Monday, November 28, 2005

Kentucky President

It is not a trick question: what three presidents had their roots in Kentucky? Some people can think of Abraham Lincoln and a few can think of Zachary Taylor. But few can name the third--Jefferson Davis. Taylor was actually born near Montebello, VA. But he made his home near Louisville, not far from where I lived as a boy.

President Lincoln and President Davis were born within a few months and a hundred miles of each other. Davis was born June 3, 1808 and Lincoln was born Feb. 12 1809. But Davis was certainly born to wealthier parents and to a family whose members fought both in the War of 1812 and the Revolutionary War.

However, it was Lincoln who articulated the view of many Americans of his day. He said in his Gettysburg Address, "that this nation, under God, shall have a new birth of freedom--and that government of the people, by the people, for the people, shall not perish from the earth."

A new birth of freedom in a land governed by its own people, that lives forever, under God. What concepts! These ideas are not acceptable to many people in 2005, but they were not all that unusual on November 19, 1863.

Yes, newspaper editors who wanted an hour's worth of bombastic and flowery oratory made fun of Lincoln's short and poignant address, but not of his ideas.

America was different one hundred and forty-two years ago. It was still a time of patriotic fervor, when people sensed they were part of a huge experiment in government. This was America where there was plenty land, and where people were freer than they had ever been at any time in history. This was America where people from "the old country" changed their names to appear more "American" and less old world. This was America where religious revivals swept the frontier whose outcome were hospitals, orphanages, and old folks' homes. It was in this environment that Taylor, Lincoln and Davis were raised.

Today, some people are convinced that America is too big, too pushy, too successful and too eager to spread freedom to other nations. They represent European thought; they seem to be ashamed of their own country. These people have always been among us. They were loyal to the throne of England during the Revolutionary War. They lost then, but have always looked for an opportunity to strike back. For some reason they sense an opportunity to succeed today when they could not succeed in past years. This opportunity seems to spring from a perceived weakness or vulnerability in the American social system. But if they win, they have no plan except to look and act more like a moribund Europe.

Perhaps America needs another Kentucky president. But with a wider view than that of Jefferson Davis.

Tuesday, November 22, 2005

Midwest Marvels

Yesterday I went to LA's airport and sat in a metal tube for four hours. At the end of that time I got out of the tube and found myself in Kansas City. It would have taken less time, but Midwest Airlines was doing some shenanigans that required a change of flight plans, and we lost an hour.

While I do not enjoy a trip to LA, I most certainly enjoy traveling to Kansas City and its suburb, Blue Springs. It is a big, sturdy, wealthy area in the middle of America where most things are new and growing. And where the people do not exhibit the effete snobbery of coastal cities.

This is definitely "flyover" country. Yet there are major companies headquartered here that hire "the brainy set" for such things as telecommunications. They are supported by solid universities and the arts in ways that you would never read about in The New York Times. The people here have worn grooves in the airways to such places as Austin, Texas and San Jose, California where other technologies abound.

It is an area where people and businesses are patriotic--you see flags and hear radio programs that make you proud to be an American.

Those of us who live on either coast tend to forget there is such a vast sprawling area of industry and endeavor in the middle of the nation. It has a beauty of its own and as an added attraction, four complete seasons. During a hike today down a country lane, with farmland on one side and large beautiful homes on the other, I passed a lake, a barn, a flock of geese, and almost no cars or trucks.

Leaves had fallen from the trees, so I had to shuffle through them. A slab of limestone lay by the side of the lane. Its surface was covered with fossils from sea life, hundreds of millions of years old, from a time when the middle of America was engulfed in a shallow, warm ocean. It extended east through Kentucky and parts of Ohio, where many of America's geologists come from.

A hundred years ago in Kansas City my great-great uncle owned a huge pharmaceutical company. His is one of the few old buildings that still stand. The rest are new with an architectural style all their own, a statement of the area's independence.

This is indeed an admirable place with opportunities for many and attractions for all.

Sunday, November 20, 2005

Case of the Disappearing Manners

George Will, the most excellent columnist, had an interesting op-ed piece in our Orange County newspaper today. It was about manners and virtue. In the article Mr. Will talked about people doing all sorts of rude things in public, and allowing one's children to misbehave as well, as though such actions were a right. And they are a right in the sense that these actions are not formally defined as illegal.

But we live larger than that. There are lots of things we don't do, not because they are illegal, but as my mother told me some 65 years ago, "People just don't want to live in a world like that." Today, Will referred to this as the "obedience to the unenforceable."

In a secularist world we tend to rely on legalism, and we sue frequently. Legalism got a bad name some 2,000 years ago and for some, it still has that bad name. For the rest of us, who are ignorant of the past, legalism is the only way; it is our entitlement.

Remember the time when nearly everyone smoked? Well, they didn't. Not everyone smoked, although it seems like they did. Many of those who did, have quit. But those who smelled up your house, who blew smoke in your face and who spat little specks of tobacco on your walls and floor are still with us. They no longer use tobacco in their rudeness. Their personal disregard for others is just taking another form. Loud telephone conversations in public places, obnoxious children and making obscene gestures from automobiles are just other forms of blowing smoke in your face and spitting on your floor. But now those who do it feel virtuous because they no longer use tobacco. Good manners are still lacking, and it is too bad.

There is a certain amount of virtue in good manners, especially if one practices manners out of respect and gratitude. No one ever blew smoke in my face out of gratitude. Gratitude has been rightly called the mother of virtues. As a population, especially as a secularist society, we seem to have little of it.

Good manners are the oil that lubricates the ways of society. No wonder that even democratic societies creak and groan a bit.

Thursday, November 17, 2005

Applied Natural Selection

Darwin Exhibit Champions Evolutionary Theory

Above is straightforward headline. It wouldn't raise many eyebrows, though. What else would a Darwin exhibit champion? Now, if the headline said Darwin Exhibit Champions Creationism, the news producer would no doubt attract a huge amount of attention.

There seems to be a general malaise in the news business these days. The New York Times has undergone two layoffs recently, and the Los Angeles Times has just announced a layoff. I can see why. No imagination.

Also, times are changing. There was a time when the three big industries in America were steel, automobiles and railroads. Books of the 1950's predicted how the rulers of these industries were going to take over American society, its economy and then the world. The industries are still around, but considerably weakened. The world does not seem overly concerned about being consumed by their CEOs.

We get our news in different ways, now. It is dished up with lots of flavors. The single-source control of news has lost out to multiple sources. People who think in "steel-automobile-railroad" terms of the old days are gradually losing out to the modern world.

Note that steel, automobiles, and railroads are all union-dominated industries. So is the news business. There are probably a few typesetters around, getting paid to set type for newspapers that ignore them and use computers to do the actual work. It is part of the contract to keep them busy. In some industries union domination was an omen that marked their decline.

But it is not the fault of the union or the worker that the industries declined. They probably contributed, but the lack of imagination of the industry leaders counted most.

That and natural selection in the evolution of economies.

Wednesday, November 16, 2005

Researcher Makes Big Discovery

It was in the news this morning, an Animal Planet News story: Researchers discover a giant ape, ten feet tall, weighing 1,200 pounds. That's a lotta ape! The story did not say what kind of researcher found the critter. It may have been a statistician, for all I know.

Of interest to the writer of the big ape story was the method of dating part of the ape that was found. It was a complex system utilizing "electron spin resistance and uranium decay schemes," whatever those are. Of interest to me was that all they had was a big tooth. From that tooth they deduced that the former owner was a huge hairy ape that lived along side humans some 100,000 years ago.

Could be. But I was reminded of the Piltdown man. I consulted my son, who is an expert at big ape stories.

He surmised that maybe the statistician had found either Jimmy Hoffa or Judge Crater.

Could be. I love science.

Monday, November 14, 2005

Price Theory and the Media

Last week I was going through my dwindling library. In it was a shelf of of books about classic economic thought. There were several on price theory. That is right, the theory of how prices are set in the marketplace. I seem to recall that only wage theory was more complicated.

The reason I was going though my library was that I was setting aside books that might help those in the family who are attending college. I was interested only in the classics, such as writings by Keynes, Hume, Malthus, Gresham and Smith (no Marx). What my professors wrote several decades ago probably has little significance today. Certainly, my own papers do not. But the really old books are still useful.

I was impressed by those economists who dwelt on the reasons prices are what they are. And then I compared the thickness of my price theory books stacked together with what I just heard on television. One of the media, who has a large audience and a small vocabulary, was telling his listeners about oil prices. He summed up all he knew about price theory in one word: gouging. To him, prices are either unimportant or someone is gouging. It is that simple. There are only two states in his economy.

There is something about journalism school that makes experts of us all.

It was disappointing to hear this speaker talk with such authority. I just knew he was going to have some influence on the windbags in Congress who would have hearings about oil prices. They don't have such hearings when prices are unduly low, just when they are high. (Some prices of bottled water are much greater per gallon than those of gasoline, but I am not holding my breath until Congress has hearings on those. Or until media types speak out boldly about gouging in the water business.)

I can understand the windbags in Congress. They like to pontificate. But media people? Maybe it is true that many of them wanted to get into journalism school "to make the world a better place."

I wish they just wanted to report the news accurately. That would be a start toward a better world.

Saturday, November 12, 2005

Management's Great Loss

It will be a severe blow to Claremont Graduate University. Its star died yesterday. He was ninety-five so it could not have been a shock.

Peter F. Drucker, called a "management guru" by Associated Press, died of natural causes in Claremont, CA. I feel as though I lost a friend. No, maybe a mentor. While I did not know The Professor personally, I read nearly everything he wrote, listened to his tapes, and even attended one of his lectures (I already had an MBA degree). Dr. Drucker helped prepare me for higher roles in management with his no-nonsense, yet philosophical style.

I can recall lots of quotes from Dr. Drucker. One that stuck in my mind concerned Industrial Psychology, a field in which many managers were taking interest forty years ago.. He said, in effect, "I do not know anything about psychology except that what is apparent to one person, another person does not understand all." I took it to be a warning that we managers should not spend our time worrying about so arcane a topic. On this basis I put my psychology books on a back shelf. (Having been on General Electric's corporate staff at the time, I had to keep up appearances and take some slight interest.)

Nearly all the lower level texts on management contained some industrial psychological lore. When I taught a few semesters of management at a local university, we studied the basics, but I told my graduate and undergraduate students what Dr. Drucker had said about psychology. I was always glad that I did.

Starting about 1955, we managers and aspiring managers at General Electric (and I suspect also at General Motors) spent much of our after-work hours studying and discussing Dr. Drucker's books. I have no doubt the successful CEO of General Electric, Jack Welch, owed Drucker a great deal.

The Professor was one of the few visionaries who recognized that management was a separate field of professional endeavor, with its own disciplines. He also saw huge discontinuities in the American and world economies, including the "Knowledge Industry," especially computers.

There is never enough room to describe all Dr. Drucker's achievements. There were so many. And there are some questions, too. He helped General Motors to be a viable producer of transportation vehicles for many years. Now seriously in trouble with huge liabilities due to retired employee costs, GM faces possible ruin. One can only wonder if Dr. Drucker warned GM management about the pending crisis that attends a socialist-leaning company which tries to pay all its former employee pension and health-care costs when employees are now living longer than anyone thought possible.

If anyone saw this disaster coming, it was Dr. Peter F. Drucker. The world of management will miss him terribly.

Thursday, November 10, 2005

Pricing Oil

It is lots of fun to blame the oil companies for whatever is wrong with our society. The CEOs of these companies usually remain silent and just keep plugging away at keeping us supplied. We really need oil--some have correctly noted that oil runs the engine of Democracy.

What really bothers many people is that gasoline costs more than it used to cost. I can recall gas at twenty-five cents a gallon. Now it costs ten times that amount. So does everything else, but their are few complaints about those other things--just gasoline.

There are cries that oil companies are making too much money. This should please many on the Left, because they consider oil to be bad and know that as prices rise usage will fall. Yet they complain loudly instead of congratulating each other. It is hard to figure.

As a student of economics at the graduate and undergraduate level, I have wondered at the charge of price gouging by the oil companies. It seems that the laws of supply and demand are all right for salt but not for oil. On the one hand people on the left are saying that people have cut back. On the other hand they say that there is a large demand that has not changed. They can't have it both ways. Either demand has fallen or it has not. Since "they" are not economists but media types, "they" have special expertise that is not hampered by serious study. Only movie and TV actors know more than media types.

There is a world-wide demand for oil that has increased steadily over the years. The supply has not quite kept up with the demand so prices have risen.

Some argue that oil companies are making too much money and should be subject to an excess profits tax. That raises a group of related questions. Here are a few:

1) How much profit is too much?

2) Who will decide how much profit is acceptable?

3) When oil companies lose money, will the government give them money to make up for an "excess losses"?

4) Will other companies (such as Microsoft) be subject to an excess profits tax? Government should be universal, not picking on only one industry or individual.

5) Does the government really want to set prices and limit profits? So far as we know the planned economy has never been successful.

What about prices? Should a corporation give back part of its profits by reducing prices? How much should they give back, and to whom? Oil and all other companies are prohibited by law from getting together and setting prices. It was an oil company that caused the law to be enacted in the first place, over a hundred years ago.

Suppose executives in the Essoil Oil Company decided that making nine to eleven cents on every sales dollar was too much. So they decided to cut back and reduce prices by five per cent. What would happen? Would other oil companies follow suit? Demand is too high for that. All Essoil gasoline and oil products would be gobbled up and they would find their supplies gone. The other oil companies would continue to sell their products at their old prices. The president of Essoil would be tossed out because he did not look out for the stock holder.

Suppose times were different. Suppose there were more gasoline and oil products available than people could easily use. Then if Essoil reduced its prices, the other oil products companies would follow and reduce prices in order to keep their market share. They might even find that at lower prices people would drive more and use more plastics and other petroleum-based products and their total revenues might even increase. Profitabilty might increase because they have huge fixed costs. Those fixed costs spread over greater volume might mean that even at a reduced prices, profits increase.

It is a complex problem that each company has to solve for itself.

One thing that can happen immediately to reduce prices is Government taking less of a tax bite. Senators and congressmen will never suggest such a thing. But Government can meddle or threaten to meddle and bring about all kinds of unintended consequences. Government rumbling and jawboning may achieve votes for those about to enter a new election campaign, but it is certain to create uncertainty in business, which always increases risk and keeps prices up (except in the stock market, where prices often plunge).

Let the market decide if prices are too high. It is a marvelous mechanism for allocating scarce resources.

Saturday, November 05, 2005

Freedom Rings More Loudly than We Think

Most Americans are proud of their freedom, when they think about it (others would rather be "Red than dead"). Our ancestors fought long and hard for freedom. We seem to feel it is our predestined right. When misguided judges on the Supreme Court take our freedom and our property away with silly decisions, we complain loudly. But when freedom is discussed for other countries and other peoples, some Americans are not so sure. They seem to be "pulling up the ladder." That is, the idea that once we have climbed the ladder to gain entrance, we pull up it up so no one else can get in.

It is an elitist idea that somehow Americans are the only ones who can handle freedom, that the "less free people" are in some way, akin to savages. We used to hear this idea expressed about civil rights for everyone. Perhaps you recall the cliche' "We're not ready for that." It meant, among other things, that the elite was not ready to lower its standards for what it thought were a people slightly above savagery. And it sure as hell meant that they were not about to lower the ladder they had so carefully pulled up behind them. History showed that they were wrong; it reinforced the idea that nobody was truly free unless everybody was free.

The desire for freedom appears to be inborn, not just in Americans but in all people. Mikhail Gorbachov of the late USSR found that you cannot give people a little bit of freedom, you have to give them complete freedom or nothing at all.

Now we are attempting to find freedom and democracy for people in the Mideast. This is partly for selfish reasons, since democratic nations do not often declare war on each other. However, for some Americans the desire to help others obtain freedom is more than that; it is a moral imperative. Still others have decided that people in the Mideast "are not ready for that."

This elitist attitude that would deny freedom to millions ignores the fact the the time is ripe. Freedom is all around Mideastern people in the form television, radio and books. The appeal of living in the eleventh century has to be losing its charm.

Tribalism is offered as an excuse for the failure of people's attempts to gain freedom in the Mideast; but we must not overlook the tribalism that we had to overcome in America. Not only did we have exclusive religious factions in each colony, but also we had ruralism tribes in the South against industrial tribes of the North. These latter differences festered for almost ninety years and finally blew up into Civil War. Why is it that we can endure civil war in America but other nations may not?

It is not the "white man's burden" to care for people in the Mideast, but it may well be the free world's burden to get them started on the road. Once they taste freedom, they can do the rest.

Freedom is a universal desire, not one that stops at our borders. It is infectious, and when the bells of freedom ring, which we are so pleased to sing about, the sound of those bells carries around the world.

Thursday, November 03, 2005

Illegal Aliens Revisited

My earlier remarks on illegal immigration seem to have stirred up a bit of controversy. It was my thesis that illegals do NOT pay their own way and because of the underground economy in which many of them participate, no one could possibly know if they did. Yet, we have experts from biology professors to news media types who reassure us frequently that illegals pay their own way.

It does not matter if they do pay their own way. There are enough other problems with illegal immigrants (such as the numbers of them in prison) that make them undesirable.

As one trained in economics and as one who has experience with major employers, I can dispel at least one myth about hiring of illegals. Large companies such as General Electric do not attract and hire illegals. These are companies who carefully examine records of people and who have a lot to lose by hiring people who should not be in the United States.

General Electric and other large companies pay the prevailing wage in a community. Or they are bound by union contracts to pay a certain wage. They hire the best people they can get for a pre-determined wage, not the lowest wage people available. It doesn't make sense for them to hire illegals.

Low wage people are not drawn to large companies, because such companies often have experts who can check fake documents. If wages are a problem, the larger companies move off-shore or they close down and buy from companies overseas. But they do not hire low cost people to save money, or any other rational reason.

It is already against the law to hire illegals; it has been that way for some fifteen years. Larger companies know they will be fined and vilified in public if they are caught, even though the hiring is an error.

No doubt there are some sweat shops who are experts in hiring low wage people. But they are not the larger corporations that make up the backbone of American industry.

As a side issue, we often associate illegals with poor Mexicans. But there are probably thousands of British and Canadians working illegally in this country. They get away with it because they are white, professional, and speak a fairly standard formof English. They are not in the low wage group. There is also a fairly large group of people from the Middle East who are professional people, graduates of US colleges and universities, who overstayed their student visas and who managed to obtain work permits. Some have been here for 20 years or more.

Some have said (and I do not know if it is true) that colleges and universities are in favor of a certain type of illegal immigrant because there are too many schools for the U.S. population. The colleges and universities can only stay in business if they have a large enough body of students. To maintain such a clientele, they have to draw from the illegal immigrant population. If the Government were to stop illegal immigrants at the border, the argument goes, some colleges and universities would have to shut down.

One of the larger problems with illegal immigrants is that many of them are nice people who work hard. Citizens hire them for day work and pay them cash for a few hours of effort. Somehow they earn a meager living doing this. When hiring day workers, the average household is providing a magnet. It would be nearly impossible for the U.S. Government to track down every household that hires illegal people and pays them in cash. Therefore, it seems easier and better to cut off the supply of illegals than it is to put heads of American households in jail or than to try to find them and impose fines.

No one said it was going to be easy to solve the illegal problem. But it is not so hard to stop the problem from growing. There is definitely a magnet or two drawing people into this country. One political persuasion says it is not the benefits we provide. Yet, it has to be part of the equation. They say that illegals take the jobs that no one else will do. This has yet to be proved. So far it is another urban myth.

Maybe illegals have it so bad in their own country that it is better to accept even a low wage in this one.

Certainly, people are dying to get into America.

Wednesday, November 02, 2005

Slavery and the Supreme Court Revisited

I got this from a reader a few days ago: "Don't underestimate the complete stupidity and outspoken voice of a few."

It had to do with my post about people who thought the U. S. Supreme Court eliminated slavery.

I take the comment to mean that in the writer's opinion, only a few people believe the Supreme Court ended slavery. It could be that he is correct. If so, I met them all and so did those people such as Jay Leno, who interview the average Joe on the street. Interviewees had a hard time identifying the Vice President, much less anybody on the Supreme Court or one of its decisions.

I have had graduate and undergraduate students in college, and I have taught in several high schools and middle schools, sometimes in a very good school district. Believe me when I say the relationship between the Supremes and slavery is not something you want to put on a test.

Yes, I have taught in an outstanding school district. While I have treasured my relationships with boys and girls over the years (that experience is where I got the name for this blog--"old men plant trees"), I do not expect them to know much about any Supreme Court decision.

If they are not aware in an outstanding school district, think about the depth of knowledge on that subject that students have in an average school district, and how much they carry with them into adulthood.

In California we have a test for teachers called the CBEST. It is about a tenth grade achievement level test, and it is required. You can take each part several times before you are declared a failure. I took it once at the age of 59 and had no trouble. Yet, many new college graduates cannot pass the test. I would not ask them to tell me about the Supreme Court and slavery, either.

My conclusion: such things are not taught anymore.