Friday, February 19, 2010

How to Fail...or not...

There are three kinds of fail.
The classic failure.
The basic failure.
And of course, the all time favorite
the Epic Failure!

Now to classically fail, all you have to do is go out and just do something that hasn't worked before, say it's a great idea anyway, and defend it as if it were the holy grail itself.

The basic failure is simpler even still, and that entails just doing something which has no chance in hell of ever working no matter how much energy or effort is front loaded into it.

But the epic that is a leap of such stupendous stupidity, ignorance, and just plain bad judgment that it leaves sages speechless, mothers fainting in despair, and shocked onlookers mesmerized by the horrendous mess that your effort has left behind.

I hope to G-d in heaven that Obama eschews these fails, and wisely considers all those promises he made on the campaign trail...because brother Obama, you are so close to dancing with the devil that it unnerves me.


  1. Sheer-

    The trend since 1982 is clear. The rich get richer and the poor get poorer. Sadly, the middle class is either unwilling or incapable of understanding that they are being pushed further and further down the overall economic ladder, to the benefit of the rich. Thus, these obscene pay packages are seen as proof of "The American Way", and any attempt to curtail this is seen by way too many folks as an attack on free enterprise, even though this "free enterprise" is extracting a huge toll on a majority of the population for the benefit of the few. While some observers point to middle class ownership of stocks and bonds as evidence that this trend benefits the middle class as well as the wealthy, they fail to note that middle class ownership of stocks and bonds is a mile wide but an inch deep. The vast majority of households own less than $10,000 in stocks or bonds, including IRAs.

    In short, all too many have been seduced into BELIEVING that they are doing well, while FACTS would lead to a far different conclusion. But then, weren't we just treated to eight years of a faith based government. As long as we BELIEVE we are OK, what need is there for facts?

  2. I agree with Al with a couple of twists.

    The key feature in Epic Failure is the leader's belief that he is encountering some bad luck but is on the right track and is about to succeed any moment now. Anybody who tries to tell the leader otherwise is discounted as being too short-sighted or secretly allied with the opposition.

    This was the defining feature of the Bush administration and it seems to be Obama's method as well.

    Barring a brilliant recovery before November, Obama and the Democratic party overall are going to take it in the shorts and the Republicans will once again be overtly in control of Congress again (they never really lost covert control). Obama so far has not shown Bill Clinton's ability to successfully govern with a hostile Congress (he hasn't even shown any real ability to govern with a friendly Congress).

    Any suggestions for President in 2012? I believe on of the requirements for the job by then will be the ability to walk on water and to work miracles with loaves and fish.

  3. To be honest, the banks insured their risky business.

    The real failure is not the bank's failure of underestimating risks (at least not on part of those banks who created CDOs), but on part of the insurer who didn't ask for the appropriate horrendous insurance fees.

    One should not be surprised that smart people can exploit the system and less smart people. We should rather focus on fixing the system and keep dumb or biased people out of positions of influence.

  4. For an epic (sorry) treatment of this topic, see:

    "The March of Folly: From Troy to Vietnam"

    All of Barbara Tuchmann's books are illuminating (though I didn't much care for the one about Stillwell), but see also "The Proud Tower". That one will make you want to cry. It did me anyway.



  5. Off-topic:

    Saw this at WaPo and thought, "Could this be our own fasteddiez"? Somehow, it is not as scintillating as his usual output, but if it were he, he was tailoring it to the audience.

    Whoever he is, he won "comment du jour":

    FastEddieO007 , on Ezra Klein's 'Are we too big for democracy?' post:

    The framers worried about the federal government having too much power, and worked painstakingly hard to limit the federal government's power over the lives of the citizens. Lets not give the federal government power over whether we have access to healthcare or not.

  6. Nope Lisa, I don't write boring ass shit about the framers....less'n they're carpenter type framers. Besides, since all of the Euros feature health care to their citizenry (WHO rates France no 1 in overall health care), this James bond cross dresser with Fast Eddie Felson, IMO, needs a failure drill for his Marie Antoinette 'Tude.

    See Ya!

  7. "Lets not give the federal government power over whether we have access to healthcare or not."

    And to whom would one grant such power? Market forces? As I look back over the past 10 to 30 years, what I see as the root of our nation's slide downhill has been a failure of the various levels of government to govern. No government entity shipped jobs overseas or required jobs to be shipped overseas. Market forces, unchecked by governance, allowed corporations to ship jobs overseas.

    The loss of jobs is only one example of where a lack of governance has done harm to a large sector of our population. Yet, the Tea Party types clamor for less governance that the pathetically low level that has brought our nation to the brink. Go figure!

  8. Al: The loss of jobs is only one example of where a lack of governance has done harm to a large sector of our population.

    In general I agree with where you're going, Al, but I have to disagree with you on this small point.

    Government simply CAN'T fight market forces directly. Nixon tried that when he froze wages to fight inflation. Inflation, as you'll recall, won that round handily and everybody who complied with the government policy lost badly.

    Government CAN lead the horse (or the public in this case) to water, they CAN give the public incentives to drink, they can even DROWN the public, but they CAN'T make them drink.

    The American people wanted lots of goods at really low prices and they weren't willing to create the conditions where it would be profitable to make those goods in this country. So other people in other countries did it for us at a reasonable price. Everything else related to job losses naturally follow from there and there's not one damned thing the US government could have done to prevent it.

    I have an accidental conspiracy theory I'd like to throw out for you guys to chew on. The simple basis for this theory is that we aren't as wealthy as we think we are and we haven't been for decades.

    In 1980 Maggie Thatcher was fighting a persistently sour British economy featuring high unemployment and high inflation. She or one of her minions hit upon a brilliant idea to solve the problem. Change the way you measure unemployment and inflation to make them look better than they actually are. This will encourage people to ACT as if they are wealthier than they actually are and that will, in turn, improve the economy.

    So they made unemployment and inflation go away with the stroke of a pen and things started looking better right away. The best part of this plan is that the government didn't actually have to spend a dime to cause this to happen.

    Now Maggie's best friend in the whole wide world was a newly elected president named Ronald Reagan. He decided to copy what she'd done so he hired a little-known academic economist named Alan Greenspan to investigate whether or not the US systems for measuring inflation were accurate or not. After long study, Al discovered that the Consumer Price Index did indeed overstate inflation by about 0.5% per year.

    Furthermore Al provided seven different ways to fix the bias. Any one of which would have solved the problem. The government adopted ALL of them, causing us to go from moderately overstating inflation to massively understating it. Furthermore, this caused the government to assume that the absolute dollar growth in the economy (which comes from inflation and real growth) to be mostly coming from growth rather than inflation.

    All of a sudden the US economy looked like a champ. Inflation was vanquished and the economy was growing by leaps and bounds. For further effect they adjusted the way we calculate the unemployment rate by reducing the number of available workers and it went away as well.

    Of course, inflation and unemployment didn't ACTUALLY go away. They've been biting us in the rear all along but we haven't been able to measure it. Now, with this economic crisis caused by bad decisions based on bad measurements, we're in a real pickle.

    Go to's alternate data section which compares how the government used to measure the economy against how they currently measure it and you'll see proof of this theory.

  9. Al,

    It isn't a simple choice between "federal government" and "market forces" whatever that really means. The fact is your are right about poor governance which has negatively impacted "market forces" over the past several decades. It's not a question of "government" vs "markets" it's a question of how they've commingled. For all the rhetoric bandied about on "deregulation" and "limited government" the fact is that government has gotten bigger and more influential over the years by almost any metric you want to choose. "Privatization" is little more that government rent-seeking and does not operate on market principles despite what proponents claim.

    So yeah, I think there is way too much government and we are not too far removed from your country of residence.

    As for health care and the federal government, that ship has already sailed. It was Medicare that created the broken fee-for-service system country-wide and it's medicare that continues to be the dominant player in setting a price floor and determining what is a reimbursable expense and it's medicare and it's subsidies for medical education which determines how many medical professionals are created. It's government that's allowed provider consolidation so that many communities have only one provider, making it difficult if not impossible for employers and insurance companies to negotiate reimbursement rates.

    In short, there's no "market" in health care at all - a fundamental requirement for any market is price discovery and there simply isn't any.

    So count me as very skeptical that more federal government solutions will solve anything. The AMA and other provider lobbies are very successful at limiting the number of doctors and preventing lower medicare reimbursements - if we turn the entire medical system over to the feds how will that change? The issue is broken governance because solutions are not determined by technocratic wisdom, even if one believes in such a thing, but organized interest groups who stand to benefit from swaying government policy. In other words, to give the feds more authority is only going to worsen the problem of rent-seeking.

    The same problem of government policy that enables rent-seeking is seen almost everywhere at the federal level. Giving the feds additional authority is unlikely to serve the interests of anyone but those who've got their mouth around the federal titty.

    Sorry for the rant, I'm in a sour mood today.

  10. Pluto

    From this article:

    “American business is about maximizing shareholder value,” said Allen Sinai, chief global economist at the research firm Decision Economics. “You basically don’t want workers. You hire less, and you try to find capital equipment to replace them."

    During periods of American economic expansion in the 1950s, ’60s and ’70s, the number of private-sector jobs increased about 3.5 percent a year, according to an analysis of Labor Department data by Lakshman Achuthan, managing director of the Economic Cycle Research Institute, a research firm. During expansions in the 1980s and ’90s, jobs grew just 2.4 percent annually. And during the last decade, job growth fell to 0.9 percent annually.

    The role of governance would be to provide incentives for providing jobs, not just encouraging economic expansion. That would require a comprehensive labor policy, with specific goals and programs tailored to meet those goals. Otherwise, we should simply let the chips fall as they may and let employment reap the same future as the mortgage market, for example.

    In short, our government needs to think strategically in terms of labor markets. But, in our culture of living for the moment, this will never happen.

  11. Love ya, Fasteddiez ;) (He was merely a common troller who thought to co-opt the handle would bestow some absent freshness.)

  12. Al,

    Unfortunately Allen Sinai is right to a certain degree. I see this in every hiring decision made in the last 6-7 years.

    Employees ARE expensive, especially as medical expenses go up. Replacing people with equipment is initially very expensive but the costs drop to near zero and stay there. This is a no-brainer from the perspective of a slash-and-burn capitalist. Buy the company, replace all people with equipment, watch profits soar, sell your shares in the stock and retire happy.

    But in the long-term the situation is more nuanced; equipment doesn't show judgment (good or bad), can't be retrained to do radically different jobs, can't improve customer satisfaction, and can't show initiative.

    This balancing act is incredibly difficult for managers and the best ones frequently come up with some sort of combined solution, hiring some employees and making them as effective as possible with equipment. But the sweet spot keeps shifting and managers have to constantly adapt.

    I can't express my fear and loathing at having the government try to step in and positively affect this difficult balance. At best we'd look like France (land of unintended consequences, some good and some bad) at worst we'd look like Russia (land of intended consequences, usually bad).

    A better way to handle the situation is to make sure the employees have maximum access to retraining education systems and encourage entrepreneurs to form new industries and improve existing industries. I'm sure that this will still have unfortunate effects on some employee somewhere but at least they are more easily predicted and countered.

  13. Pluto-

    I fully understand and agree with what you say about unintended consequences. However, we have generally lacked any sort of labor objectives that are capable of being influenced or quantified in the US. And, it's not just a matter of machines replacing people (although the tax advantages of capital equipment over staffing are an incentive to replace workers), but the lack of any disincentive to outsource work overseas, to include non-production jobs.

    Additionally, we have never really decided what the work force is to be entitled to on a grand scale. By this, I refer to the conversion of numerous domestic jobs to independent contractor status, thus depriving such workers of coverage under the Fair Labor Standards Act, workman's comp, unemployment and insurance benefits. I would also note that it is evident that a large portion of the contractor population is classified as such improperly, but would put their livelihoods at risk if they were to challenge their questionable employment status.

    In short, workers have become, in a large way, disposable and exploitable, even though we have enacted a significant body if law to deter such. What has changed from the days of child labor and sweat shops is simply the manner in which the exploitation is conducted, along with adding what was previously "professional/technical/managerial" jobs to those that can be exploited.

    I am not screaming "Workers of the World Unite!", but I am concerned with the societal burden a growing displaced, underemployed and uninsured population will create. There are too many Ponzi-like practices embedded in the American way of doing things, and the bill is going to come due. One of the reason Anthem Blue Cross of California gave for dramatic raises in their health insurance rates was that "healthy young people are dropping their insurance, raising the per capita costs of benefit payments". Of course when price rises, demand will most likely decrease, and a 39% rate increase may very well encourage more "healthy young people" to drop their insurance. It may very well be that Anthem is in a market place death spiral, yet in the short term, no one seems willing to address this, and in the long term, the Govt will be expected to provide the solution. As I have said before, all too many of us want the government to allow us unfettered foolishness as long as it "works", but then expect it to come to the rescue when it doesn't.

  14. Al,

    You and I are in basic agreement on all of the topics you just raised.

    I am particularly concerned about the huge gap between the skills high school students have when they graduate and the skills the companies need for them to have. I have seen far too many young people come into a company and crash and burn because they expect grace periods and personalized attention. That's simply not the way corporate America works these days for the reasons you mentioned above.

    My older son just finished a class in High School English taught by one of the old-style teachers. It was simply brutal for him. The teacher handed out the syllabus and didn't discuss it, he just started lecturing on the first day. Their first homework assignment was to read the syllabus and ask questions the next day. The teacher warned them that he considered silence to be the equivalent of acceptance.

    Then the teacher started cranking up the homework to the point where my super-academic kid was spending an average of 25-30 hours per week on that class alone. My kid was particularly dismayed when he discovered the my wife and I were very supportive of the teacher and were only interested in discussing how he (my son) could do his homework more efficiently.

    Well over half of the students dropped out at the quarter break and the teacher pushed the remaining students even harder. My kid finished the class with an "A" (he's still not sure how it happened), and about 2-3 years worth of life lessons (learned in about 4-1/2 months) that he's still trying to sort through and understand.

    I'm darned proud of my kid and I think he's learned a lot about life, himself, and how to really work under pressure that will be incredibly valuable in the future. I freely admit that I never went through anything like that in high school and was much the worse for the lack.

    But I think about the kids who either dropped out or never got this opportunity and then I consider the workplace conditions they will face when they graduate and I fear for them and our country.

    My personal worst-case estimate is that somewhere around 50% of potential American workers are unfit for the current workplace either because of lack of skills or inaccurate expectations of what they will be expected to do. As you've noted that's an awful burden for any economy to carry and the day when that bill comes due will be sooner than anybody expects.

  15. Pluto-

    It's all a matter of low standards and high expectations, and our schools are one place where Americans have really embraced such a dysfunctional approach. Not the only place, but a very vital one.

  16. Al,

    The 39% increase in premium costs by Anthem sounds like a lot until you consider that represents about 5 years worth of medical care cost growth. When the actual cost of medical care is rising at ~7% a year premiums will need to rise by 40% over five years and they will double in 10 years thanks to the miracle of compound interest. I keep coming back to this problem of cost growth because it affects everything. The President's just-announced plan to set insurance company premiums isn't going to do anything as long as the cost of health care continues to rise at 2-3 times the rate of inflation.


    As for workers, productivity increases do result in reduced labor requirements. That's not slash-n-burn capitalism, but an economic reality that must be faced.

  17. Andy-

    My point was that it's a pure and simple death spiral. Insurance cost goes up faster than earnings and more "relatively healthy" people drop their insurance, leaving fewer people to bear the cost of an ever increasingly expensive insured population. It's been the case for a long time, and is destined to continue unless we address it intelligently. Otherwise, the system will ultimately crash.

  18. Al,

    I agree with that completely. Unfortunately I don't see many policy prescriptions put forward from our political class that will do much of anything except make the problem worse.

  19. Andy,

    You're right as far as you're going and you've basically described a large part of what I do for a living. But it can be incredibly difficult to determine whether a proposed new technology will actually improve the company's bottom line (by getting more work done per man-hour without negatively impacting customer satisfaction) or whether we're just being cheap and stupid (firing trusted employees and alienating the customer).

    Trust me, slash-n-burn capitalism is VERY much alive and well in America and is used primarily to temporarily boost company profits, which in our MBA-driven stock market is extremely useful. Maintaining those profits for the long term isn't generally viewed as useful and so all items related to long-term profits (such as customer satisfaction and employee morale) are viewed as secondary concerns.

  20. "are viewed as secondary concerns"

    I should have said "are frequently viewed as secondary concerns" because there are still a lot of really good places to work in this country.

    It's just frustrating to watch overweening greed destroy so many companies solely to boost the profits of temporary owners who think that three months IS the long-term.