Friday, July 30, 2010

Facts and Filters

  Business media, like all media, has its own internal model or set of assumptions that drive commentary. Publications in the field often engage in obvious ideological cheerleading. On a more subtle level, much of what is written obscures a reliance on a circumscribed model that shapes our views and unconsciously walls off alternative interpretations.
   For example, the June 23 online edition of InformationWeek reported that giant Chinese PC maker Lenovo recorded a 10.2% share of global PC sales, the first time the company has garnered a double-digit share. Lenovo CEO Yang Yuangqing is naturally ecstatic at his company's performance, and gushed about Lenovo's “two-fisted strategy.”
   It's almost as if he thinks Lenovo's innovative products were the reason. Or was it brilliant marketing? InformationWeek seems impressed, noting that Lenovo's 47% year on year sales increase was the industry's highest, but then ponders, almost as an afterthought, why Lenovo's profit margin of 0.78% is so much lower than its American competitors.
   InformationWeek did not bother to connect a few dots. By way of contrast, the print edition of BusinessWeek (April 5, 2010) ran a major article on how Western companies are finding that doing business in China is becoming increasingly difficult. As BW details, Chinese officials are ramping up a variety of neo-mercantilist tactics to ensure the success of Chinese firms and to keep foreign business in check.
   One such tactic is a policy of “indigenous innovation” which means, among other things, government procurement contracts are to give preference to Chinese suppliers. Lenovo was specifically named as a beneficiary of this Japan-inspired policy.
   Combine this with China's weak currency, also the intended result of government policy, and low labor costs, and you have the real reasons why Lenovo is enjoying outsized sales increases. Despite all that, Lenovo registered paper-thin profit margins. So where is the innovation? And with so much in its favor, one might ask why Lenovo does not have large margins to go with its revenues. Either Lenovo is hugely inefficient, or it is dumping products in its overseas markets. The former is possible, the latter would fit in with the neo-mercantilist devotion to market share and reduced emphasis on profits. And as with government favoritism, this is in line with the Japanese experience.
   Two different sets of assumptions on what is driving commerce, two different commentaries, and two very different conclusions on impact and importance.
   Just remember why unemployment is slated to stay chronically high for years to come and why corporations and our government policymakers have allowed manufacturing to deteriorate.
   These are the dots they refuse to connect.

Saturday, July 24, 2010

Djou Learning His Lines

It is not my intent for this blog to focus solely on local Hawaii politics. All the same, elections are coming up, and we have a huge amount at stake. That is obvious for the US as a whole, but for Hawaii the stakes are higher than usual. We are not called America's bluest state for nothing. Democrats have dominated both congressional districts for many years. And two of the US Senate's most senior members, both democrats, hail from Hawaii. So there is often relatively little drama, at least as far as who we send to Washington.

But now we have Republican Charles Djou, winner of a special election in May, looking to cement that victory by winning outright in November. As is usually the case with Republican newbies, Djou has all of Boehner's talking points down (a little party discipline is a good thing, right?).

I see Djou is harping about what he calls out of control spending. On Fox News (where else?) he makes the claim that the stimulus has failed. This is quite a remarkable statement. Even a cursory media review shows that the people who insist the stimulus has failed almost always have three things in common: One) Merely saying the stimulus has failed is an unproven assertion. They offer no real evidence or suggestion as to how they so easily arrive at what in reality is a complex issue; Two) There is a complete failure to consider, even with what the Great Depression has already shown, how the economy would have fared without the stimulus; and Three) The claimant is almost always a Republican politician or political operative, arguably the most biased view on a Democratic stimulus package, that one can possibly find. So consider the source's motives.

This doesn't prove the anti-stimulus critics, including Djou, are wrong, but merely asserting the stimulus failed is pretty weak. There is a host of economists, including those who have won that little thingie, what is it now? Oh yeah, the Nobel Prize, who say the stimulus was absolutely needed, and it needed to be larger.

Unfortunately, President Obama, and many Democrats in Congress, have failed to respond with sufficient vigor. Remember that for many members of our beloved electorate, you must not merely state your case-- you must repeat it incessantly. Too many democrats still figure that if an opponent's charge is wrong, it is best to ignore it. Republicans understand that repeated assertions, given enough time, become accepted truth. Remember how Senator Kerry refused to dignify the idiotic smears of the swift boaters? The accepted wisdom was that he would only call attention to the issue, and possibly look petty, if he complained about it. Good advice for daily life, but Republicans interpret it as weakness, and it only serves to embolden them.

Democrats have not learned their lessons. Djou is learning his; get your party's talking points and repeat them endlessly.

Thursday, July 22, 2010

Going After the Weak

I live in Hawaii's first congressional district, one which had been well represented by Neil Abercrombie until recently when Neil decided to run for governor. Republican Charles Djou won a special election in May because a disorganized Democratic Party allowed two well-known Democrats to split the vote. Djou won the seat despite overwhelming voter preference for the democratic candidates.

A few days ago my wife received a letter from this freshly-installed congressman, detailing legislation he has co-sponsored, Federal Sunset Act, H.R. 393. I need to share some of this with you because it is a letter which sounds sensible enough at first blush, but which can't conceal the fact that Djou, long seen as a moderate in Hawaii, is already assuming the form and substance of his party leaders in Washington.

In that letter, Djou, in his best imitation of Herbert Hoover, says he is co-sponsoring legislation to “reduce the size of government and cut spending.” His claim is there are multiple agencies with overlapping jurisdictions and functions and that it is all terribly wasteful. After all, Djou says, “we cannot afford duplication and waste.” He further states that a bipartisan sunset commission, which the legislation would establish, would analyze programs and make recommendations to abolish, reorganize, or make substantive changes.

OK, Djou, there is waste and duplication. So if the goal is a more efficient and effective government, then I am for it, but reducing wasteful spending is not really the goal. His examples of multiple agencies are revealing:
163 programs with a job training or employment function
500 urban aid programs
324 economic development programs
71 business support programs
64 welfare programs
130 programs serving at-risk programs
90 early childhood development programs

Notice a pattern? Most of these areas focus on the poor and the young. Djou is going after at-risk and childhood development programs to save money. Urban aid programs? They also serve the poor and urban areas are democratic strongholds, and Djou knows it. There is no mention of the programs and departments that are truly and frightfully expensive; Our two endless wars and the massively bloated Defense Department behind them.

Or how about Homeland Security if you are looking for bloated waste? Or, more broadly, that bureaucratic octopus called the intelligence community? The feds just acknowledged its inefficiencies are so chronic and so pervasive that effective intelligence gathering is being hampered.

Like so many other Republicans, Djou has little to say about the programs that line corporate America's pockets, but thinks we got to reel in those out-of-control social programs.