Christmas Gift Ideas

Some Christmas gift ideas, while there is still time…

For the Hillary supporter still weeping with grief… a mail order from the Trump Winery (I recommend New World Reserve (red) or their award-winning sparkling wine). Also fun to bring to dinner parties (assuming you don’t want to be invited back).

A custom photo puzzle from Ravensburger (they will do up to 1500 pieces from your own photo or photos (you can collage them on their site)).

For the photographer with children… Sony A6500 (great image quality and good autofocus).

For a favorite dog: Chuckit Kick Fetch ball.

For the chef: this amazing $12 bread knife.

Readers: Perhaps based on stuff you’ve bought recently and enjoyed, what are your best Christmas gift ideas?

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Trump’s election and gender discrimination in the workplace

I was driving Domestic Senior Management’s car to the instant oil-change place yesterday. We are having our first cold snap in Boston this year, with highs below freezing and lows down to about 13F. On the way I passed the Quick and Clean car wash and decided the vehicle needed an interior vacuum and window cleaning. No doubt emboldened by Trump, the car wash owners had applied a glass ceiling to the floor. Based on wardrobe and hairstyle, there were exactly zero employees identifying as women working on the detail crew, which conducts its work entirely outdoors from 8:00 am to 5:00 pm.

[Note that this gender-based discrimination should not be confused with the pre-Trump Sex discrimination at the car wash that I observed back in August, before the entire world changed.]

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New York Times tells Donald Trump what to do

In “One Job Is Enough. Sell the Hotel,” the New York Times Editorial Board gives direct instructions to Donald Trump. Haven’t we just seen about a year of the Times writing about how Trump and his supporters wouldn’t listen to their intellectual superiors (e.g., the Editorial Board of the NYT) and switch to supporting Hillary instead? Now that he has prevailed against all predictions (including my own!), why would Trump be waking up every morning and saying “Let me just check the NYT to see if my intellectual superiors have any agenda items for me today”?

[Separately, why is divesting just this one hotel good enough? The federal government does business in Chicago, New York, and other cities where there are Trump hotels. If Trump were so motivated he could enrich himself simply by scheduling a talk to a high school in Chicago. The entourage of Secret Service and sycophants that follows the President would tie up 500 or 1000 hotel rooms in the city. Even if none of these were booked in the Trump Hotel Chicago, that hotel would be able to charge higher rates for the night(s) that President Trump was in town.]

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What we accomplished in Iraq

Lawrence in Arabia: War, Deceit, Imperial Folly and the Making of the Modern Middle East gives a summary of what we’ve accomplished for $2 trillion(?) in Iraq:

Certainly, blame for all this doesn’t rest solely with the terrible decisions that were made at the end of World War I, but it was then that one particularly toxic seed was planted. Ever since, Arab society has tended to define itself less by what it aspires to become than by what it is opposed to: colonialism, Zionism, Western imperialism in its many forms. This culture of opposition has been manipulated—indeed, feverishly nurtured—by generations of Arab dictators intent on channeling their people’s anger away from their own misrule in favor of the external threat, whether it is “the great Satan” or the “illegitimate Zionist entity” or Western music playing on the streets of Cairo. In an ironic and unforeseen way, that era now appears to be coming to an end. Beginning with the 2003 American invasion of Iraq, but greatly accelerated by the so-called Arab Spring movements that have roiled the region since 2010, the established order has steadily eroded before the force of the “Arab street.” Thus far, though, that “street” has shown little sign of coalescing around any notion of Arab unity, let alone the old dream of a greater Arab nation, but very much the opposite: a reversion to the balkanized patchwork of ethnic and religious enclaves that existed under the Ottoman millet system. While no American government official will publicly admit it, Iraq today has largely devolved into three mini-states, divided along those sectarian and ethnic lines—Kurdish, Shia and Sunni—that predated the Western imperial mapmakers.

Did the Western powers do any better elsewhere?

With the overthrow of Muamar Qaddafi, Libya, too, is rapidly becoming a nation in name only, separating into the three principal tribal regions that existed even before the Ottomans. With the brutal civil war in Syria now entering its fourth year, there is open talk of further disintegration there, of the ruling Alawite minority potentially carving out a mini-nation consisting of their ancestral strongholds along the Mediterranean coast.

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Management ideas from the Skunk Works

The Lockheed Skunk Works was pretty good at getting innovative products out the door. From Skunk Works: A Personal Memoir of My Years at Lockheed (Ben Rich, 1996)…

some of our inventions: the P-80, America’s first jet fighter; the F-104 Starfighter, our first supersonic jet attack plane; the U-2 spy plane; the incredible SR-71 Blackbird, the world’s first three-times-the-speed-of-sound surveillance airplane; and the F-117A stealth tactical fighter that many Americans saw on CNN scoring precision bomb strikes over Baghdad during Operation Desert Storm.

How did they do it? The style of the top manager changed pretty dramatically over the years:

[Kelly Johnson] was the toughest boss west of the Mississippi, or east of it too, suffered fools for less than seven seconds, and accumulated as many detractors as admirers at the Pentagon and among Air Force commanders. But even those who would never forgive Johnson for his bullying stubbornness and hair-trigger temper were forced to salute his matchless integrity. On several occasions, Kelly actually gave back money to the government, either because we had brought in a project under budget or because he saw that what we were struggling to design or build was just not going to work.

With [Kelly Johnson’s] chili-pepper temperament, he was poison to any bureaucrat, a disaster to ass-coverers, excuse-makers, or fault-finders.

I began by loosening the leash on all my department heads. I told them what they already knew: I was not a genius like Kelly, who knew by experience and instinct how to solve the most complex technical problems. I said, “I have no intention of trying to make all the decisions around here the way that Kelly always did. From now on, you’ll have to make most of the tough calls on your own.”

So the productivity wasn’t due to a particular personal management style at the top. What about the physical set-up?

Designers lived with their designs through fabrication, assembly, and testing. Engineers couldn’t just throw their drawings at the shop people on a take-it-or-leave-it basis and walk away.

Our designers spent at least a third of their day right on the shop floor; at the same time, there were usually two or three shop workers up in the design room conferring on a particular problem. That was how we kept everybody involved and integrated on a project. My weights man talked to my structures man, and my structures man talked to my designer, and my designer conferred with my flight test guy, and they all sat two feet apart, conferring and kibitzing every step of the way.

The office space allocated to Kelly’s Skunk Works operation was a narrow hallway off the main production floor, crowded with drilling machines and presses, small parts assemblies, and the large assembly area which served as the production line. There were two floors of surprisingly primitive and overcrowded offices where about fifty designers and engineers were jammed together behind as many desks as a moderate-size room could unreasonably hold.

All that mattered to him was our proximity to the production floor. A stone’s throw was too far away; he wanted us only steps away from the shop workers, to make quick structural or parts changes or answer any of their questions.

Twenty designers were stashed away in choking work rooms up on the second floor. The windows were sealed shut, and in those days nearly everyone smoked.

Except for the smoking, not too different Facebook-style Open-pit Coding!

[The “engineers have to be close to the factory” principle seems to indicate a poor long-term prognosis for U.S. engineering employment (the E in STEAM!). If the engineers need to be close to the factory and the factory needs to be in Mexico or China then eventually the engineers will have to be Mexican and Chinese as well.]

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Trump makes a woman not want to have sex with guys her own age

“Trump’s election stole my desire to look for a partner” is an interesting Washington Post article.

The author describes herself as having had “[e]nough of this dating unavailable men a half-decade younger than me”. Let’s assume that “dating” translates to “having sex.” The young cougar is now “ready to look for a partner” who is “an equal” (i.e., same age or older?). She has “two children and our needy dog.” She says she has “no idea what a supportive partner would even look like”.

She says that “on [her] own” she “can support [her] family.” This is fortunate because since she apparently has no “partner” of any kind, Perhaps her husband died and she and the kids were left without life insurance? But then who babysits the kids while she is having sex with these “half-decade younger” men?

I found the author, Stephanie Land, on Facebook. Here’s a May 8 posting:

stephanie-land-facebook-20160508-getting-child-support

It seems that she is a big Sheryl Sandberg fan. Also, though she has no “partner,” she is cashing child support checks on a regular basis. Perhaps due to an imperfect understanding of Montana family law, which does provide for potentially unlimited child support profits, Ms. Land says that she is struggling financially despite receiving these checks from a non-partner. Could it be that the father of these kids, when he is not writing checks to Ms. Land, is also caring for them every other weekend, thus facilitating the dates with younger men? Why doesn’t he then qualify as at least a financial partner in Ms. Land’s journey of single motherhood?

[Actually perhaps there are two different fathers for the two kids (generally the best financial strategy)? One of the cashflow-positive kids is 9 and one is 2. The author says “I’ve been on my own with my kids for most of the past decade”. Was she actually “on [her] own” when the 2-year-old was conceived?]

Now that Americans have elected someone other than Sheryl Sandberg to occupy the White House (Sheryl for 2020?), what’s left for this mom?

I’ve lost the desire to attempt the courtship phase. The future is uncertain. I am not the optimistic person I was on the morning of Nov. 8, wearing a T-shirt with “Nasty Woman” written inside a red heart. It makes me want to cry thinking of that. Of seeing my oldest in the shirt I bought her in Washington, D.C., that says “Future President.”

There is no room for dating in this place of grief. Dating means hope. I’ve lost that hope in seeing the words “President-elect Trump.”

On Facebook she says that she will be at a conference in Washington, D.C. on December 12 (“How Progressives Can Defend the Working Class in the Trump Era”). In case she does meet a higher-income “date” there among the “progressives”, her May 8th financial woes might dissipate (see Real World Divorce for the variation in potential child support profits among D.C., Maryland, and Virginia).

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High CEO pay is one reason that American GDP growth rate is so low?

During Election 2016, the Trumpenfuhrer-elect harped on the fact that U.S. GDP is growing only at about the same rate as the population. I.e., we’re not getting wealthier on a per-capita basis.

Skunk Works: A Personal Memoir of My Years at Lockheed (Ben Rich, 1996) was written by the manager of what became a sizable business:

The stealth fighter brought in more than $6 billion. Refurbishing the U-2 and the Blackbird brought in $100 million. By my fifth year I was heading a small, secret R & D outfit whose annual earnings placed it among the Fortune 500.

As an officially crabby old person, though, he was pessimistic about the future:

There are very few strong-willed individualists in the top echelons of big business—executives willing or able to decree the start of a new product line by sheer force of personal conviction, or willing to risk investment in unproven technologies. As salaries climb into the realm of eight-figure annual paychecks for CEOs, and company presidents enjoy stock options worth tens of millions, there is simply too much at stake for any executive turtle to stick his neck out of the shell.

What’s changed 20 years later? The “stock options worth tens of millions” are now worth hundreds of millions of dollars for some CEOs. What is the incentive to put them at risk by funding a radical product?

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My Facebook friends’ newfound love for military spending

Trump said that $4 billion was too much for a couple of Boeing 747s in executive configuration to replace the current Air Force One Boeing 747s. If everything goes according to plan, unlike any other recent military procurement project, the planes will be delivered circa 2024.

My friends on Facebook are outraged:

Another blatant lie. [over an article about how it is really only $170 million]

In addition to the distorted picture that Trump paints, it’s the fact that he engages in this type of self-aggrandizing behavior. Obama cancelled helicopter orders during his administration but he did not feel the need to tweet about it to make himself look good. [the “distorted picture” is that government spending on military aircraft tends to be wasteful?]

Obama cancelled orders too. Trump distorts facts and lies and he feels the need to get on Twitter to make himself look good. Not my idea of a grounded leader. Plus now it’s coming out that he was pissed off at Boeing. He really is a 13-year old boy, developmentally.

To avoid being defriended, a middle-aged white guy from Michigan was careful to disclaim any personal support for Trump before commenting with the following:

Forget about AF-1, the beauty of the statement by Trump is that it has provoked a reflexive response of Boeing support among progressives which couldn’t have been larger than had they made the announcement that they’d be withdrawing from bidding any future military contracts. Five minutes ago, Boeing was emblematic of corporate greed; now they’re a beleaguered business just trying to break even.

If Trump can be induced to say he wants to cancel the Navy, they’ll be demanding a 600-ship fleet by next Tuesday.

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Low-hanging fruit for the Trumpenfuhrer: Civilian-run maintenance for Air Force planes

A Pearl Harbor Day thought from Skunk Works: A Personal Memoir of My Years at Lockheed (Ben Rich)…

One area in particular where the Skunk Works serves as a paragon for doing things right is aircraft maintenance. We have proven time and again that the Air Force would be much more efficient using civilian contractor maintenance on its air fleet whenever possible. Fifteen years ago, there were so many mechanical breakdowns on the flight lines at air bases around the world that it took three airplanes to keep just one flying. The reason: lack of good maintenance by inexperienced flight crews. We in the Skunk Works are the best in the business at providing our own ground crews to service and repair our own aircraft. For instance, two Air Force SR-71 Blackbirds based in England throughout the 1970s used Skunk Works maintenance. We had on hand a thirty-five-man crew. By contrast, two Air Force Blackbirds based at Kadena on Okinawa relied on only blue-suiter ground crews, which totaled six hundred personnel. Contractors can cross-train and keep personnel on site for years, whereas the military rotates people every three years, and valuable experience is lost. Currently, two U-2s are stationed in Cyprus with twelve Lockheed maintenance persons, while two other U-2s stationed at Taif, in Saudi Arabia, in support of the UN mission in Iraq, have more than two hundred Air Force personnel.

Lockheed had provided almost everything for the CIA spy plane program except for the pilots. Maybe an idea here for Donald Trump and his incoming team?

Ben Rich is not encouraging regarding achieving efficiencies in other areas of defense contracting:

IN MY FORTY YEARS at Lockheed I worked on twenty-seven different airplanes. Today’s young engineer will be lucky to build even one. … Obsolescence is guaranteed because outside of a secret, high-priority project environment like the Skunk Works, it usually takes eight to ten years to get an airplane from the drawing board into production and operational. Every combat airplane that flew in Operation Desert Storm in 1991 was at least ten to fifteen years old by the time it actually proved its worth on the battlefield, and we are now entering an era in which there may be a twenty- to thirty-year lapse between generations of military aircraft.

Unfortunately, the trend nowadays is toward more supervision and bureaucracy, not less. General Larry Welch, the former Air Force chief of staff, reminded me recently that it took only two Air Force brass, three Pentagon officials, and four key players on the Hill to get the Blackbird project rolling. “If I wanted an airplane and the secretary of the Air Force agreed,” the general observed, “we had four key congressional committee chairmen to deal with and that was that. The same was true of the stealth fighter project—except we had eight people to deal with on the Hill instead of four. But by the time we were dealing with the B-2 project, we had to jump through all the bureaucratic hoops at the Pentagon and on the Hill. So it is harder and harder to have a Skunk Works.

I was in Boston recently and visited Old Ironsides at its berth, coincidentally at a time when the ship was being painted. I chatted with one of the supervisors and asked him about the length of the government specifications for this particular job. He said it numbered two hundred pages and laughed in embarrassment when I told him to take a look at the glass display case showing the original specification to build the ship in 1776, which was all of three pages.

General Dynamics is forced by regulations to store ninety-two thousand boxes of data for their F-16 fighter program alone. They pay. rent on a fifty-thousand-square-foot warehouse, pay the salaries of employees to maintain, guard, and store these unread and useless boxes, and send the bill to the Air Force and you and me. That is just one fighter project. There are many other useless warehouses just like it. There is so much unnecessary red tape that by one estimate only 45 percent of a procurement budget actually is spent producing the hardware. … A Skunk Works purchase order for vendor development of a system used in an advanced airplane took three pages. The vendor replied with a four-page letter proposal that included specifications for the system under development. … But at Lockheed’s main plant, or at any other manufacturer’s, that same transaction typically produced a 185-page purchase order, which led to a 1,200-page proposal, as well as three volumes on technical factors, costs, and management of the proposed project.

At least the contractors and their shareholders get wealthy, right? Ben Rich says “no.” The F-22 project was a money-loser for all five partner companies, he says, due to the government cutting the number of planes ordered: “The sad truth is that our stockholders would have done better financially if they had invested that $690 million in CDs.”

For whom does the system work out? See a recent Washington Post story for how the Department of Defense’s management and administrative costs have grown even as the number of soldiers has shrunk, consistent with Parkinson’s Law (he chronicled the growth of British Admiralty central bureaucracy as the number of ships in the British Navy plummeted):

The data showed that the Defense Department was paying a staggering number of people — 1,014,000 contractors, civilians and uniformed personnel — to fill back-office jobs far from the front lines. That workforce supports 1.3 million troops on active duty, the fewest since 1940.

In an aside, he revealed that early findings had determined the average administrative job at the Pentagon was costing taxpayers more than $200,000, including salary and benefits. [federal versus private-sector pay]

About 84,000 people held human-resources jobs.

More: Read the book.

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Invest based on PISA test results and income tax rates?

The latest PISA test results are in, comparing academic achievement among 15-year-olds in countries around the world (OECD). I’m wondering if these can be a guide for a long-term buy-and-hold investor. What motivates a business to invest? Natural resources, obviously, but, for the non-extractive part of the economy, how about educated workers plus low tax rates?

Within a country, both the academic ability of young adults and overall size of government seem to be fairly persistent over the decades.

Consider France. Like the U.S., this country is mediocre in terms of academic achievement and, according to the above-referenced OECD report, 14.8 percent of French people are “low achievers” who, especially in a $15/hour (15 euro?) minimum wage world, seem likely to be permanently on welfare (the French may not offer U.S.-quality subsidized or free public housing or food stamps, but they do have free health care for those without jobs and at least some traditional cash welfare). Heritage Foundation says that the French collect 45 percent of GDP in taxes (but maybe the real number is higher? The same page says “Government spending equals 57.5 percent of total domestic output” and “deficits hovering around 4 percent of GDP”).

Maybe some French companies are profit-machines today, perhaps based on brands established 50 or 100 years ago, but in the long run why would the country attract new investment? Capital could flow to PISA chart-toppers Singapore (government spending 18 percent of GDP; top income tax rate 22 percent; top corporate tax rate 17 percent), Estonia (no corporate income tax), Taiwan (government spending only 19.4 percent of GDP; top corporate tax rate 17 percent),

What do readers think? If investing with a 20- or 30-year horizon, would it make sense to look at these PISA numbers?

[A retired hedge fund manager friend says “No. All of this is already priced into the markets,” a variation of the traditional money-manager’s theory that “Your ideas are priced in; my ideas will yield above-market returns.” Generally I am a believer in the Efficient-market hypothesis, but what if markets are dominated by investors with a shorter-term horizon? Why would they be looking at the academic achievement of today’s 15-year-olds?]

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