War is Hell

A favorite quote from today’s New York Times article on Qusay’s $1 billion cash withdrawal from his dad’s personal bank:



“Sometimes they [the Hussein kids] would come in for small amounts, maybe $5 million,” the official said.


One of the theses of my Israel Essay is that every Third World kleptocrat has a doppelganger among the managers of America’s public corporations.  Derrick Jackson identified Qusay’s counterparts as the CEOs of American defense contractors in this Boston Globe editorial.  Here are some comparisons from the article:



“… the average army private in Iraq earns about $20,000 a year, the average CEO among the 37 largest publicly traded defense contractors made 577 times more money in 2002, $11.3 million.


“Since 2000, the 37 defense contractor CEOs … have taken home $1.35 billion. That may not be Bill Gates, but it still means that just 37 men have made enough money in the last three years to, for instance, pay for two years of running the Boston public schools.


(Despite the Federales’s fondness for buying weapons and applying them to recalcitrant foreigners, the shareholders of defense contractors aren’t doing especially well, as evidenced by this five-year comparison of the infamous Halliburton versus the S&P 500, or consider Northrop, Lockheed, and Raytheon.  But if there is pain among the employees or owners it is not being shared by the top managers and Board members…)

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Weekend in Gettysburg

Richard and I flew down to Gettysburg, Pennsylvania over the weekend to visit his brother, a professor at Gettysburg College.


On the way down we stopped at the Kingston-Ulster airport and were picked up by Richard’s friend Annie, a flying kinetic whirl of activity whose mass could only be characterized by a probability distribution.  We drove a few miles to Bard College’s new auditorium, designed by Frank Gehry.  From the air this had seemed like a misshapen metal-clad lump.  From the ground it still looked misshapen but not ugly.  It cost $60 million to build.  Running a not-for-profit college would seem to be a very good way to accumulate cash.  Even after spending $60 mil the school had enough money left over to pay lots of security guards.  A performance was in progress in the small theater and every door was locked and guarded.  Annie was not be deterred.  We walked around the back and walked in the stage door with the members of the Charles Mingus Orchestra, unchallenged past the security guard who was reading a book.  Lesson:  never hire a hippie college kid to work security.  The main theater did not impress but the backstage was amazingly huge and intricate.


While the local swells attended a play the students played Frisbee and sang folk music in front of the Student Center.  Posters advertised a show of “Palestinian Art; Four Decades of Response to Oppression” (with the world’s fastest-growing population (5% per year) and most of their money being siphoned off by kleptocratic rulers perhaps the Palestinians are now going to support themselves via indigenous arts and crafts).  We walked past the booths selling tie-dyed clothing and through the campus until we arrived at a mansion on the Hudson River, complete with formal garden.


After a late lunch in Rhinebeck we got back into the DA40, bound for Gettysburg.  We flew up a beautiful river valley that crammed together an enormous open-plan new prison, an enormous fortress-like old prison, a golf course, and a scattering of McMansions around the fairways.  We followed a ridge of uplifted hills, cut through by rivers and highways, then climbed to a more efficient altitude of 6500′.  We passed near Harrisburg and over the Three Mile Island nuclear power plants (two cooling towers dead; two blowing steam) before landing at the Gettysburg Airport.  This airport is right next to a mobile home park in which you could buy a nice trailer for $20,000 then rent a hangar for $200 per month.  All the convenience of an airpark without the expense!


The Gettysburg battlefield park is one of the best-preserved and most interesting among those in the U.S.  This was the pivotal battle of the War of Northern Aggression (know to the victors as the “American Civil War”).  The Southern armies under General Robert E. Lee had come to bring the fight into the North and were briefly in a position to reach the big cities of the Northeast.  After the South went home on July 4, 1863, the outcome was inevitable.  This was the first time that artillery, the rifle, and the digging of trenches came together to give the defense a huge advantage.  The Civil War was thus the first modern war in terms of tactics, in terms of press coverage (photographers were embedded with the troops), and in terms of the total mobilization of industrial civilian economies.  The offense did not gain the upper hand until Hitler’s air power, tank columns, and mechanized infantry conquered Europe in the 1930s and 40s (we’re still in the “offense wins” epoch of war, apparently, if the invasion of Iraq can be considered typical).


[To see what an improvement in political leadership can be achieved via professional speechwriters and Microsoft PowerPoint, check out the Gettysburg Address (original and improved).]


Being a professor at Gettysburg College seemed like a lot of fun.  First of all, even on a professor’s salary you can afford a large newish house on several acres of land, typically part of a recently subdivided farm (subdividing farms is to this decade what day trading was to the 1990s).  Now that you’ve got the big house you can start throwing parties for your colleagues.  Most of them will show up because there isn’t much else to do in Gettysburg.  Thus your life consists of going from one party to another, mixing with academics from every area of inquiry.


[Why doesn’t this happen at MIT?  First, the young fun people who work at MIT can’t afford to live anywhere near the school unless they want to cram themselves into a studio or 1-bedroom apartment, not suitable for parties.  Second there are all kinds of social and entertainment opportunities in a big city like Boston.  Third, there are too many professors in one’s own department to get to know and therefore one is unlikely to be coerced by circumstance into socializing with people from other fields (the EECS department at MIT has more than 150 faculty).]


Having soaked up the scenery and the smell of the apple blossoms it was time to depart this morning.  We were greeted by a dreary mist, clouds hanging on the hills, and a steady rain.  Flight Service said that the warm front was coming through sooner than expected but that the weather was clear to the northeast.  Richard and I departed under instrument flight rules (IFR).  This is a bit tricky at an airport with no control tower and no radio repeater for the air traffic controllers (ATC).  You need to take off and gain altitude before you can talk to ATC but it isn’t safe, prudent, or legal to climb into the clouds unless you’ve already talked to ATC.  We picked up our clearance with a cell phone call to Washington Center from the airplane as we sat on the ground in Gettysburg.  They cleared out the airspace north of Gettysburg for 10 minutes, giving us enough time to depart (if we’d had a problem taking off we would have called them back to cancel).


Despite a headwind, we were on the ground in Boston 2.75 hours later.  We had climbed up to 5500′ and never entered the clouds.

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Boston to New York by Helicopter?

A Vancouverite pointed out that one can fly from downtown Vancouver to downtown Seattle on http://www.helijet.com for $120 each way (full fare, unrestricted) and that this service has been around for many years.  Boston/NY is a bit farther but should be doable for $200 (the Delta Shuttle’s full fare is $226 one way).


A Sikorsky S-76 helicopter holds 12 passengers and costs $3000 per hour to charter, perhaps half that to operate all day every day.  The new S-92 holds 19 passengers and the brochure claims that you can run it for $2200 per hour.


It will take about 1.25 hours to get from Boston to New York.  Assuming that we get 15 passengers on the average trip in an S-92, there would be a fat profit if we could collect the same price as the Delta Shuttle folks.


Where to land?  The Museum of Science in Boston has a heliport and there are several options in Manhattan, including the Port Authority’s heliport.  Rudy Guiliani had been closing heliports because he claimed that the deafening noise and pollution of burning hundreds of gallons of jet fuel per hour somehow degraded quality of life.  Fortunately the new mayor, Michael Bloomberg, has his own personal helicopter and will presumably be more sympathetic to the transportation needs of the elite.


[A bit of searching at http://registry.faa.gov reveals that Michael Rubens Bloomberg has instrument, multi, and helicopter ratings.]


So folks, what will it be?  The $10 Chinatown-Chinatown bus, AMTRAK’s Four Hour Fast Train (TM), or our new hypothetical helicopter?

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When $57 million of weapons isn’t enough protection….

Back around 1970, Monty Python did a skit in which a mafioso visits a British Army base to shake down the commander for protection money:  “Would be a shame if anything bad happened to all of these tanks.”  Eventually, apparently, life imitates art.


Last week we witnessed the spectacle of George W. Bush being afraid for his security while encased in $57 million of weaponry.  From http://www.cnn.com/2003/ALLPOLITICS/05/01/bush.carrier.landing/ :



Bush wanted to swoop onto the deck of the Lincoln aboard an F-18 Hornet, but the Secret Service nixed the idea — they didn’t like leaving the president unguarded in a fighter jet that only has space for the president and a pilot.


(specs on the F-18: http://www.chinfo.navy.mil/navpalib/factfile/aircraft/air-fa18.html)


Thus there is apparently some common ground for George W. and the Iraqi people:  they are both afraid of F-18 pilots.


A deeper issue is when did U.S. voters become so tolerance of cowardice?  Western military leaders traditionally lead from the front and try to demonstrate that they are sharing the hazards of battle with the common soldiers.  Eastern commanders, such as Genghis Khan, thought that this was stupid.  Why put yourself at risk when you can send the rabble up to the front?


It would have been tough to imagine Winston Churchill slipping out of London during the Blitz and yet George W. spent September 11th “at a secure location”.  The risks of being in a big American city were apparently bearable for his subjects but not for his royal personage.  Americans have twice voted, or at least sort of, for men who escaped combat service (Bill Clinton famously dodging the draft, George W. in a slightly less obvious manner).


If present trends continue it would seem that whoever gets elected in 2012 will spend his or her Presidency in an MX Missile-style racetrack silo out in Wyoming (unless the winner is William Bennett, in which case perhaps he’ll command the U.S. Empire from a suite at the Bellagio).

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Dumping money blindly into index funds?

If you put money blinding into stock index funds, you’re helping managers steal from America’s public corporations, according to a special issue of Fortune magazine (start here and then click on the other articles under “special package”).  Could it be that the great investing lesson we learned from the last few decades, i.e., that index funds outperform managed mutual funds, will turn out to be inapplicable to the changed environment of the 21st century?

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Give Fs to your best customers?

Here’s a portion of the “to the instructor” blurb of Internet Application Workbook:



The daily cost of attending a top university these days is about the same as the daily rate to stay at the Four Seasons hotel in Boston, living on room-service lobster and Champagne. It is no wonder, then, that the student feels entitled to have a pleasant experience. Suppose that you tell a student that his work is substandard. He may be angry with you for adversely affecting his self-esteem. He may complain to a Dean who will send you email and invite you to a meeting. You’ve upheld the standards of the institution but what favor have you done yourself? Remember that the A students will probably go on to graduate school, get PhDs, and settle into $35,000/year post-docs. The mediocre students are the ones who are likely to rise to high positions in Corporate America and these are the ones from whom you’ll be asking for funding, donations of computer systems, etc. Why alienate paying customers and future executives merely because they aren’t willing to put effort into software engineering?


In teaching with Internet Application Workbook you have a natural opportunity to separate evaluation from teaching. The quality of the user experience and solution engineered by a team is best evaluated by their client and the end-users. If the client responds to the questionnaire in Exercise 3 of the Planning Redux chapter by saying “Our team has solved all of our problems and we love working with them”, what does your opinion matter? Similarly if a usability study shows that test users are able to accomplish tasks quickly and reliably, what does your opinion of the page flow matter? During most of this course we try to act as coaches to help our students achieve high performance as perceived by their clients and end-users. We use every opportunity to arrange for students to get real-world feedback rather than letter grades from us.

The principal area where we must retain the role of evaluator is in looking at a team’s documentation. The main question here is “How easy would it be for a new team of programmers, with access only to what is in the /doc directory on a team’s server, to take over the project?”


America’s most grade-inflated schools tend to be its most expensive, e.g., Harvard.  Assuming a 5 percent annual increase the cost of education at a top school will top $1 million within 40 years.  Are the employee-teachers really going to give Fs to people donating $1 million to the institution?  Is there any way to maintain academic excellence and good relations with our wealthy patrons (the students)?


Suppose that there were a set of standardized problem sets and tests, shared among groups of universities.  A student at School A would have his or her work graded by teachers at Schools B,C, and D.  The relationship between students and staff at School A would therefore be more akin to that of athlete and coach, people working together to achieve great results, never having opposed interests.


This idea might be tough to implement in advanced courses in very rapidly changing fields but should be easy for old standbys such as undergrad physics, chemistry, math, etc.

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Biographical Focus: Jeffrey Amherst, the first biowarrior

It’s Sunday, a time for looking at inspiring biographies.  Today we consider Lord Jeffrey Amherst, commander of the British forces in North America during the French & Indian War (1754-1763).   The town of Amherst, Massachusetts is named after this pioneer in the field of biological warfare.  It was Lord Amherst who came up with the idea of giving smallpox-infested blankets to the Indians.  This theme is explored in a bit of detail on this page at UCLA and more profoundly in tonight’s highly recommended episode of South Park (rebroadcast from Wednesday):  “Red Man’s Greed”.

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A silent PC

http://www.hushtechnologies.net/ shows a reasonably fast (933 MHz, up to 1 GB of RAM) reasonably cheap (under $1000) WinXP machine that is cooled via heat sinks rather than fans.  Another very quiet PC option is the Gateway Profile, which looks like half of a laptop computer mounted on a small pedestal.  My friend Doug and I removed the (pretty quiet) fans from a couple of old ones (500 MHz Celerons) and they continued to run just fine.


 

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Wall Street gets fined

The Wall Street firms will pay $1.4 billion for their sins of the 1990s, under a settlement reached yesterday.  It seems that they instructed their analysts to recommend buying the stocks that their investment bankers were taking public (for a fixed 7 percent share of the proceeds that seems to have been as unaffected by competition as the 6 percent collected by realtors).  This happy marriage resulted in an explosion of profits for Wall Street throughout the 1990s.


How discouraged from defrauding investors are they going to be in the future?  According to the New York Times, Citigroup paid $400 million or 0.2 percent of their organization’s value (about $200 billion according to finance.yahoo.com).  Merrill Lynch paid $100 million or about 0.25 percent of its market capitalization.


Let’s figure out what this would be like for the average American family, whose median wealth was $63,000 in 2001 (before the economy collapsed).  0.2 percent of $63,000 would correspond to one of the family members being fined $126, less than one-third the cost of the average speeding ticket (including insurance hikes) in the U.S.

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Harry Potter and the $100 million/year manager

Yesterday’s posting raises the question “if an executive can’t do a good job for $2 million/year, will he do a good job when paid $20 million/year?”  The moribund U.S. economy seems to suggest that paying out huge sums to managers is not effective.  The Israel Essay questions whether our current economic slump may not be due to the fact that companies can’t afford to invest profits in technology and equipment because they’ve paid out all of their profits to senior managers.  Today we’ll try to figure out if, even if cash were free, it is a smart idea to make corporate managers as rich as Rockefellers.


Suppose that you owned a small company and had a money tree in the back yard.  You can now pay your managers as much as you want without reducing profits.  Should you advertise for a CEO at $75 million/year?  On the plus side this is more than most American CEOs earn (see http://www.forbes.com/ceos) and therefore you should be able to recruit someone good.  On the minus side, however, think about how focussed on work you’d be if someone handed you a $75 million check tomorrow.  You’d probably move into a bigger apartment and redecorate.  And wouldn’t it be nice to have a few vacation houses?  You know that you’ll be traveling by private jet from now on, but to which of the 50 fractional jet ownership plans should you subscribe?  You’re going to get invited to a lot of fun charity events so you’ll need a new wardrobe.  In short, living like a rich person is very time-consuming.


Getting back to the owner’s perspective…  perhaps an investment would be best managed by a comfortably well-off manager, rich enough to afford a new car that won’t break down and be a distraction from her duties but not rich enough that she spends several days per week shopping for private islands.


Has this experiment been done?  Absolutely.  Consider the Harry Potter books.  As our friend Jin says, it is a mistake to compare Harry Potter to Shakespeare:  “Harry Potter is a fictional character; J.K. Rowling is the modern equivalent of Shakespeare.”  Unlike the Bard, however, J.K. Rowling was not perennially short of funds.  Let’s look at her productivity:



  • 1997:  Harry Potter and the Philosopher’s Stone published; the American rights are eventually worth enough that Rowling can quit her day job (teaching high school)
  • 1998: Harry Potter and the Chamber of Secrets published
  • 1999: Harry Potter and the Prisoner of Azkaban published; all three books are on the New York Times bestseller list.
  • 2000:  Harry Potter and the Goblet of Fire published, movie rights to first book sold; Rowling ascends to the “movie rich” class of authors.
  • 2003: Harry Potter, Book 5 completed.  Thanks to merchandising, Rowling is now richer than the Queen of England.

One year per book while Rowling’s financial condition ranged from struggling to sort-of rich.  Three years per book after Rowling became rich enough to buy castles, private jets, etc.

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