Coyote Blog

I have written about this before, but critics of all things capitalism are usually particularly critical of branding, arguing that building brands has no value except to somehow beguile customers into overpaying for things or buying things they do not need.  Now, I can be sympathetic to this when I see folks who have paid a fortune for certain fashion items (*cough* Louis Vuitton bags *cough*), but in generally branding actually has real consumer value.  One important value of branding is predictability.  McDonald's was traditionally a classic example of this -- walk into any McDonald's in the world and you will be pretty sure what will be on the menu and what it will taste like.

I wrote about this before when travelling in Europe.  I know that I like some orange juice brands and don't like others.  I know for sure I like Tropicana and so I buy that because I am confident I will get something I will like.  In Europe, I had no idea what to buy -- I might pay for something I would enjoy, but I might also find myself having paid for something I really did not like.

I was reading a travel blog and thought that this quote really represented the epitome of why brands matter

I’ve been to Hyatts all around the world within every brand of the chain’s portfolio, and I don’t recall ever staying at a property which was miscategorized. There’s no mistaking a Park Hyatt for a Hyatt Regency, or a Grand Hyatt for an Unbound Collection. When I pick a property within the Hyatt portfolio, my expectations are met and the experience is standardized around the world. Hyatt Houses and Hyatt Places are almost identical properties regardless of where in the world they pop up.

I cannot say the same for the expansive Marriott portfolio. Just last month I stayed at the JW Marriott Copacabana in Rio, and nothing about that property represented the other JW’s I’ve visited. Certainly not all generic Marriott hotels are created equally, and I’ve found a very large variation in property conditions, common spaces, room sizes and other factors at Marriotts.

For example, let’s look at Courtyard properties. Within the last year I’ve stayed at the Courtyard in Durham, North Carolina, which resembled an updated Super 8. Then, not two months later, I visited the Courtyard in LaGrange, Georgia, which was more akin to a full Marriott hotel branded property. Compare those two with the Courtyard Seoul Times Square, which has an executive lounge with a rooftop patio, and I don’t know what to expect when booking a Marriott property, even within a single brand.

Back on Inauguration Day I wrote:

Wow, it sure does seem useful to have a single figurehead into which the public can pour all the sorts of adulation and voyeurism that they seem to crave.  That way, the people get folks who can look great at parties and make heart-felt speeches and be charismatic and set fashion trends and sound empathetic and even scold us on minor things.  All without giving up an ounce of liberty.  The problem in the US is we use the Presidency today to fulfill this societal need, but in the process can't help but imbue the office with more and more arbitrary power.  Let's split the two roles.

Last week, Andrew Heaton made a similar proposal in the Federalist, but explained the logic better than I did:

We threw the baby out with the bathwater when we kicked the monarchy out of America, and we ought to bring it back. To be clear, I do not mean the sort of hereditary tyrants who rule North Korea, Saudi Arabia, or the New York Yankees. Rather, I’d like for us to get one of those cute, ornamental throne warmers the Europeans trot around to cut ribbons at events.

In America we’ve combined power and reverence in the office of the presidency, but legal authority and veneration compliment each other about as well as Scotch and back pain medication. It’s safer to ingest them separately....

In America our head of government and head of state both problematically reside in the president. We can see that unholy union in full force during the spasm of pageantry which is the State of the Union address. President Jefferson rightly viewed the whole affair as pompous and monarchical, and sent Congress a letter instead.

Unfortunately the nimbus of deference surrounding the presidency has swelled with time. In 1956 a political scientist named Clinton Rossiter published “The American Presidency,” a tome sopping wet with sycophantic notions about the Oval Office. He described the commander-in-chief as “a combination of scoutmaster, Delphic oracle, hero of the silver screen, and father of the multitudes.”

Gag me. The president is the top bureaucrat, and there’s nothing more American than despising bureaucrats. The government is basically a giant Human Resources Department with tanks, and the president is in charge of it.

My only response to this is to quote from just about every comment section on the internet:  "first!"

Here is what you are paying your government to spend time on:

The age-old question has finally been answered: No, Snuggies are not clothing.

Earlier this month, a federal court ruled that Snuggies, the As Seen on TV 'blanket with sleeves', should be classified as blankets, and live as a separate entity from robes or priestly vestments.

The ruling followed the Justice Department's argument that Snuggies are apparel and not blankets, so they should be 'subjected to higher duties than blankets', reports Bloomberg.

Judge Mark Barnett of the Court of International Trade said during the trial that the Customs and Border Protection was in the wrong to classify Snuggies as apparel. Barnett cited the Snuggies' use of marketing as a blanket, specifically referencing its packaging with the phrase, "The Blanket With Sleeves!".

The judge added that those who purchase Snuggies may likely be "in the types of situations one might use a blanket; for example, while seated or reclining on a couch or bed, or outside cheering a sports team."

In Barnett's opinion, the addition of sleeves 'was not enough' to have the Snuggie be considered a piece of clothing. He added the use of sleeves allowed the Snuggie "to remain in place and keep the user warm while allowing the user to engage in certain activities requiring the use of their hands."

More so, Judge Barnett rejected the idea a Snuggie may also be similar in fashion to priestly vestments or scholastic robes which also use wide sleeves and a loose fit around the body. In his ruling, the judge argued that robes open from the front, and priestly vestments and scholastic robes have no opening on either side, so the role of a Snuggie as a garment is invalid.

In 1973, when Ford was rolling out such losers as the Pinto and the Mustang II, would the cars have been any better if the Ford designers had, say, a budget twice as large?  Or would the same people have continued to roll out the same bad cars, just more expensively, until competition from Japan and Europe forced American car makers to get their act together?

If you have not been to a Sears store lately, and you have lots of company.  If you do not shop at Sears, think about why.  Now, imagine that Sears were to double the number of employees in their local store.  Would that change your mind and suddenly send you into the store to shop?  No?

There are times when everything about an organization is broken -- its management, its culture, its strategy.  These organizations may have perfectly good people in them -- I have no doubt that the folks at Ford in the 1970's were capable people, as are the employees at my local Sears store.   I call all these factors "organizational DNA".  This is from years ago about a corporate example, but the same is true of any organization:

All these management factors, from the managers themselves to process to history to culture could better be called the corporate DNA.  And DNA is very hard to change.  Walmart may be freaking brilliant at what they do, but demand that they change tomorrow to an upscale retailer marketing fashion products to teenage girls, and I don't think they would ever get there.  ...

Corporate DNA acts as a value multiplier.  The best corporate DNA has a multiplier greater than one, meaning that it increases the value of the people and physical assets in the corporation.  When I was at a company called Emerson Electric (an industrial conglomerate, not the consumer electronics guys) they were famous in the business world for having a corporate DNA that added value to certain types of industrial companies through cost reduction and intelligent investment.  Emerson's management, though, was always aware of the limits of their DNA, and paid careful attention to where their DNA would have a multiplier effect and where it would not.  Every company that has ever grown rapidly has had a DNA that provided a multiplier greater than one... for a while.

But things change.  Sometimes that change is slow, like a creeping climate change, or sometimes it is rapid, like the dinosaur-killing comet.  DNA that was robust no longer matches what the market needs, or some other entity with better DNA comes along and out-competes you.  When this happens, when a corporation becomes senescent, when its DNA is out of date, then its multiplier slips below one.  The corporation is killing the value of its assets.  Smart people are made stupid by a bad organization and systems and culture.  In the case of GM, hordes of brilliant engineers teamed with highly-skilled production workers and modern robotic manufacturing plants are turning out cars no one wants, at prices no one wants to pay.

I would argue that public schools in many parts of the country are in this situation.  Any organization can become senescent with value-killing DNA, but this process happens much more rapidly when there is no competition, as has been the case for public schools which have enjoyed a virtual monopoly enforced by the government (you can go to a competing school but you still have to pay for the government school you are not using).

If I am right, then the last thing you would expect to help is simply pouring more money into the same management, the same culture, the same organizational DNA.  But that is exactly what we have done.  That has been our lead strategy for 35 years, and still remains the preferred strategy of the Left.  Via Mark Perry:

Despite this history, President Obama's strategy was to throw even more money at the schools, and again it did not work:

One of the Obama administration’s signature efforts in education, which pumped billions of federal dollars into overhauling the nation’s worst schools, failed to produce meaningful results, according to a federal analysis.

Test scores, graduation rates and college enrollment were no different in schools that received money through the School Improvement Grants program — the largest federal investment ever targeted to failing schools — than in schools that did not.

The Education Department published the findings on the website of its research division on Wednesday, hours before President Obama’s political appointees walked out the door.

“We’re talking about millions of kids who are assigned to these failing schools, and we just spent several billion dollars promising them things were going to get better,” said Andy Smarick, a resident fellow at the American Enterprise Institute who has long been skeptical that the Obama administration’s strategy would work. “Think of what all that money could have been spent on instead.”

One will hear that criticism of public schools in unfair because they have all these great teachers in them.  Examples will be cited.   I say:  "Exactly!"  That is why change is needed.  Public schools are hiring good people and putting them in an organization and system where they deliver poor results.  Let's liberate this talent.

By the way, one of the misconceptions about school choice is that it necessarily means the end of public schools.  I find this an unlikely outcome, at least in most areas.  Competition from Japan meant that Ford lost some of its customers to Toyota, but it also meant that Ford became a lot better.

I have been watching the Crown as well as the new PBS Victoria series, and it got me to thinking.  Wow, it sure does seem useful to have a single figurehead into which the public can pour all the sorts of adulation and voyeurism that they seem to crave.  That way, the people get folks who can look great at parties and make heart-felt speeches and be charismatic and set fashion trends and sound empathetic and even scold us on minor things.  All without giving up an ounce of liberty.  The problem in the US is we use the Presidency today to fulfill this societal need, but in the process can't help but imbue the office with more and more arbitrary power.  Let's split the two roles.

Update:  Don Boudreaux writes:

A Trump presidency comes along with awful risks for Americans.  Yet one very real silver-lining is that Trump’s over-the-top buffoonery and manic barking like a dog at every little thing that goes bump in his sight, along with his chronic inability even to appear to be thoughtful and philosophical and reflective and aware that he is not the center of the universe, might – just might – scrub off some of the ridiculous luster that has built up on on the U.S. Presidency over the course of the past 90 or so years.  Let us hope.

He also links a good article from Kevin Williamson on the cult of the Presidency

OK, normally I would tell you that the first rule of Coyote Blog is to never take fashion advice from Coyote.  But this is an exception.  Ignore it at your peril.

Being happily married, I have no use for random female adoration, but for those in search thereof, I can tell you from personal experience that this sweater is a total chick magnet.  The last couple years, I have never gone out in it without several women taking me aside and telling me what a great sweater this is.  Via amazon

I have always thought that government policy to encourage home ownership was  counter-productive, even beyond its role in creating bubbles.  My sense is that those who advocate for such programs are engaging in what I call cargo cult economics.

Once upon a time, government officials decided it would help them keep their jobs if they could claim they had expanded the middle class.  Unfortunately, none of them really understood economics or even the historical factors that led to the emergence of the middle class in the first place.  But they did know two things:  Middle class people tended to own their own homes, and they sent their kids to college.

So in true cargo cult fashion, they decided to increase the middle class by promoting these markers of being middle class [without any consideration of which direction the arrow of causation ran].  They threw the Federal government strongly behind promoting home ownership and college education.  A large part of this effort entailed offering easy debt financing for housing and education.

I tend to be a lone voice in the wilderness on this (even those who oppose government programs for libertarian reasons often tend to fetishize home ownership).  But Ike Brannon at Alt-M seems to agree:

The pro-home-building folks aver that homeownership fosters civic involvement and helps people become more tied to their community, which encourages other behavior beneficial for the economy.  And for a good proportion of homeowners the majority of their net wealth is in their home, so it can be an important source of savings.

But another way to look at it is that correlation is not causation:  The reason that homeowners are more civic-minded and involved in the community is because such people are much more likely to have the wherewithal to save enough to make a downpayment on a house.  Ed Glaeser, the renowned housing economist from Harvard, puts little stock in the notion that homeownership has significant positive societal externalities.

What's more, there's some evidence that high homeownership rates have downsides as well.  In the last four decades the predilection for moving has slowed significantly:  only half as many people moved across state or county lines in any year this decade as was the case in the 1950s, for instance.  This is problematic because it means that our economy is worse at matching up workers with where the available jobs are.  The lingering unemployment in many rust-belt states would be less if some of their unemployed could be persuaded to move to another community where there are jobs.  There has been a decades-long move of people from the midwest to the Sunbelt, of course, but the data suggest there's ample room for more.  This hasn't happened in part because people are tied down by the homes that they own and are reluctant to sell while they are underwater.  That people are unable to ignore sunk costs isn't economically rational, of course, but it nevertheless governs how many people consider whether to move.

From Eugenics and Economics in the Progressive Era by Thomas C. Leonard (link via Don Boudreaux, I think).

It was a scholarly fashion, circa 1890, to declare the U.S. frontier “closed” and to sound a Malthusian alarm about excess American population growth. But the professional economists who wrote on immigration increasingly emphasized not the quantity of immigrants, but their quality. “If we could leave out of account the question of race and eugenics,” Irving Fisher (1921, pp. 226–227) said in his presidential address to the Eugenics Research Association, “I should, as an economist, be inclined to the view that unrestricted immigration . . . is economically advantageous to the country as a whole . . . .” But, cautioned Fisher, “the core of the problem of immigration is . . . one of race and eugenics,” the problem of the Anglo-Saxon racial stock being overwhelmed by racially inferior “defectives, delinquents and dependents.”

Fear and dislike of immigrants certainly were not new in the Progressive Era. But leading professional economists were among the first to provide scientific respectability for immigration restriction on racial grounds.2 They justified racebased immigration restriction as a remedy for “race suicide,” a Progressive Era term for the process by which racially superior stock (“natives”) is outbred by a more prolific, but racially inferior stock (immigrants).

Note that the authors of the time were not using race as we do -- by "other races" whose immigration into the US was going to destroy us, they meant Southern Italy, Russia, Austria, Hungary, and the rest of Eastern Europe.   Fifty years earlier, they would have meant the Irish.   All of who we would today consider part of the backbone of America.  Why do we have to take these ideas seriously today when they have been wrong so consistently in the past?

We are already seeing articles bemoaning the strong dollar as somehow a threat to the American economy.  Don't believe it.  Maintaining a weak dollar is yet another crony government program that benefits a tiny minority of admittedly vocal and politically connected Americans.

First, a bit of an aside.  It is amazing to me that the US dollar can be strong at all right now, given the actions of the Fed.  With its near infinite QE and zero-interest rate programs, one would expect the dollar to be weak (Oversimplifying, driving down the returns on financial assets reduces the overseas demand for them, thus reducing the demand for dollars, driving down the price of dollars).  But it turns out that the rest of the world (esp. Japan and the EU) are actually working twice as hard to trash their own currencies (they are actually heading into negative interest rate territory, not just zero) and thus on a relative basis, the dollar is stronger.

Companies that export or compete a lot with manufacturers in other countries hate the strong dollar.  It makes their domestically produced products more expensive vis a vis products manufactured in other countries.  Many of these companies have powerful political voices, and some have large unions with even more powerful political voices.  They lobby for a weaker dollar.  Part of that lobbying is often to portray other countries as nefariously "manipulating" their currencies to hurt the US.

What these countries that are weakening their own currencies are actually doing is trashing the prosperity of the vast majority of their citizens to protect the earnings of a few politically powerful producers.  Japan is a great example.  Japan is a country in which consumers have been stomped on from decades in order to reduce the price of the country's exports.  Japanese consumers pay far more for everything than we do, all so their exporters can lower their prices in the US.

This is the same in China.  We frequently host visiting Chinese students.  You know what every one of these kids do on their trip to the US?  They bring an empty suitcase that they fill up with electronic and fashion goods they buy here, many of which were actually manufactured in China  (I have never, ever have hosted a Chinese student that did not buy at least one Chinese-manufactured iPhone here).

So, we must oppose this currency "manipulation" that impoverishes Japanese, Chinese, and European citizens in favor of giving much lower prices to Americans -- Why?

We should celebrate the strong dollar.  It makes every one of us richer.  Not just when we buy Chinese electronics, but even when we buy American-made products that now must be less expensive to compete with foreign products and which benefit from cheaper inputs in their own manufacturing.

Years and years ago I wrote a hypothetical post about Chinese interventions to maintain a trade surplus form a Chinese consumer's perspective in a post from our sister publication Panda Blog.  I think it holds up really well.  It said in part:

It is important to note that each and every one of these government interventions subsidizes US citizens and consumers at the expense of Chinese citizens and consumers.  A low yuan makes Chinese products cheap for Americans but makes imports relatively dear for Chinese.  So-called "dumping" represents an even clearer direct subsidy of American consumers over their Chinese counterparts.  And limiting foreign exchange re-investments to low-yield government bonds has acted as a direct subsidy of American taxpayers and the American government, saddling China with extraordinarily low yields on our nearly $1 trillion in foreign exchange.   Every single step China takes to promote exports is in effect a subsidy of American consumers by Chinese citizens.

In my review of my Droid Turbo, I mentioned in passing that I was frustrated by how slippery a lot of cell phones were.  I was in the Verizon store the other day killing time while they fixed something on my kids' phone, so I tried holding a bunch.

The slipperiest by far were the HTC One M8 and the LG G3.  Both, probably not coincidentally, get high marks for being attractive due to their metal or faux metal backs, but the same backs make them like a wet bar of soap to hold.  You can put a no slip case on them of course, but then if you are going to put them in a case, why buy a phone that is promoted in large part on its looks?

My Droid Turbo is OK, with no slip surface around the edges but a very slick back, at least the nylon back one I have.

The Galaxy S5 is better than average.  Its back gets a lot of grief for being ugly, but it will not slide around in the hand and is comfortable to hold.

Until this week, the no-slip champion for me was the Moto X with the bamboo case (it is real wood veneer, not some plastic fake thing).  It looks good to my eye and it is very grippy in the hand.

But there is a new champion.  I tried the Moto X with the new football leather backing (again, real football leather).  This thing is not going to slide out of your hand (unless maybe if you are Jay Cutler).  The looks are ... different, but I could get used to it.  Phones for me are a convenience item, not a fashion item.  The Moto X's only problems are a small battery and a camera that is a bit weak.  Which is why I bought the Droid Turbo, which is a very similar phone but with a bigger battery.  Just wish they had all the cool Moto Maker options the Moto X has.

Last time we were in Italy, my wife and I vowed that we would try to learn some Italian before we return (she has some high school French and I have a fair amount of Spanish).   Well, we never did much about it.  I will confess that despite being often skeptical of the paradox of choice, it may actually explain my lack of action.  I could not make up my mind between the various courses.

Then along came my son, who has decided with his roommate that they want to do a semester abroad in Italy next year.  I am not sure why he chose Italy -- I can only assume it had something to do with my euphoric descriptions of finding myself in Milan on Vogue fashion night and being surrounded by Italian models.  You know that language course ad with the guy picking up the Italian course so he can have his one chance at the Italian supermodel?  It's a funny ad, but I fear it may actually hit kind of close to home in my household.

Anyway, my son pushed me over the top to buy a course.  The conflicting online reviews can leave your head spinning, but the general conclusions I came to were:

• Rosetta Stone is all marketing, but not the best course
• Pimsleur got the most positive ratings.

So I went with the Pimsleur course.  It is PC-based, which fits how my family works.  It allows four installations, so each family member got one.  And it allows its lessons to be downloaded to mp3 files so you can listen in the car or on your iPod (though you lose out on the other parts of the lesson which are non-audio).

So far, 20 days into the thing, I have been happy.  I have never thought of myself as good at languages but I have decided to trust the process.  So far, I feel like I am learning and retaining a lot.  My son reports that he thinks it is better than Rosetta Stone, which his roommate is using.

The weird part for me, who learned Spanish from a grammar nazi, is to work with verbs without first learning all the conjugation rules.   In fact, the course seems to work this way -- you learn examples and phrases first, then over time go back and learn the grammar behind what you are doing.  It seems to work, for a few reasons.  One is that a lot of the verbs you need early on to say basic things (is, go, like) have non-standard conjugations anyway, so memorizing them is what you would have had to do with any approach.  A second reason is that it is a hell of a lot more fun to say useful things than to spend what I remember to be years farting around with conjugation and use rules for the subjunctive.  After all, I am not trying to write an academic paper in Italian, I am trying to enjoy my tourist experience.  The third reason this is working for me is that I do remember a lot of my old Spanish verb conjugations, and it turns out Italian conjugates (at least in the present tense) very similarly to Spanish.

Postscript:  To the early joke about learning Italian to meet women, I will say we were all laughing through about the first 7 lessons of Pimsleur.  If you had designed a course solely to pick up people of the opposite sex, I am not sure one bit of the first few lessons would have been different.  Seriously, we were repeating phases like "do you want to have a drink at your place or mine?"

Almost exactly seven years ago (amazing how long I have been blogging) I wrote an extended piece about how hard it is to change corporate DNA.  I was writing about GM but also used Wal-Mart as an example.  Part of this piece read:

A corporation has physical plant (like factories) and workers of various skill levels who have productive potential.  These physical and human assets are overlaid with what we generally shortcut as "management" but which includes not just the actual humans currently managing the company but the organization approach, the culture, the management processes, its systems, the traditions, its contracts, its unions, the intellectual property, etc. etc.  In fact, by calling all this summed together "management", we falsely create the impression that it can easily be changed out, by firing the overpaid bums and getting new smarter guys.  This is not the case - Just ask Ross Perot.  You could fire the top 20 guys at GM and replace them all with the consensus all-brilliant team and I still am not sure they could fix it.

All these management factors, from the managers themselves to process to history to culture could better be called the corporate DNA*.  And DNA is very hard to change.  Walmart may be freaking brilliant at what they do, but demand that they change tomorrow to an upscale retailer marketing fashion products to teenage girls, and I don't think they would ever get there.  Its just too much change in the DNA.  Yeah, you could hire some ex Merry-go-round** executives, but you still have a culture aimed at big box low prices, a logistics system and infrastructure aimed at doing same, absolutely no history or knowledge of fashion, etc. etc.  I would bet you any amount of money I could get to the GAP faster starting from scratch than starting from Walmart.  For example, many folks (like me) greatly prefer Target over Walmart because Target is a slightly nicer, more relaxing place to shop.  And even this small difference may ultimately confound Walmart.  Even this very incremental need to add some aesthetics to their experience may overtax their DNA.

Corporate DNA acts as a value multiplier.  The best corporate DNA has a multiplier greater than one, meaning that it increases the value of the people and physical assets in the corporation.  When I was at a company called Emerson Electric (an industrial conglomerate, not the consumer electronics guys) they were famous in the business world for having a corporate DNA that added value to certain types of industrial companies through cost reduction and intelligent investment.  Emerson's management, though, was always aware of the limits of their DNA, and paid careful attention to where their DNA would have a multiplier effect and where it would not.  Every company that has ever grown rapidly has had a DNA that provided a multiplier greater than one... for a while.

But things change.  Sometimes that change is slow, like a creeping climate change, or sometimes it is rapid, like the dinosaur-killing comet.  DNA that was robust no longer matches what the market needs, or some other entity with better DNA comes along and out-competes you.  When this happens, when a corporation becomes senescent, when its DNA is out of date, then its multiplier slips below one.  The corporation is killing the value of its assets.  Smart people are made stupid by a bad organization and systems and culture.  In the case of GM, hordes of brilliant engineers teamed with highly-skilled production workers and modern robotic manufacturing plants are turning out cars no one wants, at prices no one wants to pay.

Changing your DNA is tough.  It is sometimes possible, with the right managers and a crisis mentality, to evolve DNA over a period of 20-30 years.  One could argue that GE did this, avoiding becoming an old-industry dinosaur.  GM has had a 30 year window (dating from the mid-seventies oil price rise and influx of imported cars) to make a change, and it has not been enough.  GM's DNA was programmed to make big, ugly (IMO) cars, and that is what it has continued to do.  If its leaders were not able or willing to change its DNA over the last 30 years, no one, no matter how brilliant, is going to do it in the next 2-3.

Megan McArdle makes some very similar points as I about Wal-Mart and how hard it is to change corporate DNA.  I recommend you read the whole thing.

A new fashion and style blog for women over 40 featured my wife in their December profile.  Definitely the better half.

This Newsweek article reviews the amazing coincidence that so many Obama DOE loans and subsidies benefited heavy-duty Obama campaign supporters.  The author seems surprised:

...these were highly competitive grant and loan programs—not usually a hallmark of cronyism. Often fewer than 10 percent of applicants were deemed worthy.

Nevertheless, a large proportion of the winners were companies with Obama-campaign connections. Indeed, at least 10 members of Obama’s finance committee and more than a dozen of his campaign bundlers were big winners in getting your money.

Several blogs have pointed out this February editorial in the USA Today by Jacob Lew, head of Obama's OMB.  In February he told us, no, in true Obama Administration fashion, he lectured us like little kids that:

Social Security benefits are entirely self-financing. They are paid for with payroll taxes collected from workers and their employers throughout their careers. These taxes are placed in a trust fund dedicated to paying benefits owed to current and future beneficiaries.

When more taxes are collected than are needed to pay benefits, funds are converted to Treasury bonds — backed with the full faith and credit of the U.S. government — and are held in reserve for when revenue collected is not enough to pay the benefits due. We have just as much obligation to pay back those bonds with interest as we do to any other bondholders. The trust fund is the backbone of an important compact: that a lifetime of work will ensure dignity in retirement.

According to the most recent report of the independent Social Security Trustees, the trust fund is currently in surplus and growing. Even though Social Security began collecting less in taxes than it paid in benefits in 2010, the trust fund will continue to accrue interest and grow until 2025, and will have adequate resources to pay full benefits for the next 26 years.

As many have pointed out this week, if this is the case, why does the debt limit even affect the ability to pay or not pay Social Security to grandma?  Because Lew was spouting complete BS.  Social Security has generated surpluses in the past, but these have been spent and replaced with IOU's.  And we are finding out right now how much those IOU's are worth - zero.

Spent the weekend playing Spacechem while watching the NCAA basketball tournament.  Though nominally about tearing apart and building molecules, its really a simulation of assembly line design, since you molecular engineering happens mechanically (ie carry atom over here, bond it in reactor, move it over there, etc).  There is a kind of built in re-playability, as most of the puzzles are not that hard to solve in some fashion, but can be very hard to solve efficiently.  For example, the level "No Ordinary Headache" will allow the player up to three reactors, but a one reactor solution is possible.  Took me forever to finally get it. This one is not mine but is not too different from my solution.

To that end, the game provides a distribution curve of other player's solutions based on three stats (number of process cylces required, number of reactors required, number of components required).  Even if you get the puzzle right, you may see you solution was way less efficient than other folks, driving one to try again.  I like this dynamic - it is sort of like duplicate bridge, where one is not judged by just winning the hand, but by how well one scored with the hand vs. other players playing the same hand.

Here is another positive review at South Bend Seven.  And just search "spacechem" in youtube to find zillions of videos of various game solutions, it will give you a feel for the game.

This is probably the first ever inside reference to my novel. The funny part is that when I read TJIC's post, I thought "hmm, Preston Marsh, where have I heard that name?"  LOL.  By the way, the business idea Travis has is actually intriguing

Restaurants get napkins and linens as a service "“ every day, they trade huge bags of dirty whites for clean whites. They are in the business of cooking food and hiring wait staff, not in the business of knowing how to bleach things (or in the business of picking out linens that can stand up to bleach).

So what does clothing as a service entail? It could include cleaning, sizing, rotating wardrobes as fashions change, etc.

It removes some hassles, and bundles responsibilities in the place where there are economies of scale "“ people in the fashion industry can and will know more about sizing, cleaning, coordinating, etc. than consumers.

I and others have thoughts on the model in the comments.

By the way, for those who have not read my book, Preston Marsh is an entrepreneur who has made money in a series of sortof odd business models.  Years ago I used to get bored at parties (actually, I still get bored at parties but I no longer use this entertainment technique) and make up occupations for myself.  I remember convincing one woman who had recent evidence that I could not ski well that I was on the Olympic Ski Jumping Team  ("You don't have to turn in ski jumping!")

Anyway, all the business models in the books are ones I made up for myself on the fly at parties.  One involves building fountains in malls and then recouping the investment by harvesting coins from them.  Another, which is central to the book, is a sort of guerrilla marketing startup which does some lifestyle consulting with teens but makes its money placing products in the hands of the coolest, trendsetting teens at high schools (a model that has since been emulated by a couple of real-life companies).

By the way, the book is still on sale at Amazon and available on the Kindle for download.  Just search "BMOC."

A Marginal Revolution reader asks:

How would you pick a tattoo, if you decided you were going to get one? How would you pick something that your future self is most likely to be glad to have? A favorite piece of art? Follow Leeson's lead and get an economics-related tattoo? Names of family members are off-limits, as are answers like "get a small dot in my armpit that nobody would see."

I could argue that it is impossible to make a political, religious, or personal statement one is 100% sure will still be relevant 30 years hence.  Here is the solution I teach to my kids -- never, ever make a fashion you can't remove (e.g. piercing OK, tattoos not OK).   I have lived through leisure suits and grunge, wide ties and narrow, short skirts and long, tie dye and soft pastels.  Think of tattooing as having a leisure suit permanently bonded to your body.

Some will say this is evading the question, so I will actually provide an answer.  The only thing I might have conceivably chosen to ink my body with at 20 that I could probably still live with today at 48 would be something having to do with my undergrad college (Princeton).   Call it the George Shultz rule.

Megan McArdle writes:

There was a great deal of back-and-forth in the left half of the blogosphere this weekend over employers who use FICO scores as a way of weeding out job candidates.  In a sort of peculiarly American fashion, our nation seems to have decided that one's credit history is a good proxy for one's worth as a human being, and thus should be used to determine eligibility for everything from employment to excellent rates on car insurance.

I have no trouble believing that the FICO score is often a proxy for what some researchers call conscientiousness; I've certainly had roommates and others around me who had terrible credit because, well, they didn't bother to pay their bills, and regarded rent as something optional that could be turned in if no more exciting commercial opportunities immediately presented themselves.

That said, it's going to be at best a weak proxy.  It's also a proxy for things that, as a society, we may not want employers to consider, like a past history of depression.  And for things that have nothing to do with your job performance, like a car accident that left you with huge medical bills and no job, or a sudden job loss.  Looking at our national savings rate, lots and lots of Americans live very close to the edge of their paychecks; they can't all be terrible employees.

I have never really even considered asking employees for their FICO score, in part because all small business people hate these scores as, even with perfect credit records, our scores tend to be smaller than people with similar income and history due to the constant credit checks made on us by vendors and other partners.

That being said, as someone who has 500 service employees working for me, I understand the insatiable desire for information on employee reliability and conscientiousness.  A large number of our employees we hire who interview well tend to get released within 60 days of their hire.  I can't tell you how many people who seem totally normal and friendly turn out to be raving maniacs in stressful customer contact situations.

The elephant in the room that neither McArdle or folks like Kevin Drum mention is that businesses are starved for reliability information on potential employees.  It used to be the best source was to check job references.  Nowadays, though, very few employers will give a honest job reference, or will provide any information at all.  I know I am guilty of that -- my company does not allow any manager to give out performance data on past employees.  I only needed to be sued once over somehow interfering with someone's living by giving honest information about that employee's reliability to change my behavior.

I understand that this is exactly what the Left is shooting for - an environment where the competent have no advantage over the incompetent.  If employers are resorting to FICO scores, it just demonstrates how all the other reasonable avenues of obtaining information have been closed to them.

The only saving grace in this country is that employment is still mostly at-will, meaning we can fire our hiring mistakes and move on.  Of course the Left wants a European-style system where it is impossible to fire anyone too -- this is the system the post office has, and one can see how well it works out.  If they are victorious on this final front, I will be forced into a game of Russian Roulette, where I can't find out anything about those I hire, I can't fire the incompetent people I do hire, and I am infinitely legally liable for any mistakes any of these employees make.

From Boston.com. via a reader:

Thousands of consumers are gaming Massachusetts' 2006 health insurance law by buying insurance when they need to cover pricey medical care, such as fertility treatments and knee surgery, and then swiftly dropping coverage, a practice that insurance executives say is driving up costs for other people and small businesses.

In 2009 alone, 936 people signed up for coverage with Blue Cross and Blue Shield of Massachusetts for three months or less and ran up claims of more than $1,000 per month while in the plan. Their medical spending while insured was more than four times the average for consumers who buy coverage on their own and retain it in a normal fashion, according to data the state's largest private insurer provided the Globe.

The typical monthly premium for these short-term members was $400, but their average claims exceeded $2,200 per month. The previous year, the company's data show it had even more high-spending, short-term members. Over those two years, the figures suggest the price tag ran into the millions.

Other insurers could not produce such detailed information for short-term customers but said they have witnessed a similar pattern. And, they said, the phenomenon is likely to be repeated on a grander scale when the new national health care law begins requiring most people to have insurance in 2014, unless federal regulators craft regulations to avoid the pitfall.

I would argue that these numbers for system gamers would be even higher save for a residual sense of honor in the population that resists such gaming, a sense of honor that will tend to be eroded over time by these incentives.  This is a theme I have discussed before, in answer to the question of why socialized nations seem to do well at first.  My answer to that question was that residual work ethic and values tend to mitigate, initially, against the horrible incentives inherent in socialism, but that these values erode when people see themselves effectively punished for their values and work ethic.

Via TJIC, I meet this guy on every long distance trip.

Apparently, there are some people who: A) Cannot judge their own speed except in relation to the vehicle directly in front of them, and B) Cannot hold a steady pedal for love nor money. So there we'll be, in the agrarian hinterlands of Indiana or Kentucky; me rolling along in the left lane and passing the occasional car on the right when I notice Mr. Wobbly Throttle a'creepin' up in my mirrors. When he gets close enough I'll signal right and let him pass, which he does, after a fashion, but sort of bogs down once he's just off the port bow. We'll roll in formation like that, me starting to fume, until we come upon a car in the right lane that forces me to turn off the cruise and tuck in behind Wobbly.

As we pass the slower traffic, Mr. Wobbly Throttle, now bereft of vehicles to overtake, starts to slow down. He notices me in his mirror and sometimes darts right, sometimes slows down further and gets passed on the right (traffic gods, forgive me!) I'll hit "Resume" on the cruise control in the left lane, but a mile down the road, sure as God made little green apples, here comes Wobbly again, as though drawn to a magnet in my back bumper. This dance can go on for over a hundred miles, and is pretty well guaranteed to have me chewing the steering wheel in frustration in only a fraction of that distance. For Vishnu's sake, man, pick a speed and hold it!

Via Valley Fever:

There is an unwanted phenomenon happening in California, and Arizona is being pegged to clean up the mess: Chihuahuas -- lots of them.

California is seeing an influx of chihuahuas popping up at animal shelters and it's becoming too much for the state to handle.

Rather than take these unwanted pooches out back, and deal with them Old Yeller style, California shelters are pawning these rat-dogs off on the Grand Canyon State....

Shelter officials are associating the rise in the abandoned pooches to celebutards like Paris Hilton, who popularized the use of animals as fashion accessories. When the reality of having to care for the dogs kicked in, it proved to be too much for a lot of wanna-be heiresses and they dropped the quivering canines off at animal shelters.

According to California shelter officials, more than 100 of the dogs have been driven to other states, Arizona included, for shelters there to deal with because in most states, abandoned chihuahuas are hard to come by.

Instead of stopping human beings from seeking a better life in the United States, maybe the Minutemen can be convinced to fight a real border threat.

I was a consultant for McKinsey & Co. for about 5 years in Dallas.  This was NOT me:

Through conversations with several staffers who have endured the McKinsey interviews, we've assembled a portrait of the typical consultant. First, they're quite young! Despite the early perception that they'd look like pasty lawyers wielding big-wheeled suitcases, they're apparently a plucky, charming bunch.

"They're kind of hot," said one source.

Crisp shirts, no jackets, freshly pressed pants"”not unlike the fresh-faced boys who posed for the Harvard fashion shoot in the Styles pages of The Times this past weekend. They jot notes down on legal pads and in marble notebooks.

Though I will say, much to my kids' ever-lasting amusement, McKinsey did send me to a sort of executive charm school when I started managing teams, because I was such a hopeless geek.  Actually, my main problem was that I was adult-ADD, and couldn't sit still in a meeting.  It's fine roaming around the room in hyperactive fashion when its your own company (ala Steve Jobs) but it is not OK when you are a 25-year-old consultant to the CEO of a Fortune 50 company.

My personal style didn't work any better in any of the other companies I worked for.  Aerospace was probably the biggest mis-match.  There is just no place for a hyperactive marketing guy in a business that takes 10 years to close a sale.  So I now run my own company, and there is no one above me to complain.

My wife has more of her patterns she has designed for knitted handbags for sale, here or at her own site here.

Well, blogging has been light again as I a) watched the incredibly unlikely prospect of the Arizona Cardinals hosting a NFC Championship game become a reality and b) built yet another new web site, this one for my wife.  My wife has for several years had a business selling designer handbags and other fashion accessories, for which she has won a number of awards.  This week she is kicking off a new business selling knitted handbag patterns.  You can guess who was named, in absentia I might add, the new business's CTO and webmaster.

Anyway, not wishing to add another platform to my stable of web site solutions, I built it using wordpress using a template that may be suspiciously familiar to Coyote Blog readers.  No appologies here, because I spent way too much time making the transaction engine work (it turns out that digital fulfillment is actually harder, rather than easier, to implement than regular mail and ship).   Since this is basically a hobby of mine rather than a real job, getting one template to work flawlessly using css is my limit.

Anyway, check her out if you are interested (or even if you are not, she will be thrilled to see some traffic).

PS-  before I get comments, I know there is something wrong with the image manipulation system I used as the site is hanging up serving up resized images.  Working on it.