What Could Go Wrong?
From my cousin’s Facebook status (and who knows where before that):
Let me get this straight. Obama’s health care plan will be written by a committee whose chair says he doesn’t understand it, passed by a Congress that hasn’t read it and whose members will be exempt from it, signed by a president who smokes, funded by a treasury chief who did not pay his taxes, overseen by a surgeon general who is obese, and financed by a country that is broke. What could possibly go wrong?
It is sort of funny if you stop to think about it.
What Decade Did I Wake Up In?
I was traveling most of last week, so no time for blog posts, but I did try and keep up with the news. Hearing that President Obama had spent his valuable time at the United Nations talking about a world with no nuclear weapons just had me shaking my head.
I fully expected the President to govern from the center after he was elected, and to try to build consensus. Instead, it’s been huge amounts of spending (the same or worse than President Bush’s spending record), proposals for massive amounts of government bureaucracy and control, and liberal pipe dreams like singing kumbaya and eliminating nuclear weapons.
I was thinking about how best to express my opinion on this when the President of France did it for me. Here’s his quote…
“President Obama dreams of a world without weapons…but right in front of us two countries are doing the exact opposite. Iran since 2005 has flouted five security council resolutions. North Korea has been defying council resolutions since 1993.
“…what good has proposals for dialogue brought the international community? More uranium enrichment and declarations by the leaders of Iran to wipe a UN member state off the map.
“We live in the real world, not the virtual world. And the real world expects us to make decisions.”
As Jules Crittenden said, “It’s a sad state of affairs when a Frenchman mocks an American president and you have to go with the Frog.”
Photo Credit: AP
Steve Ballmer on “The New Normal”
More people are saying it: we shouldn’t expect a quick recovery back to the economy’s baseline when the recession started. Here’s Microsoft CEO Steve Ballmer on the subject:
In all the talk about the economy, one term that comes up more and more frequently is something called “the new normal.” I like this phrase because it speaks to the fact that economic reality has undergone a fundamental shift over the course of the past 12 months.
So what is the nature of this shift? After years of economic expansion fueled by unrealistic rates of consumption and unsustainable levels of private debt, the global economy has reset at a lower baseline level of activity. Today, people borrow less, save more, and spend with much greater caution.
Ballmer goes on to explain how technology can allow people to do more with less, and of course he’s right, but the underlying point is clear: organizations need to adjust their thinking and figure out how to thrive, not just survive, in the new normal.
The ones who do will be the big winners when things get back to the old normal many years down the road. Sierra College needs to be one of them.
Drawing Circles Around the New Economy
Way back in the late 90s and early 2000s, the “dot com” boom was fueled by companies posting big revenue growth, and as it turned out, much of that revenue turned out to be what was known as “round trip” — it wasn’t all that real.
For example, AOL would pay People Magazine $200K for exclusive online rights for photos of some 90s celebrity’s new baby, and then People Magazine would buy $200K worth of ads on AOL. By sheer coincidence, People Magazine and AOL were both owned by AOL Time Warner, so in effect, each subsidiary now had $200,000 in “revenue growth” that didn’t improve either company’s profits one dime.
Startup entrepreneur and angel investor Chris Dixon wrote a hilarious send-up of the Facebook economy and the Zynga games people are playing inside of Facebook. (Just because I have no free time, I’ve studiously avoided all of these, despite numerous opportunities to join someone’s mafia family or become a pirate or ninja.)
While the Facebook Economy by no means has the “fakeness” of round-trip revenue, it certainly makes for some good laughs and we will see how much real cash makes it into this ad-and-game-supported business model that is supposed to eventually pay for the social networking craze (as well as make some smart people very rich).
Roman Polanski
So film director Roman Polanski, who was convicted of statuatory rape with a thirteen year old girl he was photographing, has been an international fugitive in France for years. (Apparently, the French don’t see plying a young girl with champagne and pills, and sleeping with her, as a “real” crime.)
Apparently not a big fan of films he doesn’t make, Polanski never realized that international fugitives often get arrested when they fly to other countries. He was apprehended after landing in Zurich, Switzerland (because apparently protecting 13-year-olds is important there).
Is it just me, or does the press coverage seem to imply that because this statuatory rapist happens to be a celebrity and made a great film about the Holocaust, the US is being a little over zealous in letting convicted criminals who jump bail and flee to France know that we don’t just forget because they get standing ovations in abstentia in Hollywood and Cannes?
He ought to serve his sentence and then move back to France.
Lead the Charge or Not?
Another great article about the coming Internet-driven change in education. Sierra College definitely occupies the high-convenience end of the spectrum described in this article, but new technology is going to force dramatic change in educational delivery that will sweep over us as well.
Over an omelet and fruit, McNealy made it clear that possibilities in open-source education go far beyond textbooks. Before long, he claimed, the whole bloated, expensive, lecture-based higher education system will face the first challenge to its very existence: open-source, online higher education that costs a fraction of four years at Harvard—but is good enough for employers who want a college graduate. “Universities will be forced to decide what they are. You know, are they going to be football teams with libraries attached?” McNealy asked. “That’s what a lot of them are now.”
“The economics of traditional schooling are so out of whack that there is an opening for new players,” says Fred Fransen, executive director of the Center for Excellence in Higher Education, which helps donors more effectively give money to universities. From that perch, Fransen sees the typical university business model as prone to attack.
Here’s the big question: will we lead this shift and ensure that this new approach can sustain the level of educational excellence we strive for? Or we will go the route of today’s newspapers and ignore the Internet?
I hope we decide to take charge and help lead, but it’s going to take a long term focus beyond one or two years that we haven’t developed yet.
Bringing Manufacturing Back in America
Another BusinessWeek piece, this time about efforts to shift the tide of manufacturing plants back into the United States. As one of the foundational pillars of a vibrant economy, this effort is important, and is one of the reasons we need to fix R&D (as noted in my post of a few days ago).
Much of the blame lies with U.S. government policy. Nations in Asia and Europe aggressively court strategic high-tech industries with generous tax breaks, cash grants, cheap credit, low-cost utilities, and speedy regulatory approval. Governments prize such plants because they serve as broad economic catalysts. Besides skilled jobs, they spur parts suppliers, construction work, services, and the creation of big engineering forces that are the pillars of new industries and companies.
By comparison, the U.S. has been indifferent to manufacturing. Even when tax breaks are factored in, American corporate taxes are among the highest in the industrialized world, according to a World Bank study. Nor does the U.S. simply exempt certain industrial investments from taxes, as does much of Asia.
Most U.S. states do offer tax breaks and financial aid to lure big plants, hoping to recoup the cost with income taxes generated by new jobs. But state taxes pale beside federal levies, and state budgets for subsidies are limited. “The states are playing with peanuts, while other countries play with real money,” says Clyde V. Prestowitz Jr., president of the Economic Strategy Institute, a Washington think tank. Also, it can take two years to obtain all the environmental, health, and safety permits for a modern electronics plant—a lifetime in the tech world.
“The political guys in Washington don’t have their minds around the fact that the climate for manufacturing here is really hostile,” says Joseph R. Laia Jr., CEO of Santa Clara (Calif.) solar cell startup MiaSolé, which is trying to decide whether to build its first major plant in the U.S., Europe, or Asia.
Building a wall around the United States won’t work. We’re going to have to make our systems be competitive so we can be a magnet for the high-margin innovation and manufacturing that we used to lead the world in.
One effort close to home is the Sierra College Center for Applied Competitive Technology, where we’re working to help manufacturers with technical training and workforce development. These are great efforts, and I applaud them, but it’s going to take work at the state and federal level to make a dent in this problem — and we need to, quickly.
Shhh! Mom is Shopping…
Mom had grocery shopping to do tonight, so Dad and Spencer were left on our own. What are two boys to do, except to go get some ice cream? 
A Sign?
I received this e-mail from the California Department of Finance. I signed up months ago for the DOF monthly bulletin, but I don’t think I’ve ever received it.
Then this message arrived, and ironically, it speaks volumes about California’s tax revenue collections for the month of September. (Hint: there’s no good news to report.)
In other news, California’s independent tax commission is floating the idea of eliminating the state’s income and sales taxes and replacing them with a 4% Business Net Receipts Tax, which would in effect spread the cost of taxation out over a much wider populace.
Very little would be deductible from the tax, so in effect, most businesses would raise prices by about 4% to cover the cost.
What do you think of this style of tax? Would you trade income and sales taxes for it?
Inventing the Next Million Job Industry
BusinessWeek put America’s R&D problem on the cover a week ago, and they’re exactly right: one of the reasons we’re going to see a slow economic recovery is because we aren’t making the long-term R&D investments in basic scientific research that we used to.
Name an industry that can produce 1 million new, high-paying jobs over the next three years. You can’t, because there isn’t one. And that’s the problem.
America needs good jobs, soon. We need 6.7 million just to replace losses from the current recession, then an additional 10 million to keep up with population growth and to spark demand over the next decade. In the 1990s the U.S. economy created a net 22 million jobs, or 2.2 million a year. But from 2000 to the end of 2007, the rate plunged to 900,000 a year. The pipeline is dry because the U.S. business model is broken. Our growth engine has run out of a key fuel—basic research.
The U.S. infrastructure for scientific innovation has historically consisted of a loose public-private partnership. It included legendary institutions such as Bell Labs, RCA Labs, Xerox PARC, and the research operations of IBM, along with NASA, the Defense Advanced Research Projects Agency (DARPA), and others. In each of these organizations, programs with clear commercial potential were supported alongside pure research. There was ample corporate and venture capital funding for commercialization, so the labs were able to make enormous contributions to science, technology, and the economy—including the creation of millions of high-paying jobs.
