Month: August 2016

Once Again, It’s Called Money

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Once again, we have someone writing about a skills shortage, and suggesting that the solution is to sex it up:

Because hiring manager Jim McKeown was talking to an audience, he wasn’t sitting at a desk, his head in hands, but he may as well have been.

 “I don’t know where we are heading with manufacturing,” he said, clearly discouraged. “The last 10 years have been difficult.”

 McKeown wasn’t talking about sales, or business, or the supply chain, or the cost of raw materials – all important to such companies as Kingsbury Inc., which manufactures bearings in Philadelphia and Hatboro.

 For him, and about 30 area manufacturers attending Tuesday’s meeting of the Manufacturing Alliance of Bucks and Montgomery Counties, the issue is manpower.
There’s not enough of it – and what there is is not young.

 ………

 But, he said, manufacturers need to romance them – to show them how their work on a product makes a difference, maybe keeping a jetliner aloft or a heart beating.

 ………

 When interviewing millennials, make sure there is someone close to their age on the interviewing panel, suggested audience member John Trainor, staffing manager at Javan Engineering Inc. in Fort Washington

 ………

 For a quick fix, update a stodgy website so its text and photos tell a compelling story about the company, its products and people, said audience member Clara Console, a human-resources consultant.

 ………

 “Millennials want to see their future,” which does not include working on tools “their grandfathers might have used.”

(emphasis mine)

The word for this self absorbed delusional cluelessness is “bullsh%$”.

One only need look at history:  Until auto workers pay was essentially doubled in 1914, they had trouble recruiting and keeping workers:

At the time, workers could count on about $2.25 per day, for which they worked nine-hour shifts. It was pretty good money in those days, but the toll was too much for many to bear. Ford’s turnover rate was very high. In 1913, Ford hired more than 52,000 men to keep a workforce of only 14,000. New workers required a costly break-in period, making matters worse for the company. Also, some men simply walked away from the line to quit and look for a job elsewhere. Then the line stopped and production of cars halted. The increased cost and delayed production kept Ford from selling his cars at the low price he wanted. Drastic measures were necessary if he was to keep up this production.

Henry Ford had a 371% turn over rate.

He solved it with money.

If you cannot find skilled machinists, or tool makers, or bull semen collectors, Econ 101 gives you the answer: pay them more.

If the author of this article were a journalist, instead of a stenographer, they would have known that.

H/t Atrios.

And Clinton Throws the Democrats an Anvil

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So, now that the clusterfuck known as Donald is hanging around Republican’s neck like a millstone, Hillary Clinton is busy trying to remove that particular albatross: (welcome to the Matthew Saroff mixed metaphor festival)

Hillary Clinton is trying to entice Republican voters to ditch Donald Trump by portraying him as outside the mainstream of their party, putting her at odds with congressional Democrats who want to link the party’s House and Senate candidates to Trump’s controversial brand of politics.

In a speech on Aug. 25 that flayed the Republican nominee as an outlier channeling the views of white supremacists and courting the “fringe element” of his party, Clinton invoked the names of former President George W. Bush, House Speaker Paul Ryan, Arizona Senator John McCain and former Senator Bob Dole, the 1996 Republican nominee, to set up the contrast with Trump.

Republicans who’ve already voiced their opposition to Trump welcomed having the Democratic presidential nominee make their argument—that he doesn’t represent the party or mainstream conservatism.

“I’m glad that even Hillary Clinton recognizes that this isn’t our whole party,” Katie Packer, a former adviser to Mitt Romney’s 2012 campaign, wrote on Twitter. “This is strong,” Republican strategist Ana Navarro said of Clinton’s praise for past Republican nominees. “It’s easily the best speech of any candidate this year,” Tony Fratto, a former spokesman for Bush, tweeted.

It’s Bill all over again:  Throwing the party, and the party’s ideals over the cliff in the quest for personal gain.

I am so going to take a sh%$ in the ballot booth this year. (I am not speaking figuratively here.)

Told Ya!

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Last night, I said that Syria was a clusterf%$#, and that the Turkish invasion made it worse.

Tonight, we learn that the Turks gave no warning before launching their invasion:

When Turkish ground forces delivered a lightning strike on Islamic State fighters in Syria last week, the Pentagon hailed what it described as close U.S.-Turkish coordination.

But behind the scenes, cooperation between the North Atlantic Treaty Organization partners broke down at senior levels, according to officials on both sides. The two countries weren’t as aligned on the operation as their public statements indicated.

While the White House was preparing to consider a secret plan to have American special forces join the Turks, Ankara pulled the trigger on the mission unilaterally without giving officials in Washington advance warning. When clashes started between Turkish and Syrian Kurdish fighters—who are directly backed by U.S. Special Forces—the Pentagon issued unusually blunt calls for both to stand down.

U.S. officials say the Turks’ decision undercut a behind-the-scenes effort to clear rival Syrian Kurdish elements out of the conflict zone first and created a prickly, new challenge for the U.S. as two of its most important partners in the campaign fight each other instead of Islamic State. The breakdown in coordination adds a new layer of tensions between Washington and Ankara on top of those sparked by President Recep Tayyip Erdogan’s crackdown since the July coup attempt in Turkey.

Officials in Washington said they warned their Turkish military counterparts Monday that the U.S. won’t provide air support to Turkish forces pushing southward, deeper into Syrian territory. The U.S. will continue to provide air support to Turkish forces moving westward, into the border area threatened by Islamic State. Likewise, U.S. officials told the Kurds that U.S. air support hinged on their forces moving east of the Euphrates River and on advancing south toward Islamic State’s self-declared capital, Raqqa, to ensure they wouldn’t come into conflict with the Turks, according to the officials. Defense Secretary Ash Carter said Monday that the Kurdish forces had begun to move eastward, easing the friction between the two sides.

(emphasis mine)

Just lovely. More clusterf%$#s in the Levant.

You have Jihadis, a Turkish president who makes Charles deGaulle look humble trying to reinstate the Ottoman Caliphate, the antediluvian kleptocratic Persian Gulf monarchies, which are terrified at both the possibility of a successful secular Arab state and any non-Sunni regime, you have the Iranians trying to protect the Shia across the Arab world, the Russians trying to preserve an allied government, and the US both supporting and opposing pretty much all these elements.

All the while, the refugees created by this situation is destabilizing both the EU and NATO,

Like I said, a complete clusterf%$#.

They Can Find it In Their Couch

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Apple was just assessed a €13 billion ($14.4 B) fine tax delinquency for using Ireland as a tax haven. Essentially the European Commission ruled that Apple received tax breaks from Ireland that amounted to an illegal subsidy to the computer and phone maker:

Apple has warned that future investment by multinationals in Europe could be hit after it was ordered to pay a record-breaking €13bn (£11bn) in back taxes to Ireland.

The world’s largest company was presented with the huge bill after the European commission ruled that a sweetheart tax deal between Apple and the Irish tax authorities amounted to illegal state aid.

The commission said the deal allowed Apple to pay a maximum tax rate of just 1%. In 2014, the tech firm paid tax at just 0.005%. The usual rate of corporation tax in Ireland is 12.5%.

“Member states cannot give tax benefits to selected companies – this is illegal under EU state aid rules,” said the European competition commissioner, Margrethe Vestager, whose investigation of Apple’s complex tax dealings has taken three years.

Here is where it gets weird: Ireland, which stands to benefit to the tune of €2800 for every man, woman, and child in the country is fighting this, as is the US Treasury department, which one would expect to fight this sort of illegal tax scheme:

Vestager’s ruling prompted an angry response from Apple and from Ireland and is likely to spark a political row between the US and the EU. The US Treasury said the ruling threatened to damage “the important spirit of economic partnership between the US and the EU”.

………

The commission said Ireland’s tax arrangements with Apple between 1991 and 2015 had allowed the US company to attribute sales to a “head office” that only existed on paper and could not have generated such profits.

………

The Irish government, however, wants the ruling reversed because it wants to preserve its status as a low-tax base for overseas companies.

Ireland’s finance minister, Michael Noonan, said Dublin would appeal against the ruling. He said: “The decision leaves me with no choice but to seek cabinet approval to appeal. This is necessary to defend the integrity of our tax system, to provide tax certainty to business and to challenge the encroachment of EU state aid rules into the sovereign member state competence of taxation.”

This was money laundering, pure and simple.

And this won’t really hurt Apple:

Apple, which changed its tax arrangements with Ireland in 2015, should easily be able to pay the huge tax bill because it has a cash mountain of more than $230bn (£176bn) of cash and securities, mostly held outside the US. The tech group keeps the money outside the US because it would be forced to pay US tax charges if it repatriated the money.

It’s pocket change for them, but hopefully this will make further Irish tax shenanigans less common.

I would hope that we would see some more movement in this direction, but the Obama administration, in the person of Jacob Lew, seems determined to prove that only little people pay taxes.

So, We Are Bombing ISIS, and Supporting the Kurds, and a Group That Was Al Qaeda, Which Is Fighting the Kurds………

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And now our NATO “ally” Turkey has invades Syria to fight the Kurds and support ISIS and the group that was al Qaeda.

This is completely f%$#ed up:

In recent years, President Recep Tayyip Erdogan ordered plans drawn up for a Turkish military incursion into Syria. At every turn, though, military commanders, already fighting a war inside Turkey against Kurdish militants, pushed back.

And then last month a rebel faction of the military tried to stage a coup, and that changed everything.

In the aftermath of the coup, which failed but claimed more than 200 lives, Mr. Erdogan purged thousands of officers from the ranks, leaving the military seemingly depleted. It also provoked worry from Western allies, including the United States, that Turkey would either be unwilling or unable to be a reliable partner in the fight against the Islamic State.

Instead, the opposite happened on Wednesday, as Mr. Erdogan ordered Turkish tanks and special forces soldiers into Syria, under cover of American and Turkish warplanes, to assist Syrian rebels in seizing the city of Jarabulus, one of the last border strongholds of the Islamic State.

More Turkish tanks rumbled into northern Syria on Thursday to support rebels there, and the Turkish military seemed to be succeeding in clearing the border area of Islamic State militants, and preventing Kurdish militias from seizing more territory in the region — a primary goal of Turkey in the campaign.

The operation, coming so soon after the failed coup, has highlighted how Mr. Erdogan, even after the purge, secured more operational control of the military. It allowed him to undertake Turkey’s most ambitious role yet in the long Syrian civil war and to bolster the flagging fortunes of rebel groups, of which Turkey has been one of the most consistent supporters.

Other factors holding back Turkey’s ambitions in Syria were also recently resolved. A feud with Russia, which began last year after Turkey shot down a Russian warplane near the border, ended after Mr. Erdogan expressed regret for the episode. After Ankara’s relations with Moscow deteriorated, a Turkish incursion into Syria could have risked war with Russia, which has been bombing rebels in support of the Syrian government. And the United States, which had previously been opposed to Turkey’s intervention, agreed to support it.

Seriously.  This is f%$#ed up and sh%$.

We are supporting sides at war with each other and our allies are supporting different sides that are fighting each other.

The only foreign powers with a coherent policy are Iran and Russia, they both support Assad, which is truly scary.

When the Washington Post Editorial Board Condemns Something, It Is a Hearty Endorsement

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They just came out guns blazing in their condemnation of the NAACP’s opposition to charter schools.

Don’t worry. They are just proving that the NAACP is right.

From their support for the ill conceived adventures in Iraq and Libya, to their endorsement of privatizing Social Security, there is perhaps no group in the country that has proven to more reliably and spectacularly wrong.

Fred Hiatt and his merry band of useful idiots are the veritable Washington Generals (taste the irony there) of punditry, which says a lot.

Microflaccid Office Fail

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It turns out that one of the major data exchange formats for genetics is Microsoft Excel, and we have now discovered that the Redmond company’s flagship spreadsheet program has been autocorrecting the data into oblivion:

For many people, working with error-ridden spreadsheets is a way of life. This takes on added meaning for genomics researchers, who study the building blocks of life. It turns out that their work, too, is rife with dodgy spreadsheets.

A new paper has revealed the vast extent of errors in published genomics research, which is down to an unfortunate quirk of Microsoft Excel. A trio of scientists in Australia scanned 7,500 Excel files with gene lists accompanying 3,600 papers in 18 journals over a 10-year period. One-fifth of the files had easily identified errors, which is “quite striking and a little bit embarrassing,” says Mark Ziemann of the Baker IDI medical research institute in Melbourne, one of the paper’s co-authors.

What happened? By default, Excel and other popular spreadsheet applications convert some gene symbols to dates and numbers. For example, instead of writing out “Membrane-Associated Ring Finger (C3HC4) 1, E3 Ubiquitin Protein Ligase,” researchers have dubbed the gene MARCH1. Excel converts this into a date—03/01/2016, say—because that’s probably what the majority of spreadsheet users mean when they type it into a cell. Similarly, gene identifiers like “2310009E13” are converted to exponential numbers (2.31E+19). In both cases, the conversions strip out valuable information about the genes in question.

What on earth inspired all these researchers to use what can only be described as the greasy kid stuff of analysis and data storage for this purpose?

It’s nucking futz.

That’s Fronkensteen

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Gene Wilder has died at the age of 83:

Gene Wilder, who established himself as one of America’s foremost comic actors with his delightfully neurotic performances in three films directed by Mel Brooks; his eccentric star turn in the family classic “Willy Wonka and the Chocolate Factory”; and his winning chemistry with Richard Pryor in the box-office smash “Stir Crazy,” died on Sunday night at his home in Stamford, Conn. He was 83.

Eric Weissmann, who was Mr. Wilder’s lawyer for many years, confirmed the death. A nephew, Jordan Walker-Pearlman, said that the cause was complications of Alzheimer’s disease.

………

He made his movie debut in 1967 in Arthur Penn’s celebrated crime drama, “Bonnie and Clyde,” in which he was memorably hysterical as an undertaker kidnapped by the notorious Depression-era bank robbers played by Faye Dunaway and Warren Beatty. He was even more hysterical, and even more memorable, a year later in “The Producers,” Mr. Brooks’s first film and the basis of his later Broadway hit.

………

He was nominated for a Golden Globe for his performance as the wizardly title character in “Willy Wonka and the Chocolate Factory” (1971). The film was a box-office disappointment, partly because of parental concern that the moral of Roald Dahl’s story — that greedy, gluttonous children should not go unpunished — was too dark in the telling. But it went on to gain a devoted following, and Willy Wonka remains one of the roles with which Mr. Wilder is most closely identified.

His next role was more adult but equally strange: an otherwise normal doctor who falls in love with a sheep named Daisy in a segment of Woody Allen’s “Everything You Always Wanted to Know About Sex but Were Afraid to Ask,” in 1972. Two years later, he reunited with Mr. Brooks for perhaps the two best-known entries in either man’s filmography.

In “Blazing Saddles,” a raunchy, no-holds-barred spoof of Hollywood westerns, Mr. Wilder had the relatively quiet role of the Waco Kid, a boozy ex-gunfighter who helps an improbable black sheriff (Cleavon Little) save a town from railroad barons and venal politicians. The film’s once-daring humor may have lost some of its edge over the years, but Mr. Wilder’s next Brooks film, “Young Frankenstein,” has never grown old.

Mel Brooks movies were a part of my adolescence, and Mr. Wilder had a real skill in being both low key and hysterically funny at the same time.

I Don’t Vote for Internet Trolls

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Nor do I vote for those who knowingly and deliberately employ internet trolls :

When the Internet’s legions of Hillary hecklers steal away to chat rooms and Facebook pages to vent grievances about Clinton, express revulsion toward Clinton and launch attacks on Clinton, they now may find themselves in a surprising place – confronted by a multimillion dollar super PAC working with Clinton.

 Hillary Clinton’s well-heeled backers have opened a new frontier in digital campaigning, one that seems to have been inspired by some of the Internet’s worst instincts. Correct the Record, a super PAC coordinating with Clinton’s campaign, is spending some $1 million to find and confront  social media users who post unflattering messages about the Democratic front-runner.

 In effect, the effort aims to spend a large sum of money to increase the amount of trolling that already exists online.

………

 “It is meant to appear to be coming organically from people and their social media networks in a groundswell of activism, when in fact it is highly paid and highly tactical,” said Brian Donahue, chief executive of the consulting firm Craft Media/Digital.

 “That is what the Clinton campaign has always been about,” he said. “It runs the risk of being exactly what their opponents accuse them of being: a campaign that appears to be populist but is a smokescreen that is paid and brought to you by lifetime political operatives and high-level consultants.”

 ………

 The mere mention of Correct the Record makes some critics seethe. Super PACs are typically prohibited from working in tandem with candidates, but Correct the Record is doing just that by exploiting a loophole in campaign finance law that it says permits such coordination with digital campaigns.

(emphasis mine)

I’ve spent way too much of my time online dealing with these ratf%$#s, and Hillary Clinton is paying to make more of them.

I am so glad that I do not live in a swing state.

I Am So Hoping That Matt Taibbi Is Wrong

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Unfortunately, his analysis is pretty good, so his take that Kurt Shilling is the future of the modern conservative movement is rather alarming.

This is a guy who makes Donald Trump look measured and intelligent:

Curt Schilling, cauldron-bellied baseball star turned political activist, has apparently decided to run for Senate in Massachusetts. His goal will be ousting an icon of the liberal hegemony he proudly despises.

………

If you think the white-guy grievance movement will die after Donald Trump’s likely landslide defeat this November, think again. There will be plenty of filterless, self-pitying dunces to carry the torch in Trump’s place. Schilling is a leading candidate.

His story, maybe even more than Trump’s, is a parable on the comically comprehensive inability of some to recognize the advantages us white guys enjoy.

………

More recently, Schilling worked at ESPN, where he was paid $2.5 million a year to be an analyst.

He needed the money. Soon after his playing career ended, he blew his $50 million fortune on a failed video game venture, a fiasco that cost Rhode Island taxpayers $75 million.

After that, he fell back into the ESPN gig, which should have been easy money. For all his other qualities, Schilling is an excellent baseball analyst (although, humorously, his ex-teammate and rival Pedro Martinez is better).

But Curt couldn’t keep his job. As is usually the case with people who can’t hold on to gravy-train situations, the culprit was addiction. In Schilling’s case, it wasn’t booze or pills, but line-crossing political rants.

………

Having proven incapable of running a business, being a good steward of either his own money or the taxpayers’, or holding down the world’s cushiest job, Schilling naturally decided to get into politics.

Don’t bet against him winning a Senate seat in my home state of Massachusetts, either. His would be a victory for the cause of ignorance and tone-deafness perhaps even exceeding Trump’s capture of the Republican nomination.

………

Schilling should wake up every morning and compose a five-page letter to God thanking him for the American white-guy lifestyle jackpot. Instead, he’s consumed with bitterness over the raw deal he thinks people like him have gotten.

In this, he’s very much like Donald Trump, who spent much of his adult life partying with models and celebrities and somehow emerged in late middle age as the most obdurate complainer in American history.

………

This shouldn’t be too big an ask, since (as the likes of Trump and Schilling regularly prove) American white men still mostly run the world and live highly failure-resistant existences. Just take yes for an answer, enjoy the ride, and try to have the decency to not act like a victim; that’s all anyone asks.

But they can’t do it. The Schilling/Trump principle is never shutting up, particularly on topics about which they are ignorant, which is pretty much all of them. This is a movement, not limited to Trump, and it’s not going to end anytime soon. God help us.

If Taibbi is right, and I think that he is, this likely is an indicator of a society in precipitous decline into absurdity and obscurity.

Do You Want Some Cheese With That Whine?

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Ordinary investors who are paying attention understand that aggressively managed mutual funds almost always under perform the market over any significant time horizon.

These same investors also understand that you pay more in fees for this lackluster performance, and so they tend to invest in passive investments.

You cannot continue this, because it is worse than Communism:

The rise of passive asset management threatens to fundamentally undermine the entire system of capitalism and market mechanisms that facilitate an increase in the general welfare, according to analysts at research and brokerage firm Sanford C. Bernstein & Co., LLC.

In a note titled “The Silent Road to Serfdom: Why Passive Investing is Worse Than Marxism,” a team led by Head of Global Quantitative and European Equity Strategy Inigo Fraser-Jenkins, says that politicians and regulators need to be cognizant of the social case for active management in the investment industry.

“A supposedly capitalist economy where the only investment is passive is worse than either a centrally planned economy or an economy with active market led capital management,” they write.

High fees and subpar returns, coupled with the creation of a plethora of relatively inexpensive exchange-traded funds that track major equity indexes have helped fuel a massive shift in asset flows away from active management in favor of passive. While policymakers are quick to praise the benefits of these low-cost options for retail investors, Bernstein argues that this is a short-sighted view that doesn’t take into account the potential downsides involved with the increase in passively-managed assets.

………

The social function of active management, in a capitalist society, is that it seeks to direct capital to its most productive end, facilitating sustainable job creation and a rise in the aggregate standard of living. And rather than be guided by the Invisible Hand and profit motive, capital allocation under Marxism is conducted by an oh-so-visible hand aimed at producing use-values that satisfy each member of the society’s needs. Seen through this lens, passive management is somewhat tantamount to a nihilistic approach to capital allocation.

No.

The mutual fund is a relatively new phenomenon.

You are having a kitten over this because, to quote Blazing Saddles, “We’ve gotta protect our phony baloney jobs!”

I Am Not Sure What This Means

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ITT Educational Services, you’ve probably seen their ads for ITT Technical Institute, has been prohibited from enrolling new students using any federal aid

It sounds like a big deal, but the educational chain has been circling the drain for a while, so it’s not like the Depoartnebt if Education went after a major going concern.

It has been showing signs of financial distress for some time, and its accreditation has been problematic as well:

The federal Department of Education imposed strict new rules on Thursday on one of the nation’s largest for-profit education companies, ITT Educational Services, barring it from enrolling new students who use federal financial aid and ordering it to pay $153 million to the department within 30 days to cover student refunds if its schools close down.

John B. King Jr., the secretary of education, said the department took action to protect both ITT’s students and the taxpayers who are on the hook for losses when students default on their federal aid. “Looking at all of the risk factors, it’s clear that we need increased financial protection and that it simply would not be responsible or in the best interest of students to allow ITT to continue enrolling new students who rely on federal student aid funds,” Mr. King said in a statement.

 The action threatens the viability of the beleaguered company, which like most for-profit education entities relies heavily on government financial aid programs for students to fund its operations. As of June 30, according to a regulatory filing, ITT had only $78 million in cash on its balance sheet.

Dead School Walking.

ITT operates 137 campuses in 39 states, providing career-oriented programs to 43,000 students at ITT Technical Institute and Daniel Webster College locations. ITT was once a highflying stock, trading above $75 a share in 2012. On Thursday, its shares closed at $1.40.

Ouch.

The company has been under increased scrutiny by the Education Department since 2014 and has been accused by both federal and state regulators of misleading students about the quality of its programs and their employment potential upon graduation. The Consumer Financial Protection Bureau filed a lawsuit against ITT two years ago, accusing the college chain of predatory student lending.

 In addition to the enrollment restrictions imposed by the Education Department, ITT is also prohibited from awarding raises to employees, paying bonuses to its executives or paying special dividends without department approval. In recent years, ITT has not paid bonuses to its executives. Still, Kevin Modany, its chief executive, received total compensation of $1.4 million last year, the company’s proxy statement shows.

 The Education Department also required ITT to develop “teach-out” plans for current students, allowing them to finish their programs at other colleges if ITT shuts down.

 ITT, based in Carmel, Ind., must also inform its students that its accreditor, the Accrediting Council for Independent Colleges and Schools, has determined that the institution is not in compliance with its criteria. That determination was made this month. Earlier this year, ITT said it believed its schools were in compliance, but it also acknowledged that if the schools lost the accreditation, they would no longer have access to government loan programs.

 Those programs are the lifeblood of ITT and other for-profit education companies. Federal aid accounted for almost 70 percent of ITT’s $850 million in revenues last year, the Education Department said.

It would be nice if it happened when predatory for profit schools were not already in a death spiral.

Speaking of Defense Procurement Misconduct………

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The US Air Force has declared the F-35 A combat ready.

The Pentagon’s director of operational test and evaluation (DOT&E) has declared that it is not even close:

The Pentagon’s top weapons tester is again sounding the alarm over the F-35 Joint Strike Fighter, warning that significant deficiencies with the gun, challenges integrating the short-range AIM-9X missile and unresolved software bugs could delay fielding of the jet’s full capability.

 On the heels of the U.S. Air Force’s milestone decision to declare the F-35A ready for battle, the Pentagon’s director of operational test and evaluation (DOT&E) is raising new concerns about Lockheed Martin’s fifth-generation fighter. In an internal memo to Defense Department leadership Aug. 9, the DOT&E warned the jet still has a long way to go before full combat capability and may run out of funds to fix significant performance problems on time if late discoveries delay the end of the program’s development phase.

 ………

 In response to Aviation Week queries, the DOT&E reiterated concerns that the program’s official start date for IOT&E is “not realistic,” repeating the agency’s public assessment that the F-35 will not be ready to begin the test period until mid-2018 at the soonest—assuming the JPO can provide production-representative test aircraft by then.

Late, over budget, and not combat ready.

The internal fun does not shoot straight, there are cracks in the carrier variant’s wings, external carriage of ordinance is at least 2 years away.

The Pentagon procurement process at its finest.

This is a Fascinating Concept, But Only if it is Applied Rigorously

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The suggestion that defense contractors post performance bonds is intriguing, but, much like the rest of the military industrial complex, the question is that the people who would enforce the terms of this bond would not allow themselves to be swayed by the political and economic powers of the defense contractors:

In Washington, D.C., “military reform” usually means “acquisition reform.” There is a lot of talk about it on Capitol Hill and in the Pentagon. Enough think-tank papers have been written on the subject to clear whole forests. But of the myriad options out there, one has escaped notice.

Performance bonds — money put up by a contractor as insurance to the buyer to make sure the job is done on time and to specifications — are already required for federal building projects under the Miller Act. Prime construction contractors have to furnish a surety to the government to ensure their work is completed properly and to guarantee all subcontractors get paid should the firm go out of business.

These bonds have been used with some success in overseas defense procurement contracts. Using performance bonds is one way the government protects its interests without having to resort to judicial proceedings. In fact, the Congressional Research Service recently noted that performance bond money can be used to “offset the costs of contract completion, which can include delays and finding a new contractor.”

The same idea could potentially be applied to a weapons acquisition project to protect the government’s — and the taxpayer’s — interests. But it has so far been overlooked during the sometimes desperate search for solutions to the Pentagon’s dysfunctional buying process.

One key selling point for this idea is that provisions for using performance bonds for Defense Department acquisition already exist. As is usually the case, improving discipline in weapons spending doesn’t require new rules but using the rules that already exist to better effect.

That last paragraph reveals the weakness of the concept.

The tools are already there, but the Pentagon is unwilling to use them.

If you were to decertify the 4 services, and move procurement to an agency independent of the Pentagon, a structure similar to Sweden’s FMV, you might have a chance of making it work, but this would require a catastrophe to generate sufficient impetus to do this.

The Origins of Money

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I’m sure that you all “know” how money started.

Societies were bartering, and it became too unwieldy, and so money was created as a proxy for value that reduced the friction in the transactions.

It’s an elegant theory. The only problem is that no one has ever found an example of this ever.

No examples in archeology, none in mythology, none.

Also, how does one develop a sufficient velocity to commerce to justify the creation of money?

You need money to create the levels of commerce that justify its creation.

It’s a chicken egg thing.

An alternate theory, and one that has some actual evidence behind it, is that money grew out of a system of debts and fines that were driven by the expansion of government.

This origin story actually works the way that human minds do:

Most of us have an idea of how money came to be. It goes something like this: People wanted to exchange goods for other goods, but it was difficult to coordinate. So they started exchanging goods for money, and money for goods. This tells us that money is a medium of exchange. It’s a nice and simple story. The problem is that it may not be true. We may be understanding money entirely wrong.

The above story assumes that first there was a market, and then people introduced money to make the market work better. But some people find this hard to believe. Those who subscribe to the Chartalist school [the belief that money originated with the states attempt to influence their own economy] of thought give a different history. Before money was used in markets, they say, it was used in primitive criminal justice systems. Money started as—and still is—is a record of debt. It is a way to keep track of what one person owes another. There’s anthropological evidence to back up this view. Work by Innes, and Wray suggest that the origins of money are more like this:

In a pre-market, feudal society, there was usually a system to maintain justice in the community. If someone committed a crime, the authority, let’s call him the king, would decide that the criminal owed a fine to the victim. The fine could be a cow, a sheep, three chickens, depending on the crime. Until that cow was brought forward, the criminal was indebted to the victim. The king would record the criminal’s outstanding debt.

 This system changed over time. Rather than paying fines to the victim, criminals were ordered to pay fines to the king. This way, resources were being moved to the king, who could coordinate their use for the benefit of the community as a whole. This was useful for the King, and for the development of the society. But the amount of resources coming from a criminal here and there was not impressive. The system had to be expanded to draw more resources to the kingdom.

 To expand the system, the king created debt-records of his own. You can think of them as pieces of papers that say King-Owes-You. Next, he went to his citizens and demanded they give him the resources he wanted. If a citizen gave their cow to the king, the king would give the citizen some of his King-Owes-You papers. Now, a cow seems more useful than a piece of paper, so it seems silly that a citizen would agree to this. But the king had thought of a solution. To make sure everyone would want his King-Owes-You papers, he created a use for them.

 He proclaimed that every so often, all citizens had to come forward to the kingdom. Each citizen would be in big trouble, unless they could provide little pieces of paper that showed the king still owed them. In that case, the king would let the citizen go, and not owe them any longer. The citizen would be free to go off and acquire more King-Owes-You papers, to make sure he would be safe the next time, too. This way, all the citizens needed King-Owes-You papers to stay out of trouble. That made King-Owes-You papers widely accepted, and consequently, also a useful medium of exchange. This lead to the rise of markets.

Not only does this better match the way humanity works, the creation of money is the other is a Kumbaya moment that really hasn’t ever occurred in the history of finance.

The author goes on to explain how we actually have relatively recent history to explain this:  The Spanish conquest of the Americas, where the locals saw the need for money only when their oppressors started demanding taxes.

Linkage

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To go along with the Ikea link:

This Explains Why College Costs So Much

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Here is a little sample of the corruption and self dealing that is increasingly at the heart of elite colleges.

The attached link is a series of vignettes, but read the penultimate paragraph, and then read the rest:

So, what we’ve got here is an NYU President handing a New York apartment, meant for faculty, to his son, and what looks rather like powerful faculty members feathering their own nests with cheap housing; we’ve got a Baylor President not wanting to cross a powerful and wealthy football team, even to the extent of failing to handle a rape scandal; and at Penn State we’ve got a President who’s a member of the “innovation cult,” when it’s not at all clear this will benefit the student body as a whole. Have any of these institutions learned from these experiences? No. Are these college Presidents personally responsible for corruption at their universities — for converting a public institution to serve private purposes? Sexton and Start, yes. For Barron, the jury is still out.

Go read.