Tuesday, November 27, 2012

Wal-Mart and the deadly Bangladesh fire

According to a wire story in The Maui News, Wal-Mart is "distancing" itself from the fire in which more than 100 employees of one of its suppliers were killed.

A statement claimed Tazreen was no longer authorized to sew for Wal-Mart but had done so via a subcontractor "in direct violation of our policies."


One of the things I carried away with me from 40-plus years of business reporting was an anecdote about the Wal-Mart store in Ames, Iowa. A college professor of business writing a magazine article about Wal-Mart (whose founder got his start peddling shirts in Iowa) asked the manager of the Ames Wal-Mart to turn on the exterior lights of his store shortly before sunset in order to provide the magazine's photographer with a showier background.

The manager said he couldn't turn his own lights off or on. "That's controlled from Bentonville," he said.

Do I believe Wal-Mart did not know who was sewing its shirts in Bangladesh? Not in one million years.

UPDATE, Nov. 28

The fire has emboldened lots of commenters to talk about Wal-Mart. One of the more incisive comments comes from the Washington Post's Harold Meyerson, who delves into Wal-Mart's culture of deniability:

But the very essence of the Wal-Mart system is to employ thousands upon thousands of workers through contractors and subcontractors and sub-subcontractors, who are compelled by Wal-Mart’s market power and its demand for low prices to cut corners and skimp on safety. And because Wal-Mart isn’t the employer of record for these workers, the company can disavow responsibility for their conditions of work.

This system isn’t reserved just for workers in faraway lands: Tens of thousands of American workers labor under similar arrangements. Many are employed at little more than the minimum wage in the massive warehouses in the inland exurbs of Los Angeles, where Wal-Mart’s imports from Asia are trucked from the city’s harbor to be sorted and packaged and put on the trucks and trains that take them to Wal-Mart stores for a thousand miles around.

The warehouses are run by logistics companies with which Wal-Mart contracts, and most of the workers are employed by some of the 200-plus temporary employment companies that have sprung up in the area — even though many of the workers have worked in the same warehouses for close to a decade. Last year, the California Department of Industrial Relations, suspecting that many of these workers were being cheated, charged one logistics company that runs a warehouse for Wal-Mart with failing to provide its employees with pay stubs and other information on their pay rates. Wal-Mart itself was not cited. That’s the beauty of its chain of deniability.
The whole thing is worth reading.

What should bankers be paid?

Nothing, if you ask me, based on recent performance.

Nasim Taleb, the "black swan" guy, suggested to a conference in England, not more than the regulators who regulate them. Well, I'm not sure most of the regulators earned their pay recently, either.

Never happen, of course. Bankers who lost billions were hired off by other banks, in some cases with seven-figure signing bonuses. Makes you wonder about all those rightwingers who claim that only a free market can usefully allocate scarce resources.

There's no resource scarcer in the 21st century than a competent banker. It appears that the Bank of England scarfed up the only one, a Canadian who didn't even want the job.

Canada, by the way, refutes the notion that bank regulation is a bad idea. Worked great for the Canadians, both the banks and the citizenry.

I have not made up my mind about Taleb. I began reading his book "Black Swan" but -- unusually for me -- didn't finish it. Either I am too slow to understand him or what he wrote barely made sense. The "black swan" metaphor, in any event, was poorly chosen:

If you lmow the argument -- even if you don't know the book, the argument in some form has entered public consciousness as a meme -- Taleb scorned Europeans who said all swans were white -- true enough for Europe -- but turned out to be mistaken when white explorers got to Australia where there were black swans.

So, nu?

It is one thing to say, all the swans we know are white, another to say all swans have to be white.

Quite another to say, only a market can efficiently allocate resources. We already have evidence to show that markets frequently fail to efficiently allocate resources; and also that planned economies sometimes do a good job of it.

For Taleb's metaphor to work, you would have to have someone from Europe looking at a black Australian swan and say, "There can never be any black swans."

So far as I know, nobody was ever that stupid. On the other hand, we have numerous people who have seen markets at work and go on to claim that nothing can be better.

Sunday, November 25, 2012

The real reason Romney lost

It's obvious, but in all the postmortems, I haven't seen anyone finger it.

First, let's review the bidding:

Romney himself: Obama bought the election by gifting non-whites with gummint goodies.

John Podhoretz (editor of Commentary): Democrats had no policy to offer but organized the greatest get-out-the-vote operation in history. (Why the targets voted for a no-policy candidate is not explained in this version.)

Franklin Graham and other religious bigots: It was the judgment of God for America's embrace of homosexuality.

Glenn Beck: Wake up call from God (or something).

Bob Vander Plaats (antigay head of Iowa Family Leader): Obama would have lost if Republicans had run a really far right candidate.

You may have seen a few others.

The real reason can almost (but not quite) be set out as  a syllogism:

1. Almost all voters report to American business management; and if they don't, they used to or have a spouse who does; or at the very least have friends who do and who talk about their experience.

2. After stripping off the decorations, Romney's fundamental offer was to run government like American managers run businesses.

3. Given their personal experience, most Americans have no desire to have something as important as government run like a business.

Wednesday, November 21, 2012

Stuff it, just stuff it

Is there anything more tiresome than a vegetarian using Thanksgiving to recruit? Stuff it, vegans, just stuff it. I'm eating turkey.

Why vote counting is slow

The Guardian, still partly an English newspaper although it is morphing into the first bicoastal daily, marvels at how complicated voting is in America, compared to England, where you get a ballot with one choice: your MP. Here, by contrast:

British general elections can, believe it or not, still be as simple as walking into a voting booth, marking X on a piece of paper and putting it in the ballot box.
But voters entering a US polling station can be handed a telephone directory of candidates for president, Senate, House, governor, state senate and legislature, mayor and some combination of parish, county, ward, municipality, comptroller, supervisor, commissioner, judge and board of education, even if not the dog catcher of urban myth.
On top of the voting for people, there's the voting for things, the propositions and state constitutional amendments to deal with – and it's not all fun and gay marriage. There's the municipal bond proposals, the sports stadium sales tax, and many more. California's voters had to mull over 11 propositions on election day, ranging from the death penalty and genetically modified food labelling all the way to state senate redistricting. It takes time to complete – hence the long queues outside – and even longer to count after the event.
I've never had the opportunity to vote for a dog catcher, but in Polk County, Iowa, we got to vote for the fence viewer. At the Des Moines Regiser one year, we plotted to get one of the reporters elected, but after much talk about it over beer at the Office Lounge (named so reporters could call their wives and tell them, honestly, "Honey, I have to stay late at the office") we never quite got our act together.

Tuesday, November 20, 2012

The worst-managed company ever?

If asked to name the worst management ever, I suppose many people would think first of Enron, but those guys weren't even trying to be honest.

Among managements at least notionally attempting to play by the rules, you could make strong cases for General Motors or AOL, or possibly Long Term Capital Management; and if you take the long view, there is no question but that the various iterations of Citibank have made more and bigger bad management decisions than any other corporation; but for sustained and obtuse mistakes in the 21st century, there's nobody with a record quite like Hewlett-Packard's.

Tech companies fall behind the curve often enough, usually by giving up on innovation, like Kodak. But for an on-the-ball company like H-P, starting from a dominant position and avowedly pursuing strategies of innovation and new market penetration, nobody has put together such a long string of such big mistakes.

The $8.8 billion writedown of Anthology that H-P announced today works out to a loss of something on the order of $18,000 per minute  and, presumably, counting.   

With Anthology, H-P thought it was getting in on a rising wave. With Compaq, it got in on a receding wave, evidently on the theory that being the biggest player in a marginal business would have some sort of financial advantage. As Nils Pratley in the Guardian points out today, H-P then decided to get out of the PC business anyhow, after overpaying for EDS and Palm:

Remember the context here. Hewlett-Packard was a former computer titan fallen on hard times. Too many acquisitions, such as EDS and Palm, had turned sour and new-boy chief executive Léo Apotheker was desperate to find an instant fix. He decided to get out of making personal computers and buy Autonomy at an almighty takeover premium of 64%.

Accusations of perfidy are flying back and forth, although the bottom line apears to be inescapable: Whichever side was in the right, morally, one side committed a mighty error. It would be unsurprising, given history, if this turned out to be H-P and its Big Four accounting firm. Where have we heard that story before?

Of all the obvious things that RtO has stated over the years, I think the most original observation has been that the business community's shibboleth about the overriding necessity of creating confidence is nonsense. If we learned anything in 2008 (and the Republicans certainly did not), it is that confidence is like strychnine to business management. Give me a worried CEO any time.

Pratley wonders if "Hewlett-Packard's investors might ask whether their management was too driven by the desire to do a deal, any deal, that offered the prospect of a fresh start."

I would rather think that investors should ask, "Can't we get performance this bad cheaper than by paying executives 500 times what ordinary workers get?" Do I hear 50? 25? 10?

At any rate, let us hear no more about running our government on businesslike lines.

Also, see here for a British view of the crisis, rather more broadminded than what the American business press managed to produce.

Monday, November 19, 2012

Scott DesJarlais watch

It's now been 5 days since sworn testimony by Tea Party Republican family values congressman Scott DesJarlais revealed that he is a serial abortionist, liar and flouter of medical ethics. DesJarlais has not been heard from.

But some Tennessee Republicans see an opportunity to investigate Barack Obama.

You read that right. Not since the voters of my home county, Hamilton, re-elected Bookie Turner sheriff while he was serving a term in his own jail have Tennessee voters displayed more loyalty.

Times Free Press reporter Chris Carroll had this today:

Other Republicans on the state executive committee, all of whom said they consider themselves anti-abortion, said issues from 12 years ago -- even the congressman's sworn testimony -- aren't relevant now.
Tim Rudd, a Realtor who resides in Murfreesboro, said the media should "get off DesJarlais" and investigate President Barack Obama's background, education and "what makes him tick."
"We're talking about a personal issue in his former marriage," Rudd said of DesJarlais. "That did not form the man he is today."
I love Tennessee politics.

Sunday, November 18, 2012

The silence of the elephants

Ordinarily, the doings in Tennessee's 4th Congressional District would not be grist for RtO's mill, although for me personally the soap opera that is east Tennessee politics never loses its charm. The exposure of Tea Party, anti-abortion congressman Scott DesJarlais as a serial abortionist, liar, philanderer, malpracticing doctor etc. (all by his own sworn testimony) raises the local issue to one of more general interest.

If you had been found yesterday under a cabbage leaf, you might suppose that the party of values and family would be all over DesJarlais to, at least, get out of Congress and hide. But, no.

To rightwing Republicans, family values are flexible things. It's like the old joke we told on the Baptists (I'm sure you've heard it), that the reason they opposed premarital sex was that it might lead to dancing,

I mean, we already knew from Noot Gingrich's success that Republicans are down with adultery. According to the Chattanooga Times Free Press, not one elected Republican in the state could be found to condemn DesJarlais.

But it's not mere silence. Phil Roe, a rightwing congressman, doesn't see what the fuss is about:

"I don't know that it reflects badly," Roe told the Washington, D.C., newspaper Roll Call. "I think it's an individual decision that someone's made."
He sounds like a Democrat, doesn't he?

Thursday, November 15, 2012

More top-notch local reporting

I always wanted to report for my hometown paper, but they never gave me the time of day. Here's some first-rate work from Chattanooga.
A decade before calling himself “a consistent supporter of pro-life values,” Tennessee physician and Republican U.S. Rep. Scott DesJarlais supported his ex-wife’s decision to get two abortions before their marriage, according to the congressman’s sworn testimony during his divorce trial.
It gets worse from there, a lot worse.

Typical Tea Party phony.  The voters returned him in a landslide, although the bare bones of his conduct was revealed well in advance of the election. It was not, however, nailed down until the Times Free Press finally got the transcript of his sworn deposition.

The Washington Post notes:

DesJarlais easily won reelection last week despite reports that he had sex with patients and urged one of them to get an abortion. The congressman hasn’t directly responded to questions on the matter since then.
The Christians of east Tennessee have always been like that. Hamilton County was dry when I was a boy. My grandfather used to say it was because the Baptist ministers and the bootleggers allied to keep it that way.

Wednesday, November 14, 2012

Our 'no billboards' laws

On my own, I wouldn't spend time on Craigslist, and especially not on Rants and Raves, which seems to be where people go when they're too crazy for an AOL chat room.

But for my other blog (the one I get paid to write), I have to monitor Rants and Raves in case someone says something about the business. And there I found this. Possibly it's a good thing Hawaii doesn't allow billboards:

Dunno where this was.

My other blog is http://kamaainaloan.com/wordpress. Almost entirely different content than RtO.

Local reporting at its best

The Tampa Tribune smothers the local angles of the Petreus story, calling on local knowledge and -- evidently -- lots of footwork.

This story is way weirder than the national press has made it, and that was weird enough. TV miniseries coming up?

This is the kind of local newspaper reporting that Americans are losing as national and international digital methods push daily newspapers off the cliff. Sad thing, most of them don't have any idea of what they are missing.

Nut grafs:

" 'The court fully expects that Ms. Khawam's pattern of misrepresentations about virtually everything, including the most important aspects of her life, will continue indefinitely.'
"She was more than $3 million in debt, records show. She had blown through four jobs in five years and sued a former employer for sex harassment. She had had three failed engagements, left her new husband and moved in with her sister where she quickly began hobnobbing with military brass and others in Tampa's elite circles.
"What moved the top government brass to go to bat for a woman the court said suffers from 'severe' psychological deficits? The answer can be found in Jill Kelley's social climb in the last decade, since she and her surgeon husband moved south from Philadelphia . . . ."

Hostesses with the mostest, sounds like. It makes me wonder about the reliability of the officer evaluations those generals write. RtO has never been a Petreus fan, as documented mostly in book reviews. If he and General Allen couldn't spot the kook factor in the Khawam twins, their judgment should  be seriously questioned.

Kha-WHAM! indeed.

Tuesday, November 13, 2012

Why we call them gun nuts

NEW YORK (CNNMoney) -- Gun sales are up in the wake of Barack Obama's re-election on Tuesday, driven by fears of tighter regulations under a Democratic president, especially for firearms that might be classified as assault weapons.
And furthermore:

Bill Anderson, owner of the gun shop Call-To-Arms in Denton, Texas, said the big spike will probably hit full force this weekend. He said that gun enthusiasts are assuming that Obama will be more aggressive about gun regulations in his second term.
"Being as this is his second and last term, he might do it, because he's not interested in getting re-elected," said Anderson.
Obama had largely avoided the issue of gun control during his first term, despite some high-profile mass murders by mentally unstable gunmen . . .

Plus, now he'll send the UN army in blue helmets to take those guns. Also, Bill Anderson didn't get the Fox memo about how Obama is going to run for a third term despite the Constitution.

A co-ed military

So, maybe this boy-girl army wasn't such a good idea after all.

Monday, November 5, 2012

A final look at Intrade

I wish I had started following Intrade sooner, but as a non-believer in markets, I was not motivated.

What I've watched over the past couple weeks has not changed my views, but I am interested in the very high volatility of the presidential race market.

In a few days, Romney has gone as high as 45% and as low as 31%. Right now, Obama leads at 67.6% -- that is, you pay $6.76 for a chance to win $10.00.

If my brain had been more nimble (and if I didn't live in Hawaii where I was asleep during the crucial swings), I could have built a Dutch book -- a bookie term for a series of bets where you finish in the money no matter what.-- by arbitraging the differences.

I am not repining. I bought Obamas at considerably under $6.76 and could cash out now for several hundred dollars in profit.

I won't, though, because if you are persuaded by Nate Silver at 538 blog, the odds of losing are one in six. My bets pay off at better than 3 to 2.

You don't get many chances to wager on those terms. I think you have to put money on Obama even if you want Romney to win. And I wonder, how many Intraders bet against their political preferences on the theory that if your man doesn't get in, at least you'll have a payday. And if you lose money, at least your man won.


I should have checked 538, but I thought all the polls Silver was going to get were included in his Monday morning line.

Not so. He now has Romney's odds less than one in ten. Intrade is still paying almost 3 for 2. If you believe Silver, you are never going to see a more compelling wager.

Sunday, November 4, 2012

A revealing factoid

Until a few weeks ago, the Romney campaign web page didn't have a pointer to "African-Americans for Romney." At least, according to one of the best campaign stories I've seen all year, in the Guardian.

A frustrated Tampa Republican leader says:

"Romney did a really poor job with minorities. That was my greatest disappointment. You'd go on to his website and he'd have a column for outreach. You clicked on that and there was Catholics for Romney, Democrats for Romney, fishermen for Romney. You never saw blacks or African Americans for Romney until four weeks ago," Wood said.

"I think it's the big frigging smart guys at the top who think they know how to run a campaign, and they probably just wrote off the African American vote. Romney did a really poor job with the African Americans. They're in many ways like Hispanics. They favour traditional marriage, they go to church regularly, they're suffering worse from unemployment."
Very revealing. Romney is cleaning up the Bubba vote. That comes with a cost.

The cost must have seemed small to a candidate who thought that 47% of voters are freeloaders. No points for guessing whether he and his rich country club buddies figured black Americans fell into the 47% or the 53%.


Friday, November 2, 2012

A campaign high point

Every campaign deserves a memorable hula, and kumu hula Patrick Makuakane delivers with the “Birth Certificate Hula.” If you follow the link, you’ll hear him say he was born at Kapiolani maternity just a couple days apart from Barack Obama.
The line “drunk in a taxi” is good.
Performance before enthusiastic audience here: hula
Patrick Makuakane
Photo by Kathleen Bender

Thursday, November 1, 2012

They don't need no steenking numbers

From the New York Times, a story about Senate Republicans who hate numbers. I have not read the report, but what RtO has said elsewhere makes it obvious that the conclusion is reasonable, even obvious.

The conclusion being that raising tax rates on the rich does not unduly impinge on productive investment. Not mentioned, at least in the Times report, is the threat of the rich that if the country tries to tax them, they'll just move their money offshore.

I don't doubt it. All the more reason to tax them, in my view.

The Times begins:

The Congressional Research Service has withdrawn an economic report that found no correlation between top tax rates and economic growth, a central tenet of conservative economy theory, after Senate Republicans raised concerns about the paper’s findings and wording.
The whole thing is well worth reading but especially this gem:

They also protested on economic grounds, saying that the author, Thomas L. Hungerford, was looking for a macroeconomic response to tax cuts within the first year of the policy change without sufficiently taking into account the time lag of economic policies. 

Shhh. Don't tell Mitt Romney. He thinks cutting taxes on the rich will instantly produce 12 million jobs. Even Republicans don't believe that.