Wednesday, December 31, 2008

As Gone As Hugh Hefner’s Virginity

Goodbye 2008, and good riddance. Over the course of the year, the DOW has suffered the worst loss since 1931, but the financial geniuses in Washington just got around to calling this mess a “recession” last month. Based on that, I’d like to offer my humble prediction for 2009. A year from now, the word “recession” will be replaced with the word “depression,” even though the official spin may still be another year behind the actual economic reality. Here’s why I’m so sure about this.

We are told that the thing holding back an economic recovery is the lack of consumer confidence. When consumer confidence returns, the economic good times will also come back. The problem is— consumer confidence will never return, at least not in the previous incarnation. For the last 30 years or so, consumers were confident that they could have everything that they saw advertised on television regardless of their ability to pay for it. Palatial houses, gigantic pickup trucks, Nike tennis shoes, jewelry, billboard-sized flat screen televisions, palm-held electronic devices that can do everything but cook dinner, and endless mouthwatering food of every variety served up in trendy restaurants full of happy, extravagant mealtime patrons— all of this purchased on the tab, thanks to unsecured credit that flowed from those miraculous plastic cards. This is the glittering picture that reflected consumer confidence, but now it’s as gone as Hugh Hefner's virginity, and it's never coming back.

What’s happened is that a whole lot of people have suddenly realized that much of the stuff they were buying was stuff they didn’t actually need. It’s this word, “need,” and the concept behind it that’s thrown the trolley off the track. Conspicuous consumerism always relied on people thinking in terms of “want” rather than “need,” and this only became possible when the bulk of the population became young enough to not remember the Great Depression. Now, the old timers who always understood the concept of “need” are being joined by several new generations who are learning about “need” for the first time. This isn’t a trend that will take us back to things as they were.

There’s an old saying from the 1930s. “Use it up. Wear it out. Make it do, or do without.” People in hard economic times always seem to discover the wisdom of this old saying for themselves, and they remember it when times get better. It’s not a bad thing.

Sunday, December 28, 2008

“Barack the Magic Negro”— Is it Lighthearted Political Parody?

Conservative comedian, Paul Shanklin, perpetual water boy for Rush Limbaugh wrote a little ditty titled, “Barack the Magic Negro,” (set to the tune of “Puff, the Magic Dragon”) and fed it to the insatiable Right Wing comedy machine just in time for Christmas. Republican apologists immediately dismissed this as lighthearted political parody. In the past, Conservative Christians (a group renowned for mirth and merriment) have showcased their taste in humor with side-splitting, knee-slapper parodies like “Mission Accomplished,” fun and games at Abu Ghraib, and “You’re doin’ a heckuva job, Brownie.” Additionally, the candidacy of Sarah Palin erased, once and for all, the notion that Republican Conservative Christians are not ardent jokesters. The Shanklin parody, we are told, is just another lighthearted joke.

Paul Shanklin dropped his donation into the lap of Rush Limbaugh at an awkward time. The entire nation was freezing in some of the deepest cold in memory, and Limbaugh was using this inordinately bitter weather to disprove global warming. If that wasn’t enough, Liberal Caroline Kennedy was seeking Liberal Hillary’s vacant Senate seat. Limbaugh’s plate was already piled high with red meat. Nevertheless, he found time to have a little fun with the so-called parody.

Chip Saltsman heard the parody and decided to give out CDs containing the tune for Christmas stocking stuffers. For those unfamiliar with Chip Saltsman, his credentials as a first-class joke promoter were established when he ran Mike Huckabee’s Presidential primary campaign. Evidently, the only Right Wing honcho who lacks a sense of humor is the RNC Chairman, Mike Duncan. Duncan denounced the parody, and already Christian Conservatives are wondering if he might not be a closet Liberal.

You can tell from reading this that I’ve had a lot of fun writing it, but I’d like to shift gears and move away from this delightful sarcasm. The truth is that Christian Conservative Republicans are not lighthearted in the least, and they’re deadly serious about their bigotry and their ideology. When they delight in a song about a negro, there’s nothing humorous or innocent or cute about it.

Saturday, December 27, 2008

How The Military Model Can Help American Business

Ask almost anyone with a long work-experience track record, in almost any business, and they’ll probably tell you that the past three months (September-November, 2008) have comprised the worst economic quarter in their memory. Commerce Department numbers seem to substantiate that, and the people who write the history of economics and business are already saying that this is the worst meltdown since the early 1930s. Nevertheless, some friends of mine, still lucky enough to have jobs in sales positions, tell me that they are under intense pressure from their managers to make their quarterly numbers, and bring in their budget by the end of the year. This is utter insanity in my opinion.

Corporations (all of them) like to make analogies between their sales/marketing efforts and military campaigns. They talk about their offensive and defensive strategies, and their frontline operations, and their intelligence capability as related to the competition. In the pharmaceutical business, Big Pharma players openly refer to their gigantic sales forces as their “army.” Carrying this analogy one step further, holding the feet of the sales force to the fire, and cracking the whip to make quarterly numbers compares to the Civil War strategy of sending troops into withering fire with the command to achieve the objective or die trying. The thing is— the military world has moved past this suicidal nonsense, and American business has yet to do so. For at least the last 50 years, military strategy has called for extensive and exceptional training to prepare troops long before they are ever tested, and then backing front line troops with the best in technology and communications capability and the full support of commanders.

If American business continues its infatuation with the military analogy model, then the corporations that emerge from this current economic meltdown will look a lot more like the current military. Sales forces will be given better training. They will be backed with better technology, and better communications capability, and the middle level managers will function more in a support role, and less in the role of taskmasters. In the instances when sales targets are not met, there will be less second guessing of the sales force, and more accountability for the people who actually set the targets. That’s the current military model, and that’s the only business model that will survive this economic mess. So here’s my two-cents-worth of unsolicited advice for those people who are under pressure to make their quarterly numbers in this— the worst economic quarter in history. Get your resume out there ASAP because your employer is about to go out of business.

Monday, December 22, 2008

Why Ponzi Schemes Work

Charlie Ponzi would certainly have understood what Bernie Madoff was doing. Now that it’s known how Madoff made off with over $50 billion in investor capital, everyone is voicing righteous anger and outright astonishment over how such a thing could have happened. My hypothesis for today is that, if you scratch the surface of an early Madoff investor, you will probably find someone who suspected that they were at the top of a pyramid scheme. My enduring hypothesis is that people who buy into pyramid schemes in the early stages usually know more than they will ever admit, and in fact, part of the appeal of Ponzi schemes is that early investors think they have the inside track because they’re either first in line, or else sufficiently high on the pyramid to avoid disaster. Ponzi schemes work on greed as much as ignorance.

About 30 years ago, my wife and I got suckered into one of those early Amway presentations where you were invited into some guy’s living room for a social get together, only to discover that you’d been ambushed when the party host started drawing lines and circles on an easel board. I don’t mean to imply that Amway ever was a Ponzi scheme, but from the earliest days it certainly was a business plan with a pyramid-type structure. That night at the Amway presentation, the presenter repeatedly stressed that the people who opted-in early would reap financial rewards far greater than those who joined the party at a later date. My wife and I didn’t take the bait, but I noticed that those who joined up that night had the confident look in their eyes of a fast zebra who knows that the lions will only get the slowpokes that are trailing behind.

Ponzi schemes are the ultimate triumph of short term profit and expediency over long term accountability (see my blog of 12/18), and in that respect, you could make the case that most corporations, as well as the United States Government, look at things in much the same way as the man who sets up a Ponzi scheme. The differences, here, are only in degree, not essence. As our nation now racks up deficits in the trillions of dollars, we all go along with it because, at some level, we all see ourselves as high on the pyramid, and we know that the base of the pyramid— those future generations who will inherit the debt— won’t come along until after we’re dead and gone. It’s for this reason that I, personally, would feel a lot better if the whole shell game was being orchestrated by Bernard Madoff instead of Henry Paulson.

See also: Recession or Depression (12/18)

Saturday, December 20, 2008

Nobody Is In Control

Nobody is in control. As America careens toward a 1930s economy and a 14th century Crusading foreign policy, nobody wants to believe that catastrophic events are simply guiding themselves without very much human intervention, and this fear of no control helps explain the numbers coming out of several recent polls from Scripps-Howard and Newsweek. One third of Americans now believe that everything is under the control of a small group of all-powerful men operating behind the scenes, pulling the strings of government and commerce. These same believers (33% of us) think that 9/11 was an inside job to throw the public off the track, and to open up foreign, mostly Arab lands to an expansion of their power. But our national tendency to look for shadowy explanations doesn’t stop there.

28% of us believe in witches, and 40% of us (46% of women) believe in ghosts. 61% of us believe in Satan, 59% believe in hell, 73% believe in miracles, and more than 50% believe in angels. The astrological community which makes up 20 % of our population believes that the stars have absolute control over our destiny. And finally, let’s not forget that 35% of us believe in UFOs and the power exerted over us by aliens. Which brings me to the field of science fiction, and the writer Alan Moore who once advised us that, “The truth is, that it is not the Jewish banking conspiracy or the grey aliens or the 12 foot reptiloids from another dimension that are in control. The truth is far more frightening, nobody is in control.”

Thursday, December 18, 2008

Recession Or Depression?

Call it what you will, a depression or a recession, because the economic mess almost defies description. The root cause, however, isn’t very complicated in my opinion. The whole economic meltdown was preordained when our management culture drifted away from the reality of long term consequences, and embraced the Holy Grail of quick results. In his lectures, Stephen Covey uses an analogy that relates to farming, pointing out that farmers can’t use the postponement technique of “cramming”— waiting until late summer to plant their crops and still expecting the harvest to be on time. But there’s another farming analogy. You can’t plant on time, in early spring, and expect to harvest a full crop in May because you’re too eager and impatient to wait until late fall. This latter analogy is beyond the comprehension of almost everyone in a position of management in modern America. Ours is the culture of short term strategy, and the economic mess is the result.

You didn’t need to be a MENSA to know that people who were only minimally qualified for a sub-prime loan would default when their ARM reset to a higher rate. You didn’t need to be a MENSA to know that huge, gas-guzzling vehicles would become hard to sell if gasoline prices went above a certain level. In the pharmaceutical business, you didn’t need to be a MENSA to know that huge armies of lobbyists and salesmen, along with high priced advertising on television, would cost a lot of money without creating a single new drug. The list goes on and on, but the thread that runs through everything is the failure to look beyond the short term. Here’s the scary part. The management culture in China takes the opposite road, and never loses sight of the long term consequences.

Wednesday, December 17, 2008

Coming Soon To Drugstore Near You— Lower Prices, Lower Quality

IMS Health, the world’s leading pharmaceutical intelligence and data mining firm, is out with its annual report on the generic pharma industry, and the news doesn’t look good for the R&D-based Big Pharma segment where the branded pharmaceuticals are researched and produced.

Generic pharmaceuticals sold $78 billion (globally) in the last twelve months, with $34 billion of that total coming from the U.S. market where generics now account for roughly 64% of the total domestic drug market volume. Past research has shown that about 90% of sales for a given drug will convert over to generics when the branded version goes off patent, and this becomes critically important when one considers the fact that branded pharmaceuticals currently generating $139 billion annually in the top eight world markets will lose their patent protection in the next few years through 2012. Most of these patented drugs are in the “blockbuster” category. The problem is that there are few, if any, potential blockbusters in the R&D pipeline waiting to take their place. For the last decade, Big Pharma has focused on growing mediocre “lifestyle” drugs into blockbusters through gargantuan advertising and marketing efforts, and they have given much less attention to the R&D needed to keep the new blockbusters coming. If one believes the IMS statistics, the wheels are now coming off the bus. This helps explain why Pfizer, once the darling of Wall Street, saw its stock trading earlier this week at exactly one-third of its stock price eight years ago.

Tuesday, December 16, 2008

It's Now Official

It’s now official. Yesterday, the members of the Electoral College met inside the 50 statehouses around the U.S.A. to certify the results of the November 4th election. This is a routine procedure that takes place every four years, and yesterday the event was remarkable only for what DIDN’T happen. The electors didn’t hesitate in the least.

For the last five weeks, the legislators who make up the Electoral College have been besieged with mail urging them not to ratify the election of Obama, on the basis that he was allegedly born in Kenya and is, therefore, ineligible to hold the office of President (see my blog of 11/11). This mail was generated by “the usual suspects”— those members of the political fringe who always think they have the inside track to the truth because they’re tuned into the voice of God, or the EIB network, or short wave radio. On one of last Sunday morning’s political talk shows, a pundit completely astonished me by giving a name to this fringe element, calling it “the Palin, Hannity, Limbaugh crowd.” Those of us who rant in the realm of blogs can get away with labels like this, but I never imagined that a mainstream TV talking head would utter such a phrase. If the fringe can actually be marginalized, maybe there’s hope for national unity, after all.

See also: Was Obama Born In Kenya? (11/11)

Monday, December 15, 2008

Why The Vatican Should Just Let It Go

This week the Vatican, operating under Pope Benedict XVI, updated its official position about the behaviors that are considered sinful in human sexuality and reproduction (the last update was 21 years ago, which tells you a lot about the urgency of this). In-vitro fertilization, human cloning, genetic testing on embryos before implantation, and embryonic stem cell research are considered taboo, along with all the newer birth control measures such as the morning-after pill, the Intrauterine Device and RU 486. These transgressions now join the classic Catholic sex-trinity of masturbation, pre-marital sex, and homosexuality in the category of sexual mortal sins which can lead to an eternal life sentence in Lucifer’s slammer, according to Vatican theologians.

Advice about sexuality and reproduction coming from the Vatican carries the same weight as advice about astro-physics and cosmology coming from the Flat Earth Society. Most American Catholics, and the entire non-Catholic world all recognize this. So why does the Vatican still feel the need to weigh in on such topics? Basically, they just don’t get it. They still think they’re relevant in today’s post-medieval world. Despite the best intentions of the men in the red robes and beanies, the stark fact is that these men sworn to celibacy, and living in the ultimate old boy’s club, cannot fully grasp the subtleties of womanhood and parenthood, and they should just let it go.

Thursday, December 11, 2008

It's The Battery, Stupid

In 2002, American venture capital invested $4.6 million in the research technology to improve the efficiency of electric batteries, and this was less than what the cosmetics industry invested in research to make better deodorants and hair shampoos for women. By this year (2008), the amount spent in the U.S. on research to build better batteries has grown substantially to about $200 million (estimated for the full year), but this still represents only a fraction of the estimated $3 billion that is spent on battery science around the world.

The majority of the research to improve battery power has always been done in China, Japan, and South Korea— driven by the need for more battery power in electronic items like laptops and iPods, most of which are produced in these Asian countries. The upside to this situation (for the Asians) was that much of this battery technology funneled down to the car industry where it was applied to hybrids at Toyota and Honda. This, in turn, helped give them a ten year head start over our big three American automakers in the rush to market “green” automobiles. As things stand now, we will probably never catch up, and cars will join television sets in the category of items produced exclusively abroad.

It didn’t need to be this way. Unlike cosmetics, batteries involve electricity, and two of the foremost institutions where the behavior of electrons is studied are right here in the U.S.A.— Argonne National Laboratory and Oak Ridge. However, these are run by the Federal Government, and are subject to Federal funding priorities. During the years 2000 up to the present, these physics research facilities have been forced to languish under the same anti-science bias that has crippled the search for stem-cell therapies and global warming solutions. The stumbling block was, and still is, the Bush Administration’s infatuation with scientific ignorance. As the big three CEOs plead for money to save their dying car companies, we all need to remember who to thank for this situation.

Tuesday, December 9, 2008

The Economy Is Just Fine?

Yesterday I wrote a piece that was conciliatory toward the Right, but if you read this blog routinely, you knew that would never last. My question for today is this. If your ideology helped lead the nation to totally needless war and national bankruptcy, and then the vast majority of the American people turned against your position, how do you keep going in the Right direction? I guess that depends on who you are.

If you’re Ann Coulter you probably make the decision to put a nude picture of yourself on the cover of your next book. Even liberals will go along with that. If you’re Charles Krauthammer you hope that people will give you a break because you’re in a wheelchair, and maybe they’ll even think that you’re as smart as Stephen Hawking. If you’re Sean Hannity or Bill O’Reilly you don’t need to worry about the future of your career because you’re on FOX, and FOX is to journalism what Mae West was to romance and sexual intimacy. And finally, if you’re Rush Limbaugh you just keep doing the same old thing because your fans expect nothing different.

According to Rush Limbaugh, the economy is just fine, and all the hype about doom and gloom is just scare tactics coming from the “liberal elite media.” This exactly matches his analysis on global warming which he believes is also a liberal myth. It’s easy for Limbaugh to come to this conclusion since— for him— the economy really IS just fine. Earlier this year, he signed a contract for 400 million dollars to stay on the radio a while longer. That’s more than the combined pay for the CEOs of GM, Ford, and Chrysler, and their institutions actually make a tangible product. For you “dittoheads” out there, bullshit is only metaphorical and can’t be considered a tangible product.

The demographic profile for Rush listeners includes a great many people who fall into the categories that are being hit hard by layoffs and foreclosures. I wonder how these people feel when they tune into the EIB network and hear their oracle tell them that the economy is just fine.

Monday, December 8, 2008

Maybe We Can All Make Nice

Last night, at a nationally televised awards ceremony, George W. Bush gave Barbra Streisand a very public smooch on her (right) cheek. Ms. Streisand did NOT recoil in horror, and this sent the subtle message that maybe now is the time for the Left and the Right to bury their differences. As a hardcore Lefty, I would now like to make some concessions of my own to my friends on the Right, and I do this in the spirit of reconciliation. Yes, I do have friends on the Right.

1. In retrospect, Jesse Jackson would have been a terrible choice to be a first black president.
2. Listening to NPR will not, automatically, make you intelligent, and listening to Rush Limbaugh will not, automatically, make you stupid. Those things happen, but they’re not automatic.
3. The fact that the concept of democracy was hijacked by the Neo Cons does not diminish the fact that democracy is still a pretty good system.
4. Labor unions are dysfunctional at best, and destructive at worst. The average UAW member with a high school education earns twice what the average university professor earns with a Ph.D. That situation is just plain nuts.
5. The worst patriotic song ever written will still be a more interesting piece of music than “Hey Jude” by The Beatles.

There! Now that I’ve gotten that off my chest, maybe we can all make nice.

Thursday, December 4, 2008

As Roger Ebert Once Told Me— Ignore The TV Advertising

Film critic, Roger Ebert, once gave me some personal advice at a conference in Boulder, Colorado. He said that if I wanted to enjoy a thoughtful film instead of a stupid movie, I should ignore all the TV advertising and high attendance ratings, and go with a film title that had gained little attention with mainstream moviegoers. Ignoring the TV ads was the key. I’m remembering Roger Ebert’s advice from years ago because it seems to apply to a now-timely subject that’s far removed from the movies.

This year, DTC (direct to consumer) television ads promoting prescription medications celebrated the ten year anniversary of the FDA ruling that opened the floodgates, so to speak. Today, pharmaceutical companies spend $2.60 on television marketing (the ads plus the samples to back them up) for each dollar spent on research, so when Big Pharma spokespeople justify the high cost of prescription medicines by citing research funding needs, they’re telling you less than one-third of the truth. None of this would make much difference except for the fact that the U.S. government and private healthcare insurance providers are running out of money to pay for the extravagance. But here’s the kicker— just as the most lavish television advertising promotes mostly second-rate movies coming out of Hollywood, so also the most DTC television activity is focused mostly on high-priced pharmaceuticals to treat second-rate health problems. If a person can cut through all the LCD flatscreen pharma-hype, they can save money on prescription medicines just the way that I found I could avoid watching bad movies by following Roger Ebert’s advice. Ignore the television advertising.

DTC advertising has given us a new way to look at “pathology lite”—those human ills that most of us have at one time or another. Here are some of the afflictions de jure being hyped on television: restless leg syndrome, heartburn, overactive bladder, fibromyalgia, sadness, COPD, insomnia, erectile dysfunction, indigestion, aching joints, obsessive-compulsive disorder (otherwise known as adult ADHD), and common depression. If you recently found out by watching television that you have one of these afflictions, then you probably don’t have it. When you’re really sick, you don’t need an outside source to tell you that you’re sick. The medications being sold on TV for the afflictions de jure are not medications that will save your life, and probably not even improve your life, but they will eat up your bankroll. Some have actually killed people. It’s always worth remembering that antibiotics and cancer therapies— the pharmaceuticals that actually will save your life— are never advertised on television.

Wednesday, December 3, 2008

Why Public Relations Matters

There’s a saying that “you can’t make a silk purse out of a sow’s ear,” but that seems to be the best description for the task set before the PR teams at Ford, GM, and Chrysler. Less than two weeks ago, the CEOs of the big 3 automakers presented themselves in front of a congressional panel to beg for money, and they came away with nothing but the image of their own incompetence and narcissism burned into the mind of the American public. If one of these men had been unprepared, it would have been remarkable, but the fact that all three were unprepared is simply astonishing. So tomorrow, they get to try all over again.

There should be page in the CEO “how to” manual that tells a titan of industry to meet with his PR director before he appears before congress. Most people think of PR guys as spin-masters and slick mouthpieces, and some are just that, but the very best PR directors working at the most successful companies are paid handsomely for one very important talent— they can see things the way that people outside the company see things. They are inoculated against internal groupthink, and— most importantly— they have the personal fortitude to speak truth to power, and to tell a CEO the things that a CEO doesn’t want to hear. A good PR director would have told any one of the big 3 CEOs to cut his own salary, to sell off the corporate jets, and to carry a pen and paper to take notes so that it would appear to the congressmen that somebody actually gave a shit.

I suspect that all three American automakers have such PR directors on their payroll. The fact that they weren’t consulted explains why their companies are in financial trouble. The inept and arrogant big 3 CEOs have accepted the dysfunction in their styling departments, and their engineering departments, and their strategic planning departments, and their marketing departments— so why would they think about trusting their PR departments? The good news, however, is that Americans have the choice to not buy their products.