Occupy This!

When last I left off, your intrepid explorer (that’s me) was trying to figure out what to “Occupy” in 2012.  You may recall that I challenged myself to "Occupy" something this year.  Not occupy as Webster might define it but Occupy as 2011 defined it.  To become subsumed by something that I believe in.

The number of replies was overwhelming.  Some were whimsical.  Harold Bernaert replied that  he “will be preventing everybody from occupying me.”  Stewart Lenox declared that he hopes “to occupy about 10 to 15% less space via diet and exercise.”

Others were more serious.  My old high school chum, Bruce Scottow, suggested that I “always strive to Occupy Fact….  We simply can never have meaningful progress in any field…  if we can’t have meaningful dialog.  And we can’t have meaningful dialog unless we deal in facts.”

Perhaps the most thoughtful reply came from Professor Leilani Baumanis.  Her recommendation:  “Occupy your mind with something that will fulfill you and make you the better version of you.… something that will give to the world more than you ever imagine.... Sounds like an impossible dream, I know. But for people who are very capable, only accomplishing impossible dreams will fulfill you.”

Professor Baumanis

She’s right, I thought.  I must find something fulfilling that will make me a better version of myself.  So…  I have decided to Occupy the idea of helping jobless veterans. 

It will not be easy.  The US Department of Labor estimates that there are already more than 235,000 unemployed veterans of the Iraq and Afghanistan wars.  When I was discharged from the military, most hiring managers were veterans themselves.  Today, most are not.  And, they don’t understand the value of a military background. 

Military veterans are mission oriented, focused and exact in executing their jobs.  What commercial enterprise wouldn’t benefit from more than that?  Moreover, Congress and the President have provided a tax break to businesses who hire vets. 

So, I have decided to do whatever I can to help.  “What can I do?”, you might think.  Well, I can do a lot.  In the last few years, I have helped a half dozen C-level executives find work.  I have spent many years in professional services in S. Florida and I have an extensive network.

By help I don’t mean the usual..  an email or a phone call.  I plan to get to know each one of my clients so I can vouch for them.  I will reach out to everyone I can think of who will be sympathetic and who might be able to help. 

Where will I find the time?  I don’t know.  Where did I find the time to learn to ski and play golf?  What’s more important?  Skiing, golf or helping a veteran?  The question answers itself. 

My first project is Tommy Pearce.  Tommy is a Marine Corps veteran who fought in the Battle of Fallujah.  He has a background in logistics, a field that easily translates into a civilian job.  Tommy worked in a civilian company in that same field until the company went bankrupt.  He and his wife have two kids.  She is a Miami-Dade County school teacher who was laid off last year.  Tommy will do anything to keep a roof over their heads.  Do any of you have contacts that might help Tommy and his family?

What about the rest of you?  Won’t you join me.

WHO WILL LEAD? 

Occupy… Something… What? I Dunno

Are you making New Year’s resolutions this year? Three years ago was the last time I did so. I worked hard at it too. I created three categories – Healthy, Wealthy and Wise – and made two resolutions in each. It was a serious endeavor. (No one who knows me would be surprised. I have been told I am too serious since I was in the second grade.) It took me two years to achieve them all. I am still tired from the effort.

Despite my exhaustion, I feel compelled to have another go at it. This time, I’ll keep it simple. My resolution is to Occupy something. I am not sure what just yet. But I will do it. I will Occupy something.

Many serious commentators have made Occupy their Word of the Year. Indeed, Ben Zimmer who heads the Word of the Year effort at the American Dialectic Society told NPR that Occupy leads this year’s voting (although he admitted his personal favorite is Humblebrag).

Occupy has several meanings, of course. I don’t mean that I will Occupy something in the conventional sense. If I Occupy my Lazy Boy recliner, that won’t count. It’s doubtful I could Occupy it any more next year than I did this year anyway. Taking up residence somewhere else doesn’t count either. I could plop myself in a first class airline seat on my way to the capitals of Europe or Occupy a suite at the Four Seasons; but, that wouldn’t capture the essence of the resolution either.

Nor, do I mean Occupy in the military sense. The US military Occupied Iraq for eight plus years. It’s not what I mean.

Occupying my time with something would not require much resolution either. I already occupy my time writing this blog and reading about this and that.

The real resolution to Occupy something requires that I embrace and idea or concept and immerse myself in it. The folks who Occupied Wall Street made a serious commitment to an idea. They physically and visibly took up residence in a downtown NY park. Their idea – and their attitude – were picked up throughout the western world and went viral (that phrase – went viral – must have been the word of the year sometime in the past).

In my professional career, I have found that for change to be effective in any institutional setting there must be a physical and visible manifestation of it. If the CEO wants a realignment of functions to be effective, he should move people’s offices around. Preferably this should happen during the work day so that everyone can see it.

I have a good friend and colleague, Larry Litowitz, who, as CEO of a manufacturing company, moved his desk to the factory floor to make sure everyone knew he was serious about getting in touch with his workforce and the need to improve equipment and safety.

That’s how you Occupy something!

So, I must decide. What will I Occupy? Maybe you can help. Any suggestions?

Say It Ain't So...

Brooklyn Dodgers center
fielder Duke Snider

When I was a kid – I mean a very young kid, grade school age – I was a baseball fan. No one talked about football. The NFL wasn’t a big deal. If you were a football fan you watched the college game. Michigan vs. Michigan State, USC vs. UCLA, Florida vs. Florida State, etc.


But, I grew up in NY where there were no big deal football teams. But there were three – that’s right – three major league baseball teams. The team you rooted for largely depended on what borough you were born in. I was born in Brooklyn and grew up on Long Island so I was a Brooklyn Dodgers fan. It would be more accurate to say I was consumed with the Brooklyn Dodgers.

I remember how devastated I felt when I learned that my beloved Dodgers were moving to L.A. I had never considered the possibility. How could the BROOKLYN Dodgers move to California? It was unheard of.

Of course, it wasn’t unheard of. Just four years earlier the Braves moved from Boston to Milwaukee and the St. Louis Browns moved to Baltimore to become the Orioles. But, I was too young to have that perspective.

At around the same time, the Soviets launched Sputnik, the first unmanned satellite into outer space. All the grown-ups around me were in a state of shock. Not me, I was surprised that this was the first. After all, I had been watching Flash Gordon and Captain Video soar through space on TV for years.

Five years later, when JFK was assassinated, I was shocked (like the rest of the nation). However, by then, I had some historical perspective. I knew that three other presidents had been assassinated while in office so, in a way, I was less shocked. I had gained that perspective by then.

The fall of the Berlin Wall

With age, comes wisdom, right? At least that’s the common belief. Yet, there have been other world events that I never saw coming. Indeed, much like when the Dodgers announced their impending departure from NY, I had never considered the possibility that the Cold War would end in my lifetime and that I would see the Berlin Wall come down.

I also never considered the possibility that I would see terrorists fly commercial airplanes into the World Trade Center. Nor, did think I would live to see an African American President of the United States. (Even the President’s mother-in-law said as much.)

It strikes me that these events are coming along at a faster pace than when I was a kid. About once a decade, I think. Does that mean that my inability to foresee them undermines the premise that wisdom comes with age? What perspective am I lacking?

What’s next, I wonder. The only prospective disaster I can see coming is the possibility of a dollar collapse because our government can’t get its act together. But, I have gone on and on about that in these pages; so, I won’t drag you through it again.

But, I have some questions. My favorite, of course, is WHO WILL LEAD? Who will solve this morass in DC? And, can they do so in time?

But, I wonder if you can help me? What are things that have happened in your life that you never contemplated could happen? Can you foresee the next big one?

If you can, please share it with me? It’s obvious that I don’t know what’s next.

It's a Vegetable!

The blogosphere loves catchy headlines. Since publishing a blog titled Greed is Still Good and two follow-ups that continued the theme, the Google statistics for this blog show readership quadrupling.


Among the many responses I received, one stood out as unique and piqued my interest. A Belgian reader advocated that technocrats do a better job than democratically elected politicians and the free market at ensuring prosperity for the public. Here’s what he said, in part:

“When dealing with corporate matters, look for the best CEOs. When dealing with agricultural matters, look for the most successful farmers. When dealing with exact science, look in academe for the most respected scientists. When dealing with matters of justice, look for the most respected judges.

“Basically, you look for experts wherever they can be found. Competent technocrats are most likely to be found among those who get the best results or achieve most respect in their respective fields of expertise.”

I challenged him to provide examples of where this works. He responded that it does so in the democracies of northern and western Europe.

This exchange took place a few days before the prime ministers of both Greece and Italy were replaced by technocrats.

When I hear the word, technocrat, I think of a bureaucrat – a government employee whose dogged adherence to some arcane set of rules yields an unreasoned result. But, technocrats don’t comply with policies. They are the experts who make policies.

The argument in favor of technocrats – and, indeed, the European example – is that well-crafted technocracies overcome the inequalities of opportunity that result from unbridled capitalism. Europe has embraced technocracy, perhaps because of its history of class-ridden societies. As a result, Western Europe has better childhood health results and better public education systems than the United States. A recently published study by the Organization for Economic Cooperation and Development (OECD) observed that economic mobility from the bottom is more difficult in the US than most countries of Western Europe.

Naturally, programs that produce these results come with a price tag. Sweden, for example, has the second highest tax revenue as a percent of GDP in Europe at around 48% (more than double the US percentage). They balance their budget, provide extensive health and welfare benefits and run a capitalist economy. Their high tax rates are part of the social contract that the citizens have made with their government.

Many pundits in this country have suggested that the Euro debt crisis demonstrates the failure of European social democracies. That model of governing is unsustainable, they say. But, the Euro crisis is not the result of social democracies. It’s the result of debt. Unsustainable debt is the result of long term, structural budget deficits. Some western European countries – France, Belgium, Italy, Spain – run large deficits and are facing difficult choices. Others, like Sweden, do not.

Americans shouldn’t be casting dispersions on Europe simply because they seem to have hit the wall a few years before we are projected to. Indeed, running a balanced budget is a statement of national character. National character that we apparently lack.

But, neither is the Swedish example proof of the superiority of technocracies. Wasn’t it a group of technocrats who dreamed up the Euro in the first place. The concept of a currency not backed up by a central bank is flawed by definition.

The American model is driven by economic freedom. Property rights, free trade, minimal government regulation, low taxes and freedom to fail are central to our superior economic growth over the last two centuries. The success of that model is best exemplified by the 1990’s when low taxes and a balanced budget were at the root of our economic success.

Clearly, not everyone in this country embraces these principles of economic freedom. There are some obvious flaws to a system that rewards Lady Gaga more than it rewards its teachers. But our nation was founded on the right to pursue happiness. And, Americans do not believe it is the responsibility of government to ensure it. If asked, Americans would express admiration for the Swedish model; but, they would not sacrifice their standard of living – their second car, their McMansions -- to achieve it.

The US has its technocracies. We have technocrats at the helm of the FCC, the FTC, the FEC and, of course, the most important technocracy of all, the Federal Reserve Board. But, on a larger scale, Americans reject the idea. Remember when healthcare reform was to include a panel of experts to examine the high cost of care during the last year of life? “DEATH PANELS!” screamed the opposition.

On the other hand, I would like to meet the technocrat who pointed out that, calorie for calorie, tomato paste has the same nutritional value as an apple. Under one proposal, the National School Lunch Program could credit a serving of pizza as a vegetable. Now, that’s my kind of technocrat.

Greedy or Simply Needy?

I lived in Denver for a few years, back in the 1980s. It was a great experience for a guy who grew up in NY and I wouldn’t mind going back someday. I worked in a national credit card business at the time so the local economy didn’t affect me too much. Others weren’t so lucky.


Colorado is a boom or bust state. In the 80s, it boomed early on high oil prices. It went bust later on the collapse of oil prices. Big Oil closed all their Denver operations when it became economically infeasible to explore for oil in the Rockies. The contractors, most of whom were geologists and engineers went bust along with them. Many left town leaving a declining real estate market and failed regional banks and S&L’s behind.

Sound familiar? It was a microcosm of our national banking crisis. The difference? The banks weren’t too big to fail. The Federal Deposit Insurance Corporation (FDIC) spent about $900B to take over failing banks (an amount which they later recovered by raising rates on its member banks), the banks’ shareholders lost all of their stock, none of the executives walked away with multi-million dollar severance packages and no one occupied Denver.

Too bad it didn’t work that way in the financial crisis of 2008.

Last week, the press reported on an Organization for Economic Cooperation and Development (OECD) study that concluded that the wealth gap between young and old is growing. The report went further in concluding that economic mobility from lower to upper income strata was more evident in Canada and many European countries than it is in the US.

Naturally, this information is used as fuel for those sympathetic to the Occupy Wall Street movement (OWS). I wonder how many of those who reported on the OECD study actually read it (which you can do by clicking HERE).

What the report actually said was that upward mobility was primarily a function of parental influence on education starting in early childhood and extending through college. The gap between young and old, rich and poor is the result of how well educated you are.

To quote directly from the report: “Parental or socio-economic background influences descendants’ educational, earnings and wage outcomes in practically all countries for which evidence is available.”

Many pundits have speculated that the fervor behind OWS will peter out when the weather turns too cold to camp out in city parks. Even if that happens, the underlying problem – young adults who have worked hard and played by the rules can’t find jobs – will not vanish with the first snow. However, over time something must change.

Here’s my prediction: in the absence of jobs, many will start businesses. Yes, comrades, they will become capitalists. They will go from being needy to being greedy. As one pundit put it, their Plan B will become Plan A. And, there’s an app for that. "Start Your Own Business" will set you back $.99 in the iTunes store.

I have sat in on many presentations on how the Internet – Google, Facebook, Retargeter.com, Tumblr.com, YouTube, etc. – are changing the way business is done. When they are over, the middle aged listeners in the audience usually remark that they don’t get it. If I were 25 today, I would see those folks as too fat, dumb and happy to stand up to the competition I can offer.

Those too sluggish to adapt to the new world will end up like the last buggy whip manufacturers. We live in a world where $600 can buy a disk drive that would store all of the world’s music, where 5 billion mobile phones are in use and 30 billion pieces of content are shared on Facebook every month (according to the McKinsey Global Institute).

Creative entrepreneurs have figured out how to use technology to destroy old business models in healthcare, music, journalism, libraries, education, travel, supply chain management and the credit card industry – among others. Just as the transition from an agricultural to an industrial economy caused economic disruption – lost incomes among those whose skills weren’t adaptable – the transition to a global information/Internet based economy is doing the same right now.

And, just as the OECD study concluded, education is critical to making the adjustment.

What if you’re not an A student and can’t figure out how to disrupt an old business model? Dilbert cartoonist Scott Adams wrote of his experience creating new businesses for himself while in college in an Op-Ed piece in the Wall Street Journal last April. Titled "How to Get a Real Education", he outlined the real world skills required to make a business work – any business. Not just those that are disruptive.

Free market capitalism has been the basis for American prosperity since our nation’s founding. Successful business people act in their own self-interest. It doesn’t result from greed; it results from need. That one man’s success can cause another man’s failure is part of the natural order. Those who seek to change it must consider that our prosperity will suffer.

Back in Denver, one enterprising geologist opened a micro-brew pub in an old industrial part of town called LoDo (Lower Downtown). Wynkoop Brewery became a popular restaurant in a bad part of town. His Plan B became Plan A.

Today that successful entrepreneur is governor of Colorado.

From Deadly Sin to Virtue

Ma'at

I had more responses to last week’s blog posting, Greed is Still Good, than any since I skewered Reverend Jones last September (Is That What Jesus Would Do? Really? ). I was pleased that the responses were thoughtful and articulate. While the core of my argument was about the economic theory known as the Law of Creative Destruction, most of the responses were a reaction to the headline. Apparently mentioning one of the seven deadly sins is a great way to get a response.

Of all the responses, most interesting to me was a comment from the Mensa group on Linked In by Richard Irwin. Here it is:

“There is no point in having wealth and power if it is just to serve our own ego. Wealth should be spent so others benefit from it, not hoarded, for that is miserly. Power should be used to serve others, not ourselves, as true happiness is not achieved through the domination of others. Equally, poverty is of no benefit to the individual or the society they find themselves in.

“We now need to look at sustainability and balance and learn to rebuild the diversity of the world we inhabit. The ancient Egyptians had a concept they called Ma’at which was the presence of truth, order, balance and justice in the world. I believe that after a century or more of world conflicts and unrestricted exploitation, that the concept of bringing Ma’at back into the world through the deeds we undertake in our lives is a valuable one.”

I must confess that I had never heard of Ma’at who, as it turns out, was an ancient Egyptian goddess representing the concept that Mr. Irwin describes.

In reading about Ma’at, I found myself thinking of Practical Wisdom, the principle defined by Aristotle. The result of the application of Practical Wisdom is a virtuous society. Two great books, published in the last year, examine Aristotle’s thinking in the context of modern society. The first is "Justice: What's the Right Thing to Do?" by Harvard professor, Michael J. Mandel and the other is "Practical Wisdom: The Right Way to Do the Right Thing" by Swarthmore professors, Barry Schwartz and Ken Sharpe. Schwartz gave a great lecture on the topic last November which can be found on TED.com by clicking HERE.

The critical element of Practical Wisdom in its application to how our society works is the flexibility to bend the rules -- to use judgment to structure the best outcome for society and its inhabitants. Schwartz compares it to Jazz improvisation. The notes are on the page but the musicians play a variation that results in beautiful music. My interpretation is that he is talking about the difference between rules and principles (a construct first pointed out to me by a colleague).

Aristotle

In American society, our response to people and institutions that are unprincipled is to create rules to govern their behavior. But Schwartz points out that doesn’t work. Hence we have laws like No Child Left Behind that leaves children behind and Dodd-Frank Financial Reform that doesn’t reform the financial system.

On the topic of bankers – that target of the OWS crowd – Schwartz points out the bankers are smart people and “like water, they will find the cracks in any set of rules”. What we need, posits Schwartz, is the moral will to do the right thing and the skill to figure out what that is. In other words, we need principles.

He further points out that rules (or regulations in government parlance) “create people who only respond to incentives”. If you reward teachers for their students achieving higher test scores, that’s all they will teach. If you reward doctors for doing too many medical procedures, they will perform too many medical procedures.

Great thinkers like the college professors who have written on this topic make a material contribution to our society by creating a construct for our institutional leaders – commercial, religious or government -- to absorb and adapt to a practical application. But for most of us there is a simpler way to look at it.

It’s not what you do but how you do it. There is nothing inherently wrong with being a lawyer; however, lawyers who put their own interest ahead of their clients are unethical. There is nothing wrong with being a doctor; however, prescribing too many procedures so you can make your next boat payment is unethical.

Examples abound… Journalists who bend the truth to create a headline that will please their editor… legislators who are guided by special interests that make donations to their campaigns… Auto mechanics that convince you to make repairs you don’t need. And so on.

During the years before the financial crisis, Goldman Sachs sold Collateralized Debt Obligations (CDOs) to their customers while their proprietary trading desk was “shorting” those same securities through the purchase of Credit Default Swaps (CDS’s). They made money while their customers lost a bundle. Unethical? Definitely. This is a simple principle anyone can grasp.

Illegal? Maybe. We’re still sorting that out. Legal is about the rules while ethics is about principle.

Is investment banking in and of itself unethical? In practice, investment bankers arrange for capital financing to enable entrepreneurs and corporations to invest in business growth spurring demand for goods and services and creating jobs. Is that unethical? I think not.

Wall Street – the financial services industry – provides a valuable service that enables the prosperity of American society. That investment bankers can make millions while doing so is neither illegal nor unethical. The OWS crowd may take issue with that. Despite the lack of a coherent platform, one clear message from these protests is that our system lacks social justice.

Perhaps we can find some guidance in Ma’at. Consider this from the Tour Egypt website:

“Ethics" is an issue of human will and human permission. It is a function of the human world of duality. What is "ethical" for one group is sin for another. But Ma'at, the reality that made all groups what they are is transcendent of ethics, just as a rock or a flower is amoral, a-ethical, without "truth or falsehood." How can a flower be "false" or "ethical?" It just is. How can the universe be "ethical or moral, right or wrong"? It simply is. That is Ma'at.”

Greed Is Still Good

True confession: I used to work at Goldman Sachs. Yup, the evil empire, the scourge of the Occupy Wall Street (OWS) protesters. So, I have a bias.


So many pundits, editorials and reporters have made the obvious observations about this now national (or maybe global) movement that I find it difficult to add any new thoughts. They are righteous… they are wrongheaded… they should be marching on Washington…. Maybe they just want jobs… Or, maybe they just want to get laid. (Well, this last observation is mine. But then I am old enough to remember the anti-war demonstrations of the 60s.)

I’m in the camp that thinks they should be marching on Washington. But where specifically? The White House? The Capitol? The Fed? The Department of Treasury? Too complicated. Let’s just occupy Wall Street.

Another obvious observation: they have worked hard and played by the rules and feel screwed by the system. They need jobs.

But, here’s the problem. The jobs aren’t coming back and it has nothing to do with Wall Street. It has to do with technology and the Internet in particular.

Have you been to an airport lately? If you have, you probably checked in to your flight at a kiosk which spit out a boarding pass and directed you to your gate. Remember how many people it used to take to check you in? Do you think those people are getting their jobs back?

This is just one of the examples of “The Second Economy” identified by the McKinsey Quarterly (you can get a free copy by clicking HERE and creating a login). The Internet has disrupted a lot of old methods of doing business. Thousands, if not millions, of jobs have vanished by way of the use of RFID technology, websites that have replaced travel agents, retail stores, schools and data centers. Yes, even Info Tech professionals have been affected. Our data is moving to “the Cloud”. We don’t know where it is and, apparently, we don’t care.

What server holds your Facebook page and all your photos? Don’t know? Neither do I.

Speaking of Jobs, lots of comment about the adoration among the OWS of the recently departed billionaire, Steve Jobs. It’s easy to focus on the contradiction. After all, Apple wouldn’t exist if it weren’t for junk bonds, hedge funds, IPOs, secondary offerings, derivatives and the like.

I find it more interesting to look at Apple as a microcosm of the global economy. Think of it this way. Apple creates the product – the design, the engineering, the operating system, etc. The products, the iPod, iPhone or iPad, are manufactured primarily by Foxconn in China. In the industrial economy that started to vanish from these shores about 20 years ago, the manufacturer would be a very valuable company in stock market terms. Yet, Apple is the most valuable (or second most valuable behind Exxon Mobil) company in the world. Not Hon Hai, parent company of Foxconn, which has over 400,000 employees worldwide.

I don’t think the OWS protesters are focused on Steve Jobs the billionaire or on Apple, the company. They are just turned on – like the rest of us – by all the power that the iPhone places in the palm or our hands.

Michael Douglas as Gordon Gekko

Which brings me to Gordon Gekko and the “Greed is Good” speech from the movie Wall Street. In context, the famous Gekko speech was an interpretation of Schumpeter’s Law of Creative Destruction. Here is what Gekko said, in part:

“The point is, ladies and gentleman, that greed, for lack of a better word, is good. Greed is right, greed works. Greed clarifies, cuts through, and captures the essence of the evolutionary spirit. Greed, in all of its forms; greed for life, for money, for love, knowledge has marked the upward surge of mankind.”

Here’s a quick overview of Schumpeter’s law cribbed from Wikipedia: “In Schumpeter's vision of capitalism, innovative entry by entrepreneurs was the force that sustained long-term economic growth, even as it destroyed the value of established companies and laborers that enjoyed some degree of monopoly power derived from previous technological, organizational, regulatory, and economic paradigms. Schumpeter also elaborated the concept, making it central to his economic theory.”

It wouldn’t make a very good movie script, would it?

But, whether you prefer Gekko’s version of it or Schumpeter’s, the fact is that email destroyed the Post Office, Netflix destroyed Blockbuster and the guys who invented that airport kiosk destroyed all those airport jobs. And, all of us are willing participants.

Oh, and by the way, if you have an iPhone, you can even skip the airport kiosk. How’s that for power in the palm of your hands?

So, here’s the real problem. To replicate the success of Apple Computer and Steve Jobs, we need to train more engineers and designers. And, we aren’t? According to a Kaufman Foundation study, more than half the students in technical masters programs are foreign. And, now they don’t have to stay here to find jobs in their field. They can go back to China, India, Korea or South Africa to find meaningful work.

So, maybe the protesters should be marching on the Department of Education.

What do you think?