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Terrorism Follies

by Bill O'Connell on January 10, 2010

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Do you remember the scene in the movie “Saving Private Ryan” where after storming a machine gun nest and losing their medic, the Americans have to deal with how to handle a prisoner they captured?  Some say shoot him on the spot others disagree.  They know they can’t take him with them as he will slow them down.  After much vigorous debate Captain Miller (Tom Hanks) decides to untie him, point him toward the American line and tell him to keep walking, with the hope that he will be captured by the advancing American forces. 

Later in the movie as Miller’s unit is in a pitched battle to the last man, the released German prisoner is among those killing Miller’s men.  After reinforcements arrive to turn the battle in the Americans favor and the remaining Germans surrender, the former prisoner smiles and nods to the soldier in Miller’s unit that acted as translator and argued for sparing him as if to say, “Hey, how’s it goin’ pal?”  The soldier lowers his rifle and kills the German.

I am reminded of this by the current situation with Yemen.  Started under President Bush was the insane idea of releasing enemy combatants where they can find their way back to the battlefield.  This stupid policy was, until recently, going to be accelerated under President Obama.  Either we are at war or we are not.  You can’t fight a war with half measures.  Either you fight it to win or let the enemy have their way.  If we are in a war and we capture the enemy they stay captured until the war is over.  We don’t need a bunch of lawyers standing on the sidelines tapping their foot and their watches and saying, “how much longer are you going to hold these people without charging them?”  Answer: until the war ends or hell freezes over, whichever comes first.

 Is It a War Yet Mr. President?

 Backed into a corner, on his fifth (?) try to explain what his administration is doing on the War on Terror (am I allowed to call it that?), he actually called it a war, at least against Al Qaida.  He has spent the better part of his first year in office giving the back of his hand to the Bush administration.  But after seven years of Bush keeping us safe and two terrorist attacks on our soil this year with Obama at the helm and his poll numbers sinking, he has come to the realization that he owns this now.

The tough Harry Truman talk is nice (“The Buck Stops Here”), but it is just words until you actually do something with the buck that just stopped on your desk.  Why is the spectacularly incompetent Janet Napolitano still drawing a salary?  In Obama’s world it seems to be that what he means when he says the buck stops here is that he is the only one subject to firing and since we can’t fire him, everyone under him keeps on keeping on.  But who appointed these people?  It was Obama.  So he should recognize that he blundered and if the underlings don’t have enough sense to fall on their swords and resign, he should flat out fire them.

 Vacations are Important.  Anti-terrorism, Not So Much

 After the terror attack at Fort Hood, you would think that perhaps President Obama would be a little more responsive to another attempted attack, but hey, he was on an Hawaiian vacation.  Nobel Prize?  Chicago trying to win a bid for the Olympics?  President Obama will travel across the sea for that.  But an attempted attack on America?  Chill, baby, chill.  How about his director of National Counterterrorism, Michael Leiter, taking a ski vacation?  Just because stopping such an attack might be considered counterterrorism and just because that organization just failed miserably at stopping such an attack, and just because we didn’t know why it failed or if another attack might be on the way, why interrupt time with the family over that?  Family time is important, so said his boss. Don’t worry, Mike, we’ll wait.

Behind the Curve

It seems that with each attempt the enemy is one step ahead of us.  So discussions heated up about these new body scanners that can find anything, so it is claimed.  Don’t get me wrong, I am a big advocate of technology, but I guess the real problem is best summed up by one pundit comparing our methods to the Israelis:

“The Israelis look for terrorists, we look for tweezers.”

Instead of reading body scanners, perhaps we should be training the TSA agents in reading body language.  That’s what the Israelis do.  If you are a Palestinian, sorry, but you go in a different line and you get more closely screened and questioned.  You may pass, but you are going to be thoroughly checked out. We should do the same.  Where is your passport from?  What visa stamps do you have in your passport indicating where you have been?  Why don’t you have any luggage Mr. Abdulmutallab?  Why did you buy a one way ticket?  Who are you staying with in Detroit?  I see you paid cash for your ticket, how much cash do you have left for your trip after you land in Detroit?  Do you have a credit card?  No?  Hmmm…maybe you should wait over there, while we check further.

 No technology is foolproof.  Having worked in technology for over thirty years I can say that with some degree of confidence.  It only takes one failure of the technology for a disaster to strike.  But if we spend less time trying to find that box cutter, shampoo bottle, tweezers, jar of honey, etc., and spend more time spotting someone who doesn’t look like they are on a nice business trip or a visit to relatives or who otherwise fit the profile of a terrorist, that’s right I said it: profile, we could probably become a lot safer without having to lock the bathrooms for the last hour of the flight.  If we had pulled the young Abdulmutallab aside and questioned him, he probably would have cracked like an egg.  Does anyone think for a minute that this kid would have given off no body language signals if questioned by a trained professional?  The right combination of skilled human observers and questioners along with technology, is what we need to be safer.   Rather than this:  We”re the TSA and You Can Count on Us!

Intelligence Sprawl

We also need to collapse the intelligence arms of our government back into one and shut the others down.  Roll back Homeland Security into the Department of Defense, put the myriad intelligence gathering arms back into the CIA, make people accountable and lessen the need for a coordinating center to gather intelligence from a dozen agencies correlate it and send it back out to the dozen agencies.  All that does is create more fiefdoms that don’t want to talk to the dummies in that other agency who aren’t as smart as we are.  As the old saying goes, “When everyone’s responsible, no one is responsible.”  Government is neither nimble nor overly cooperative.  The fewer handoffs between agencies necessary to connect the dots, the better off we will all be.

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Kill the Detroit Bailout

by Bill O'Connell on November 16, 2008

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I was having lunch with a colleague the other day and the conversation turned to the economy. He spoke of some recent analysis of the number of jobs that would be lost if the Big Three failed.  He recounted not just the employees of the auto companies themselves, but the employees of their suppliers, advertising firms that produce car ads, and on and on.  His final tally was well over 1 million jobs lost.  He concluded by saying it would make the current financial crisis a walk in the park.

Getting enough exercise?

Does that mean that we are all going to start walking?  Not that that would be a bad idea, we could all stand to lose some pounds, but for someone who has a 23 mile one-way commute with no option for mass transit, it’s just not going to happen.  So what do we do?  Well, one of several scenarios is going to happen.

Scenario 1:  The Big Three Close Their Doors

If this scenario came about, what would we do?  We would go buy Toyotas, Nissans, Hondas, Volkswagens, etc.  Those companies would have to scale up to fill the void caused by the Big Three closing their doors.  That demand would need people.  So a significant number, but by no means all, of the laid off workers from Detroit would move to North Carolina, Alabama, and other points south, and join these auto companies at their U.S. plants.

Likewise the suppliers would form new alliances to supply these car companies, as would all the other ancillary companies that currently support Detroit.  Would jobs be lost?  Yes.  Would it be anywhere near the number of jobs my friend projected?  No.

Scenario 2: The Big Three Reinvent Themselves

The liberty of the car companies to reinvent themselves is constrained by government regulations.  Surprise!  If the Big Three have any hope of reinventing themselves, they have to have the freedom to do so.  Start by eliminating the CAFE standards.  CAFE, which stands for Corporate Average Fuel Economy, is the mileage standards dictated by the government that the auto companies must comply with or face heavy fines, draining more money from the Big Three’s coffers.  So for every car that the Big Three build that may get 20 mpg, they may have to build and sell perhaps 3 that get 30 mpg, in order to meet the standard.  But what if they can make money on the 20 mpg car, but they lose money on every 30 mpg model?  What if the reason they can’t make money is because of their labor costs per vehicle, their pension costs per vehicle, their health care costs per vehicle, when added up are too high compared to their foreign competitors.  They are basically forced by the government to make an unprofitable product.

Why not abandon the CAFE standards?  Let Detroit build the cars and trucks that they can make at a profit.  Let the foreign manufactures make cars that they can make at a profit, including high mileage cars.  Let the American people have the freedom to choose which they want.  As the price of gasoline climbs as it did, and will again, people will want to buy high mileage cars, hybrids, electric cars, but they will also want to buy SUVs, luxury cars and light trucks.  Why does a particular manufacturer have to produce all kinds?  When has government ever made the right call on what products to produce? (Hint:  think of all the five-year plans and Great Leap Forwards from the Communist world).

Scenario 3: The Government Bails Out the Big Three

The government prints up a bundle of cash, $25 billion or more, gives it to the auto companies and hands the IOU to you and me.  The new Democratic Congress and Administration will toe the line for their backers in the environmental movement and demand higher CAFE standards for the auto companies in the interest of addressing: our dependence on foreign oil; green house gases; and helping consumers.  This will put increased pressure on the Big Three to make more unprofitable products and we will find ourselves back in the same place a few years hence.  More liberties will be vaporized as the government appoints a czar to oversee the auto companies to be sure they are building the right products, that management is not getting paid too much money, and well let’s face it, they would basically be nationalizing the auto companies.  Management talent would dry up, and socialism would make greater inroads into the U.S. economy.

The Best Scenario

The Big Three file for bankruptcy, if that is what they need to do.  The stockholders would probably be wiped out, the management team would be replaced, and this will let them re-negotiate their labor agreements.  Congress and the new Administration realize that people will want to purchase cars with higher mileage as the price of gas climbs regardless of any government requirement.  There is no justifiable reason that any particular auto company has to build a particular car because the government says so.  Achieving this state of enlightenment, Congress repeals the CAFE standards.  With the liberty to manage the company to make a profit rather than meet the constraints of a bevy of interest groups, a more energized management team takes the reins, and returns the Big Three to competitiveness.

Drawing a line in the Sand

If we don’t take a stand here and now, every company that wants a cash cushion will be working the halls of Congress to get their hands on your money.  There is not enough to go around.  In addition, many of the problems we are facing were created by government initiatives.  The mortgage mess was not the result of not enough regulation but by government programs that compelled lenders to give loans to people who could not afford them.  Detroit’s problems are a result of CAFE standards and onerous union contracts.  Since government created many of these problems why do we think that government knows how to fix them?  What we need to do is tell them to back off and let the free market work.

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Bailing Out the Auto Companies

by Bill O'Connell on November 11, 2008

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The conga line for companies with their hands out forms on the left.  The next ones bellying up to the slop trough are GM and Chrysler.  They need $25 billion to help them through a tough patch or they may go out of business.  It is a loan?  Is it buying a stake in the company?  Is it that thing of which we dare not speak– socialism?

What’s Next?

The question is are we, by the continued intervention of the government, managing our way out of a recession and into a full blown depression?  For all the warm memories of FDR, the depresion lasted more than twelve years thanks to, “We’re from the government and we’re here to help.”  Perhaps it’s time to take our medicine, pull the covers up under our chin, sweat it out, and get back on our feet.

Business, like many things, runs in cycles.  There are up cycles and there are down cycles.  We can’t eliminate them, they are a necessary part of the process.  But just as there is no cure for the common cold, sometimes it is best to let it take its course as soon as possible and be done.

Was Government Intervention Wrong?

I don’t believe so.  It was unfortunately necessary to end the panic.  When lenders have no confidence that if they lend they will be paid back, and if they have non-performing assets and they can’t sell them because they don’t know how to price them, the whole system locks up.  The system needs a lender of last resort and the only one big enough to step into that role is the government.  However, that should be for the least amount of time possible.

The Problem with the Auto Industry

The auto industry has had 35 years to figure this out.  With the Arab Oil Embargo of 1973, Japanese auto companies made major inroads into the automobile markets.  Imagine buying a car that got 20 miles per gallon, rather than 8, was better built, and cost less.  Well, that’s what the Japanese companies were offering, but what did Detroit learn?  Union contracts too expensive, let’s invest in robots and get rid of the expensive people!  GM bought boatloads of robots and later ended up scrapping them.  Why?  Because the workers weren’t the problem.

Who transformed the Japanese auto industry?  An American by the name of W. Edwards Deming.  After World War II, Japan’s industry was in shambles.  Deming went to help them get their industry back on its feet and taught them about statistics and quality control.  They learned their lessons well.  They focus on incremental changes every day.  If someone sees a problem on the assembly line and takes action to stop the line, he doesn’t get chewed out, he gets applauded.

The Big 3 have had all this time to figure out what they were doing wrong and fix it, but what did they do?  During the good times, they just rolled along.  If signing a big labor contract kept the peace and kept the factories running, they would buy off the unions.  But when the trouble starts, there’s no room to maneuver.

Leading the Way to the Future

The Japanese saw the need to cut back further on fuel consumption, but they knew there was a limit as far as how much mileage you could squeeze out of a gasoline engine, so they came out with hybrids.  Initially they were a novelty, but when gas was headed for $4 per gallon, they we economical.  Where was Detroit on this?  Lagging behind, of course.  Don’t develop a hybrid car until your customers demand it, but by the time they do, they would rather buy the tried and true hybrids being built by Toyota and Honda.  Ford promised to produce 250,000 hybrid cars but rescinded that pledge nine months later.  Why?

According to a Ford spokesperson, an internal panel of experts analyzed customer interest in hybrid cars and did not feel that there was enough demand to warrant the expense of building 250,000 hybrids.”

What was the price of a gallon of gas when they made that decision? $2.20, the lowest it had been in ten months.  The other half of that article quoted above said, “Toyota remains top hybrid producer.”  GM is now placing a very big bet on the Chevy Volt, which will be an electric car scheduled to launch in 2010.  Although there is little fanfare, Toyota, Nissan and Mitsubishi are all planning electric cars in the next two years.

To Bail or Not to Bail?

So why should the taxpayer be on the hook for the mistakes of the Big 3 auto maker’s management for these past 35 years?  Perhaps they should just go into Chapter 11, reorganize and come out as more competitive companies.  Why prop them up so that they can stumble along for another 5-10 years until the next downturn and come back to the trough?  The stockholders have been electing the boards of directors for these companies for 35 years and buying their stock.  The boards have been hiring the management team and providing them with their compensation.  The management team has made the product decisions, negotiated the labor agreements, and all the other missteps.  Why should American taxpayers have to step up to the plate and bail them out.  They got themselves into this mess, let them get themselves out.

But that’s just my opinion.

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