When a President wastes a decade

Attended a dinner at Winsor School with old friend David Sanger, now NYT chief national correspondent (I met him 30 years ago when he was an intern in WSJ Boston Bureau). Have to buy his book, "The Inheritance." He says that it argues that whether Iraq was the right or wrong war, we need to understand how significant it was in consuming national time and treasure. He estimates cost at $3.3 trillion and the establishment of a national strategy that distracts us from both domestic planning and other international interests.
New anecdote: he recently met with a Chinese general who said that ten years ago the Chinese despaired of ever catching up to U.S. power, but "we never dreamed you'd spend a decade in Iraq and Afghanistan."
It's a reminder that the most powerful weapons are those you don't use. Saber rattling can often have much more impact than actually using the saber. The Cold War, the most successful U.S. war since WWII, was all about unused weapons.
It's also a reminder that when a president picks one big battle it will prevent him from waging other battles. They have to spend some of their political capital as they go along, but it's not an infinite resource. Obama has won most of the political battles he fought -- health care, financial rescue, financial regulation, Supreme Court picks -- but he doesn't have any political capital left. Because the fight for economic recovery turned out to be the most important battle, and he can't wage it any more, most voters think he's been a failure.

Perry's job "creationism" like religious creationism

The Wall Street Journal has a very interesting front-page piece on Texas Gov. Rick Perry's job "creation" programs today. http://on.wsj.com/o2vjUd It makes it clear that Perry's "job creationism" is as scientifically rigorous as religious creationism.
Written by my former colleague and Pulitzer Prize winner, Mark Maremont, the story notes that Texas committed $440 million to new jobs programs starting in 2005 and says they claim to have created 59,000 jobs. It notes that at least 12,000 of those jobs were claimed as a result of a Texas A&M genomics project that actually hired only 12 people. The rest come from adding up a plethora of unrelated jobs, most of which would have happened anyway.
Sadly, it is predictable that when a politician starts counting "jobs created" the number claimed will greatly exceed the reality. It was especially interesting that the best example of jobs created -- Citgo's new U.S. HQ with 820 jobs -- didn't really "create" jobs. It caused the jobs to be placed in Texas rather than some other state. Venezuela created the jobs because it needed a U.S. base for Citgo. Texas just offered a larger bribe to get them there than any other state was willing to provide.
To be sure, these state bribes to business are an important part of plant location decisions. But they aren't job creation in the sense of a venture capitalist providing money that creates a new industry. And it isn't a useful precedent for a U.S. president.
I am familiar with the recent plant placement efforts of a large food manufacturer. It ran rigorous analytical models to try and decide what state should get a new manufacturing and distribution facility it planned. It concluded that the only measurable financial criterion that mattered was the size of the state subsidy. So states are basically in a position of having to tax their existing businesses to bring in a new business. It's an unfortunate game of beggar-thy-neighbor, and governors have to play it. But it isn't job creation.
Perry, of course, criticizes Obama for his job creation efforts. So it's rich seeing him caught playing the same games.

Jobs place in business history? No. 3

Steve Jobs' death is a tragic instance of genius interrupted. I only met and interviewed him once, but my life repeatedly has been changed by his vision and the products it created. I live on my Mac and iPhone and I probably have a more intimate relationship with them than with any other devices I've ever owned except my sea kayak, which periodically saves my life.
After 40 years of following American businesses, I've developed an interest in business journalism and business history. I believe that business and economic history probably plays a bigger role in the way the world works than most historians recognize.
It's too early to tell, but I'm a journalist, so I have to ask: How significant was Steve Jobs in business history?
After some consideration, I think he was probably one of the three most significant business people in American history. I'd rank him with Thomas Edison and Cornelius Vanderbilt -- probably in third place. Jobs (with Steve Wozniak who created the cheap disk drive) invented the personal computer. The second Apple (with VisiCalc from Dan Bricklin and Bob Frankston) was the PC that made Ben Rosen start proselytizing PCs as tools rather than toys. Bill Gates was a better business person at that point, but Jobs created the hardware. The one time I interviewed them both involved an argument over whether hardware or software should be free. That argument continues.
So what did Steve create? It's somewhat tough to say, because in corporate America, success is a team effort. But repeatedly, companies headed by Jobs created revolutionary products. That's really rare.
Giving him credit for team efforts, he created the usable PC; he created the graphical user interface, which is the way all people deal with machines today; he stole and popularized the mouse; he made desktop publishing possible; and that's just in PCs.
Then he changed movies with Pixar, demonstrating that creativity was a successful business strategy in high tech.
When he came back to Apple, his genius was really astounding. He used his vision to create products and services that remade the music industry, the PC industry, the newspaper, magazine and book publishing businesses.
And he created the smart phone -- the most important product in the world today. Nokia had led the way into smart phones but Apple took advantage of increased bandwidth, and it completely changed people's expectations. Remember reading the early reviews of iPhone? The raves were so over the top that you wondered how the Mossbergs and Pogues had been drugged. But when you got your own iPhone you wondered how any company had managed to create a product that so perfectly fit your needs. Screen gestures that did what you expected were an incredible example of a company understanding people.
The iPhone was the perfect expression of merging technology with imagination. It may never be equalled.
Still, I think there are other business people who have had a huge role in changing America. First, I would list Thomas Edison. Electricity generation was a big deal, and he invented technology to make it work and a corporate model to sell it. And inventing a market for electricity by inventing light bulbs was definitely world-changing. Edison also invented moving pictures and he created musical recordings. Think of the leap he made from a world where the impact of the spoken world was limited to shouting distance,
Last year I read a biography of Cornelius Vanderbilt that makes me think he should be in the small Pantheon of business leaders as well. He controlled sea transportation around New York, through great service (he pioneered ferries that left on a schedule rather than when they had a full load of passengers) and steely will. Then he moved on to control rail transporation. He was the first to demonstrate how to use the stock company, with many investors, to accrete the capital needed to build railroads.
There aren't many other business leaders in that league. The Wright Bros. invented the airplane, but they didn't create airlines. Bell started the phone company, but it was just one business. Saenoff didn't really invent radio the way Jobs invented the PC. JPO Morgan saved the financial system, but he didn't innovate anything.
I think Henry Ford might be in Jobs' league, mostly because the car remains the most important life changer of any technology. And Ford, unintentionally, created the middle class industrial worker. So I think I'd rank Ford and Jobs together, just behind Edison and Vanderbilt.
These kinds of rankings are completely bogus, of course.
But doing them provides some context for the events of our times.
Thoughts?

US Studying Google for Antitrust? Really?

The Wall Street Journal broke the news that the FTC is ready to subpoena Google for information on its trade practices.
This is likely to help Google's competitors. But it's hard to see how it's going to help consumers. And antitrust law in America is fundamentally designed to give consumers a fair shake.
(I'm an enthusiastic user of many Google services, but I don't own any stock in the company).
It's hard to imagine a company that treats consumers more fairly than Google does. It figured out a way to let people find almost any information free. It did it by giving them ads for products and services that they were likely to want rather than bombarding them with irrelevant ads. That has worked so well for businesses that they have halved their advertising in newspapers and generally reduced ad budgets because they get more effective returns for less money online.
Google has used its incredible profitability to expand its footprint on the Internet through more free services, most of which have only indirect financial returns, if any. It stores much of the world's video information free on YouTube. It runs a great free e-mail service that prevents spam better than any costly corporate e-mail services I'm aware of. It runs free Google office apps in the cloud, so you can access them from any computer. It introduced a really good, credible alternative to the iPhone at a time when Blackberry couldn't figure out how and Microsoft was fiddling and diddling with shrinking a bloated operating system into a pocket-sized package.
Google even stood up to the Chinese and moved out of that country -- an incredible example of corporate morality. Much of the criticism of Google comes from competitors and advertisers who want to game its system and bother innocent consumers with unwanted sales pitches rather than the products they actually want.
The FTC better not mess up the Google system to the point that consumers get less.
As Dan Lyons points out at Daily Beast this is certainly bad for Google. Even though the Feds may not succeed in getting the courts to find Google's actions illegal or force many operating changes, Google will have to think about something besides the customer benefit of any new service it provides. Everything it does from now on will be constrained by the need to consider what the government thinks.
The government's unsuccessful antitrust prosecution of IBM marked the beginning of the end for Big Blue's long run of dominance. Similarly for Microsoft. Those cases hinged on the giants' abilities to bundle software with existing mainframes or operating systems in a way that prevented competition from getting a toehold. Locking out competition is bad for consumers, and those actions arguably led to a better marketplace.
From a competitor's point of view Google undoubtedly looks like a voracious monopoly. But there are serious, cash rich competitors in the same space that can take care of themselves. Apple has a market cap substantially higher than Google's, a lock on the most lucrative smart phone and tablet users and control of the music industry. Microsoft has revenue and cash flow that would make most national treasuries weep, and a lock on the CIOs of the world. Facebook gets a lot more time everyday with Internet users than Google does and it knows a lot more about them.

Google provides a greater consumer service, for less money, than any other company in high tech (although Facebook is coming close). It will be tragic if that is lost due to antitrust action.

Brain-free law-making

The NY Times has an interesting story on state legislators proposing bans on listening to music players or texting while bicycling or walking. http://www.nytimes.com/2011/01/26/us/26runners.html?_r=1&src=fbmain
It seems to be a classic example of legislation by anecdote, unimpeded by actual knowledge.
In fact, pedestrian fatalities declined 16% over the time that Americans presumably increased their walking while distracted. Fatalities dropped to 4,091 in 2009 from 4,892 in 2005. The story says there was a slight upturn in 2010, but that doesn't seem to have been the reason legislators decided to act.
Among the states, Arizona and Florida had the largest increases in pedestrian fatalities, followed by North Carolina, Oregon and Oklahoma. The study doesn't say whether those states had the largest increase in sales of iPods or Blackberrys -- facts that might have provided a rationale for the proposed laws.
New York State Sen. Carl Kruger of Brooklyn, proposed a bill that would apply to pedestrians in cities of one million or more. “This is not government interference,” he said. “This is more like saying, ‘You’re doing something that could be detrimental to yourself and others around you.’ ”
Kruger has a funny way of defining "not government interference."
Examples like this of legislating for the sake of legislating are enough to turn me into a full-fledged libertarian.

New Job site threatens monster.com

I just read a story in the Washington Post about a new domain, "jobs" that looks like a big threat to Monster.com and CareerBuilder.com. It could do to those job sites what CraigsList did to newspapers' classified ads.
The jobs domain was authorized by the Internet registry, ICANN. It was opposed by newspapers and long-term nemesis Monster alike. The jobs domain lets companies post help wanted ads for free. You go there by typing something like http://ma.usa.jobs/writing, and see a list of postings. Companies love it because they can put up ads for free. Monster.com charges up to $395 for an add, or $230 a piece for ten or more. For a big company with a lot of openings, it's a significant saving.
If you're job hunting -- or hiring -- its worth checking out.

Official Google Blog: An update from the Chairman

Official Google Blog: An update from the Chairman

http://billbulkeley.blogspot.com/2011/01/silicon-valley-boardroom-shakeups.html

Silicon Valley Boardroom Shakeups

Two of the biggest companies in Silicon Valley underwent big boardroom shakeups yesterday. At Google, Eric Schmidt, the professional manager who has headed the company since 2001 relinquished the CEO title to co-founder, Larry Page. At Hewlett-Packard, the world's biggest technology company by revenue, four board members departed with five new ones coming on.
The Google change is a big deal. I'd argue that Google is the most important company on the planet -- more so than Facebook, IBM, Apple or News Corp. The Google triumvirate has created an amazing business model. And it is also a cultural and political force with its own foreign policy. Google's stance against Chinese censorship (allegedly pushed by co-founders Larry and Sergey) was an important development in world affairs last year. Its stewardship of many individual's documents, e-mail, photos, videos, phone calls and blogs is a bedrock of Internet existence.
Eric Schmidt, who I met a few times while covering Sun and Novell, has an amazing ability to foresee how technology will impact business and the economy. Google has made a series of smart moves through acquisition and invention during the decade he has been there. I'm not a shareholder, so I don't have that perspective. But as a citizen of the globe, I hope the change won't derail Google.
The good news is that the co-founders presumably are more attuned to the company motto -- Don't Be Evil. The risk is that Schmidt's acute sense of how Google fits into the wider world will be subsumed to a Google-centric view.
Hewlett-Packard, on the other hand, doesn't really matter. It's a collection of unrelated commodity businesses that don't lead in anything but cutting prices. If the whole company blew up, someone else would license Canon's printer engine technology. The same Chinese factories would make the same PCs and laptops. Another Indian body shop would take over the offshored services. The Intel-based enterprise servers would be made by some other Microsoft spawn. And only the legacy enterprise equipment would retain an H-P identity. Mark Hurd managed to make H-P profitable, but the decision to slash R&D has made it largely irrelevant.

Chinese mothers

There was a fascinating piece in Saturday's Wall Street Journal by a Chinese-American mother who is a law professor at Yale. She contrasted her parenting style with that of typical American moms (and dads, including her husband). The message was that while her demands for perfection from her daughters sound autocratic and unreasonable, they produce superior children. The implication was that her methods are typical not only of Chinese-American mothers but of mothers in China as well, raising some interesting questions about the future competitiveness of our two societies.
I certainly haven't raised my children the way she did, and I suspect some of the reason is laziness and lack of self-discipline.
While her methods sound draconian, they are also incredibly time consuming. I don't think many American mothers or fathers have the discipline and determination to spend the hours working with their kids that being a Chinese mother seems to require. We all try to spend quality time with children, but not many spend the amount of time that Amy Chua seems to. I suspect her kids benefit from the amount of time and attention they get, even if they sometimes rebel at the content. She may sometimes tell them they're "garbage" but the amount of time she spends must tell them that she thinks they're incredibly important.
In one painful anecdote about forcing her daughter to learn to play a difficult piano piece, she describes spending at least four hours of yelling, screaming and listening to badly played piano. Not many parents have the energy or make the time for the sort of effort.
In the U.S., you sometimes hear about football or baseball players who are coaches' kids who spent that sort of time with their Dads. And then there's Tiger Woods. But very few parents will spend that kind of time practicing math or language or a musical instrument with a child. It's so much easier to put the kid in front of a video screen or a computer game.