Wednesday, October 19, 2011

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.

Tuesday, October 11, 2011

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.

Wednesday, October 5, 2011

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?