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About admin

Retired engineer, CEO, and entrepreneur. Founded four companies, 2 financially successful, earned 23 US Patents, and wrote a book on marketing.

Why large Organizations have lousy leaders

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I’ve found few exceptions to this observation: Large, hierarchical organizations over 30 years of age are poorly led, a drag on their societies, and unable to adapt. This applies to diverse organizations like Goldman Sachs, J.P. Morgan, BP, General Motors, the US Army, Penn State University, the Catholic Church, many governments, and most political parties. I believe there are structural causes for such pathetic leadership. These institutions have structured themselves to promote only those individuals who will protect and defend them. Potential leaders of change were the impatient, disruptive subordinates who either left in frustration or were expelled for cause. They were heretics and whistle blowers who directly threatened statuses, perks and self-images.

Promotions through middle management are filtered by five criteria (listed in their order of importance): 1. Perceived loyalty to the immediate superior and that superior’s status within the organization, 2. Perceived loyalty to the existing system as defined by senior management, 3. Likability, 4. Seniority, and 5. Apparent competence, usually equated to an accumulation of the system’s merit badges and an absence of accountable failures.

This  promotion process effectively stabilizes the inner workings of an institution and makes relationships among its members predictable and enduring.  Mediocre executives may administer with ease, so long as neither the mission nor the organization needs to change. Those who have reached the top are old (in their 50s or older), cautious, semi-competent administrators, supported by slightly younger, risk-averse subordinates awaiting their turns. The statuses and perks within these organizations go to those who play the game and get along. Subordinates are rewarded for impeding change, covering up organizational failings, and avoiding risks associated with altering the mission or initiating reforms.

Change, innovation, and bold leadership normally come from small, youthful, informal establishments with self-anointed leaders in their twenties or thirties who are intensely focused on their missions and thrive on taking risks. They attract subordinates who provide critical abilities and passionately pursue the institutional objectives. In the early years, a natural filter attracts worthy applicants and discourages most of the others: the organization is risky, ill-defined and without a history of success.

An ugly reality about innovative startups is that most of them fail or become members of the living dead. A venture capitalist friend told it to me this way: “When a successful VC invests in 10 companies, on average two or three of them will succeed and make him a hero. Three will fail. Worst of all, four will become very attractive small businesses which suck up his time.” I will add that the three which succeed will eventually join the next generation of large, hierarchical organizations run by lousy leaders who replace the founders.

An old bureaucracy will be poorly led until its culture embraces uncertainty, youthful bulls, and institutional failures. I can’t see that happening in the military, Goldman Sachs, Wells Fargo, BP, or the Catholic Church; just to mention a few. They will have to fail drastically before they might renew themselves. It’s tragic for society that some businesses and financial institutions have been allowed to become “too big to fail.” They need to be broken up until they’re small enough to fail and then prevented from growing through mergers and acquisitions.

How to select and develop capable leaders

Almost everyone sucks at selecting potential leaders (as opposed to selecting prudent administrators) because they use the wrong criteria. Potential leaders are too young, too aggressive, make too many mistakes, and are usually arrogant and obnoxious. They are out to accomplish something on their own and don’t want to report to others. They aren’t trying to be selected by others; they do the selecting.  Most of them won’t be successful. And few can predict who will and who won’t succeed. It is easy to identify Steve Jobs as a winner after the fact. However, Continue reading →

Twitt

A Founder’s History of Pro-Log Corporation (2)

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Friday, February 15, 2013
Ed:

Great reading.  You do have a writer’s touch.

I guess I could use a little more backstory – who is MSI data?  Did you build two companies?

The PPS4/1 was a Rockwell 4 bit chip, used in things like pinball games.  I know the 4004 was used in traffic signals, a calculator, and Pro-Log programmers, but I did not know about the heart monitor.  Do you remember the name?  Someone said the 4004 was used in a voltmeter, but I don’t know which one either.  There were only a few companies that made programmers for the 4004 (1702A), so I can guess that you guys were right there at the beginning of it all.  You provided the tools that designers needed – very cool.  You were right about the 4004 revolutionizing engineering.  It might have been good that Intel was short sighted in their assessment of the power of the 4004.  It gave you something to do for a few years.

So two guys start a business with a chip, and buld a business that standardizes industrial integration (STD and STD-32).  Why/how did Motorloa get involved?  Was it a good or bad thing?  Seems to me, if your were doing well (cash and time), why would you sell.  Of course, if the writing was on the wall, and your industry was shrinking, getting out while the going was good make sense.  Are you still living off of the Motorola payout?  (You don’t have to answer that if you don’t care to.  I remember the tale of the designer of the Hayes modem, who got a 7 year payout, right before the company folded at 7.5 years.  He actually lives near Atlanta.  A fellow robot guy.)

Very interesting thus far.  Who owns the name Pro-Log?  The www.prolog.com site goes to GDCA, a supplier of new Pro-Log cards.  It looks like they own the name, but they don’t tell the story of where Pro-Log came from though.

Should I start the Wikipedia page, or is that something you want to do?  :-)

Oh, by the way, I think I found Matt  (Matthias) via email.  I told him I had a collection of programmers and was toying with the idea of repurposing them into clocks or 4004/4040 4-bit trainers.  I haven’t heard back yet, so he may not have any insight.  I haven’t told him that we are conversing either – not sure if that was kosher or not.  I can provide his email if you would like to strike up a conversation – or I can keep it on the down low.  If you guys aren’t friendly, then I will keep the conversations separate.

I also read somewhere you have like 10-20 patents?  Do you still get to collect royalties from them?  That would be sweet…

Anyway, it is getting late here and I have a meeting tomorrow I need to get ready for.  The Vintage Computer Fair is having their first Southeast show in April, and I’m trying to put together a booth.  Maybe I’ll incorporate Pro-Log into the display.  So far, it is a good story to tell.

Flash
______________

Saturday, February 16

Flash:

It’s going to take many sessions to answer all the questions in your latest email, but keep those questions coming. They’re very helpful.

The name Pro-Log was Matt’s idea. It stood for “programmed logic.” It was meant to distinguish our engineering approach to using microprocessors from the traditional computer software methods. At roughly the same time the ProLog language was developed in England. From time to time, this became a distractive nuisance, but never a serious issue.

Yes, the PPS4 and Rockwell were the chip and company I was referring to. Matt chose the 4004 for the MSI order entry system because its architecture was simpler to use and its instruction set fairly clean and I/O oriented.

The heart monitoring machine became one-of-a kind because we went on to start Pro-Log, and the doctors didn’t have the wherewithal to fund the multi-year approval process for medical equipment. I’ll tell the story of that machine later. I used to tell it often in the early 70s when I lectured around the nation about microprocessors and how to use them. One of my jokes was that for every button on an instrument, one had to add 10 points to the required IQ of the operator, and 25 points for every potentiometer. When the doctors told us that they would operate the heart monitor and not the nurses, we made it a one-button system with no potentiometers. (I then demonstrated how microprocessors could simplify control panels.)

Other pointed jokes I made during the lectures told why hardware engineers were better than software programmers. Engineers always begin counting from 1 and programmers begin with 0; so that engineers are one step ahead of programmers. Engineers used picture languages to develop ideas and to communicate with other humans Continue reading →

Twitt

A Founder’s History of Pro-Log Corporation

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Introduction

From: Flash Corliss,  Saturday, February 09, 2013
Subject: Pro-Log

 Ed,

Hello, my name is Flash Corliss, and I just recently became a Pro-Log fanboy.  Over the years, I have been collecting Pro-Log programmers and STD computer cards off of eBay.  Wonderfully built stuff. 

Which got me thinking; “Where did Pro-Log come from?”  I know the story of Microsoft, Intel, Apple, IBM, and HP, but not of Pro-Log.  I know it was bought out by Motorola, and then they killed it a few years later, but the beginning is a bit of a mystery. 

I have some brochures and owner’s manuals that paint a very capable engineering company – but nary a word of backstory. 

Using Google, I was to find you and Matt Biewer (I don’t have his email yet).  From what I can gather, you and he founded Pro-Log in 1972 (friends?).  What was your first product?  How did you meet Matt?  Did you always want to run a company (CEO)?  Did you and Matt get along and remain friends before/during/after the sale to Motorola?  Why did Motorola discontinue the Pro-Log brand? 

Anyway, tons of questions.  You may not have the time to tell me your story – so is there a history book somewhere?  I know Matt wrote a PLS-400 Designer’s Guide (would love to get a copy).  Did you write anything at Pro-Log?  Did he write anything else besides the Designer’s Guide?  I have his name on some of the schematics I have in my collection, did you design anything?  Is there a repository of all things Pro-Log (i.e. do you have any Pro-Log paraphernalia lost in your garage – I could give them a new home)? 

I think at the very least a Wikipedia page should be written, and I don’t mind doing it if you don’t have the time.  Also, who would have the latest firmware (like for the PM9080 plugin module for the M-980 programmer)?  These programmers are still used for the Vintage Computer crowd…  I was toying with the idea of fabricating a USB interface for them so that they could be used with today’s newer computers.  I hate seeing these programmers tossed in the trash heap because people think they can’t be used anymore. 

Thanks for your time reading my ramblings.  I hope we can start up a conversation and take a trip down memory lane.  Invite Matt, it will be fun. 

Flash

_____________________________________

From: Edwin Lee  Sunday, February 10, 2013 2:22 PM

Flash,

Thanks for your email. You ask a host of great questions, most of which I will answer in due time. Am winding up a vacation in Hawaii today, flying back to Oregon tomorrow, so just this short email to let you know I got yours and will reply later.  I wrote many things while at Pro-Log, and continue to write now. For several years, in the early 80’s we published a monthly newsletter to our customers in which I wrote a management column.  Some of the essays are on my web page at www.elew.com. That also contains some info on my background and on Pro-Log.  I don’t know why Motorola dropped the Pro-Log brand, but it might interest you to know that back in the 70’s when Motorola developed the VME bus, their engineers used documentation and standardization ideas we had pioneered. More on that later. 

I have no idea what Matt is doing these days. I haven’t seen him or been in contact with him since 1997. Your questions about our relationship cannot be answered well in just a few words…. It is a long and complex history that goes back to Burroughs ElectroData in Pasadena. 

What got you interested in our products and in Pro-Log? I’ve saved some of the early documents. Have extra copies you might be interested in. 

Ed Lee

_______ 

From: Flash Corliss  Wednesday, February 13, 2013

Ed,

I hope the vacation was festive and that you don’t have much jet lag.

I was 5 when Intel announced the 4004, and didn’t have a clue about the early 4 and 8 bit computers.  Our South Texas town didn’t get much in computer news.  At 13, I bought (with my own lawn boy money) a TRS-80 Color Computer.  My dad thought it was a toy, but it was a tool for this young future computer guy.  Over the years I acquired several other TRS-80′s, and in college, I got my first IBM PC clone.  I had had the assumption that the IBM PC was the first PC.  It wasn’t until a few years ago that I got my education straightened out.

The Internet is awesome for doing research, and the more I looked, the more I found.  I decided I’d start my journey at the first microprocessor, instead of going back in computer time to the Mini’s, the Main’s, or the EDVAC’s.  Those are great eras in the computer timeline, but the Intel 4004 seemed like the best place to start to become an expert in all things 4 bits and up.  I already grew up with DOS, BASIC, and assembly, so how much more would I need to learn from the 4004 to the 8086?

Apparently a lot.  There is the whole S-100, CP/M era that I knew nothing about!

So for Christmas a few years back, my wife bought me an Altair clone from a guy in Alaska.  It was a wonderful kit, but its EPROMS were 1702A’s, and there is no modern programmer that can program them.  More research revealed the Pro-Log programmer, and I ordered one on eBay.

Super nice device.  However, it had corroded batteries, and its memory boards were shot, but I did get it functioning.  In fact, the Pro-Log programmers were more fun to play with than the Altair (which I haven’t finished yet).  Then I found out that the M980 that I had used an Intel 4040 4 bit processor, and the M900 used the Intel 4004.  Sweet!

Long story short, there isn’t much about Pro-Log available online.  Herb Johnson has a collection of Pro-Log documents, but he wants 20 cents a page, which gets pricey after a while.  So, I have been on a quest to find Pro-Log paper copies elsewhere.  That search led me to you.

I have ten or so M980′s, nine M900′s, three 1702A plugins, 20+ STD cards, 4 cages and power supplies, and one PLS-411 card (pre-STD) – and most of this collection has been refurbished and is 100% functional (with the latest firmware).  I don’t have an M810 – that would be awesome.  I also have an 8085 diagnostic kit, but was beat out on eBay for the 4004 version of the diagnostic kit.

I am not sure if you remember, but which came first: the PLS-400 series, or the 810 Programmer?  The 810 looks like it has PLS cards in it, so did you build the 810 and decide the sells its cards on the side.  Or did you create the PLS-400 line, and then build a programmer around it.  As best as I can tell, in the 70′s for programming the 1702A EPROM, your choices were either the DATA I/O or the Pro-Log.

For me, the Pro-Log was preferred.  Thank you for building such a wonderful device.

It is my intent to rewrite the EPROMS in these programmers to give them a new purpose (maybe a clock or something).  I have noticed that there are many 8 bit trainers (SYM, KIM, AIM, MARK-8), but there aren’t any 4 bit ones.  Wouldn’t it be cool to use a Pro-Log M900 or M980 as a 4040 or 4004 trainer?

I do.

Flash

________________________________

From: Edwin Lee,  Thursday, February 14, 2013

 Flash:

As I ponder how to answer your questions, I realize it will take many days, most of them fun and a few of them painful.  I’ll answer some of your questions in any case, but I’d like to propose a condition for going through the whole enchilada and for sending you some old documents at no cost to you. That is, that you will permit me to post your emails and my replies on my blog for others to read.  You can go offline with specific questions or comments at any time. Furthermore, I’d like you to review, a month or so down the road, some essays I’m writing about autonomous systems. 

The back story of Pro-Log is probably unique in hi-tech. Matt and I started the company so that we could raise our families (he had 6 kids, I had 5) in a healthy place. We lived in Southern California in the Pomona area, choking in smog. Six months after starting the company we began a process of deciding where to move, and 3 months later moved to Monterey! That move nearly broke up the company. For one thing, Matt wanted to go to Santa Cruz instead of Monterey. 

The initial funding for the company was roughly $100k provided almost entirely by Matt, me, and our families. Two other people, who we brought into the executive team shortly after incorporation, provided a few thousand dollars. We excluded outside capital so that we could balance our personal lives and professional activities. For the first 16 years, we grew the company entirely out of retained earnings, an additional $50 k loan I made to Pro-Log during its 2nd year, and a line of bank credit on our accounts receivable!  My own commitment to self-funding the company came from previous experience in MSI Data, where outside capital dictated much of what we did, subordinated our personal lives to corporate objectives, and nearly cost me my family. 

To answer one of your specific questions: we developed and built the first “gang” programmer, controlled by the first single-board microcomputer using the 4004 during the period  from November 1972 to February of 1973. The unit programmed eight 1702A PROMs at a time using an adaptive algorithm I developed and got Intel to bless. (The algorithm cut the average programming time by over 80% from the method advocated by Intel.) We delivered it in February of 1973 to RCA in Van Nuys.  We were able to move quickly because Matt had, in early 1972, gutted a hardwired production unit of an MSI Data order entry system, and replaced its control logic with a 4004 based network and 1702 PROMs. Continue reading →

Twitt

Ethically challenged Jason Conger cheated for headlines and votes

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I recently attended the State Candidates Forum sponsored by the League of Women Voters and was disappointed by Jason Conger’s unethical antics.

There were four candidates on the stage, two for the Oregon House and two for the Oregon Senate. Conger is Bend’s Republican incumbent in the House. The moderator posed a series of questions which each of the four candidates was to answer within 90 seconds. Time-keepers raised a yellow card when15 seconds remained and a red card when time was up. On his first answer, Conger talked past the red card; not a significant or unique violation, but a harbinger of what was to come.

While answering a later question, Conger pivoted from a legitimate reply to challenge Nathan Hovekamp about his so called “attack ad” that claimed Conger had voted for special interests. Conger stood self-righteously over a seated and fittingly silent Hovekamp, glaring down at him until his time ran out. Conger’s actions clearly violated the forum rules. The moderator should have told Conger “you’re out of order,” but he said nothing. Conger evidently realized that he could get away with cheating. He immediately blew off the next question and directly challenged Hovekamp a second time, standing over him and glaring down as a long silence dragged on.  Again, the moderator said nothing. Finally, Hovekamp responded by citing two bills Conger had voted for. At that point, the moderator mumbled something about this not being a debate and ended the discussion. I thought I was watching yet another NFL game with substitute referees. (By the way, if you think that Conger’s first challenge was spontaneous instead of calculated, then I have a bridge I want to sell you. Conger may be ethically challenged, but he is clever, and he is not stupid.)

Later on the moderator asked an unintentionally ironic question: “Why is there so little civility in the Legislature?”  He could have looked in the mirror and at Jason Conger to answer it for himself. Civility requires voluntarily adhering to rules of conduct, which are fairly administered by competent moderators, referees, or chairpersons. Civility, like fair play, is undermined when the media, supporters, and general public reward or ignore incivility or cheating, instead of holding the offender’s feet to the fire. The Bend Bulletin, which has endorsed Conger, rewarded him with headlines for his performance and nary a word about his unethical behavior.

Twitt

Essential qualities of a great President

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Two weeks ago, on 60 Minutes, Mitt Romney and President Obama were each asked, “what are the essential qualities of a leader.” Both responded with remarks about a personal vision, which is important but secondary. Their answers provide clues to past triumphs and troubles in the Obama Presidency, and to the tragic course which a Romney Presidency would take. Allow me to explain.

The most essential quality of a great leader is an ability to recruit and effectively manage outstanding people, including his lieutenants. This conclusion was reached long ago by others besides me. For example, in The True Believer, Eric Hoffer says:  “The most decisive (quality) for the effectiveness of a mass movement leader (is)… above all, the ability to evoke fervent devotion in a group of able lieutenants” (p 115). The majority of leaders settle for mediocre and incompetent loyalists because they are easier to manage during a crisis.

Three decades ago, while CEO of Pro-Log, I wrote A Framework for Managing. It describes how quality people are the most strategic and important resources for sustained success and profits are the most tactical. It also explains that subordinates are a small subset of the people whom a top executive must recruit and manage. A chart from that essay is shown in Fig. 1.

No individual, particularly in politics, business or sports can lead by themselves. A college football coach cannot accept any old group of players and assistant coaches to develop a winning team; he must recruit and manage excellent people, including athletic directors and alumni. Complex systems, like football teams, companies or governments, require a network of capable lieutenants who provide information and advice, develop scenarios, and execute plans in specific specialties.  A great leader attracts, selects, and supports the most qualified people available, even those who don’t fully accept his vision or exhibit blind loyalty to his cause. A President who accepts retreads or limits himself to docile loyalists eventually brings disaster. George Bush the younger comes to mind. (By the way, being the “great decider” which Bush touted as important is, at best, a tertiary quality.)

Abraham Lincoln understood the principles of great leadership. His Gettysburg Address and Emancipation Proclamation generated public support for Continue reading →

Twitt

Myth Romney rides again!

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Mitt Romney should change his name to Myth Romney. He has amply demonstrated that his entire political world is myth-based rather than data-based. A few days ago I pointed out that Romney hadn’t done his homework on foreign issues. The recently released video of his private fund-raiser, in which he claims that 47% of citizens are (parasites) sucking off the government, demonstrates that he hasn’t studied domestic issues either. This myth about citizens isn’t even original… it comes from Grover Norquist’s book “Leave Us Alone” (published in 2008) in which he divides the public into “takers” and “leave us alones” with a mere handful of undecided. Both Romney and Ryan are disciples of Grover Norquist, who is apparently the brains of the outfit.

Maybe it’s just me, but I prefer a fact-based leader with whom I may disagree to a myth-driven follower who is too lazy, too shallow, or too dumb to use objective information.

Twitt

Book Review: The True Believer: thoughts on the nature of mass movements

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Why would you want to read a 60-year-old book about fanatics and their followers, written by a self-educated itinerant farm-worker and longshoreman? Because, in a mere 168 pages, The True Believer by Eric Hoffer clarifies —more than any other book or social theory that I know of—  the nature of today’s religious and political mass movements, including the Catholic Church, Christian fundamentalists, China’s cultural revolution, Iran, Al Quaeda, the Arab Spring, Birchers, Birthers, and Tea Party loyalists. It is a mental searchlight and a unique pair of glasses, which illuminate and clarify today’s political and religious movements. It is an easily understood yet scholarly work which you will read, re-read, savor, contemplate, and treasure.  In the 1950’s Dwight Eisenhower brought The True Believer and its author Eric Hoffer to the nation’s attention. In 1983, Ronald Reagan awarded Eric Hoffer the Presidential Medal of Freedom.

Eric Hoffer is is so succinct, simple, and profound that writing about him must fail to do him justice. So, I’ll let him speak for himself. Here are a few thought provoking quotes, from among the hundreds of gems in his book.

“Faith in a holy cause is to a considerable extent a substitute for the lost faith in ourselves.” (p14) Hoffer makes the case that followers in mass movements are fleeing their frustrated lives.

“A man is likely to mind his own business when it is worth minding. When it is not, he takes his mind off his own meaningless affairs by minding other people’s business.” (p14)

“When people are ripe for a mass movement, they are usually ripe for any effective movement, and not solely for one with a particular doctrine or program.” (p16) “all mass movements are interchangeable”… they compete for the same followers.  (p17)  Hoffer’s examples include how readily Communists converted to Fascists and vice-versa. My conclusion is that all extremists are blood brothers. Hoffer points out that the opposite of any extremist is a moderate; extremists frequently change causes, but seldom do they become moderates.

“In pre-war Italy and Germany practical businessmen acted in an entirely “logical” manner when they encouraged a Fascist and a Nazi movement in order to stop communism. But in doing so, these practical and logical people promoted their own liquidation.” (p19) Would someone kindly send copies of this book to the Koch brothers and Mitt Romney?

“The milieu most favorable for the rise and propagation of mass movements is one in which a once compact corporate structure is, for one reason or another, in a state of disintegration.” (p42)

“The vigor of a mass movement stems from the propensity of its followers for united action and self-sacrifice.” (p 59)

“Hatred is the most accessible and comprehensive of all unifying agents.”  “Mass movements can rise and spread without belief in a God, but never without a belief in a devil. Usually the strength of a mass movement is proportionate to the vividness and tangibility of its devil. When Hitler was asked whether he thought the Jew must be destroyed, he answered: “No…We should have then to invent him. It is essential to have a tangible enemy, not merely an abstract one. ” (p91)

“Finally, it seems, the ideal devil is a foreigner. To qualify as a devil, a domestic enemy must be given a foreign ancestry.” (p93) Sound familiar? Anyone we know who is intensely hated by people who deny his citizenship and charge that he is a Muslim?

“That hatred springs more from self-contempt than Continue reading →

Twitt

Sloppy-poppy Romney has not done his homework

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It seems to me that Mitt Romney has failed to do vital homework on his foreign and economic policies. Prior to his presidential campaign, he had years of leisure-time in which to travel, study, consult and develop coherent and carefully developed strategies and policies. His performance on the campaign trail is evidence that he didn’t prepare himself. His trip to England and Israel earlier this year was pathetic as evidenced by his ham-handed remarks about the Olympics and the Palestinians. (During his visit to Israel, his old pal Netanyahu effectively endorsed him and has subsequently done his best to embarrass President Obama.)  Romney’s outburst about Libya and Egypt, before getting the facts, was tragic, desperate, and irresponsible for someone who wants to be President. His whining remarks about China smack of merely being against whatever President Obama does rather than stemming from a coherent strategy.

What would he do after he labeled China as a currency manipulator? How would he get them to play by the rules? Institute tariffs? Stop trade? Pay off our debts to them? Send in the Marines? He should be able to answer those questions if he has a strategy; otherwise he is just huffing and puffing for votes.

Certainly China is a currency manipulator. They’ve manipulated their currency and maintained tariffs since I did hi-tech business with them in the 1980s. They have cleverly used duties and currency manipulation to suck manufacturing jobs out of the US. However, I applaud their prudence. The responsibility of the Chinese government is to develop China, not to protect us against our own follies.

For more than two decades Continue reading →

Twitt

Free Trade Doesn’t Work: what should replace it and why

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Would you like to know why we’ve lost millions of middle class jobs over the last 30 years and endured annual trade deficits of more than $500 billion for 15 years? Would you like to learn what we can do to right the ship? Then, buy, read, study and refer to “Free Trade Doesn’t Work: what should replace it and why” by Ian Fletcher. It ranks in my top five books on economics. It’s that good! The title makes bold claims; the content delivers.

In his effective 267 pages of text, Ian Fletcher dissects and often demolishes fundamental teachings about the benefits and risks of trade and replaces them with evidence based updates.  He then recommends a practical alternative based on clear objectives. He wastes no time on polemics or blame as he provides easily understood and well documented evidence sprinkled with stimulating analogies to support his thesis. He displays a refreshing and sensible appreciation of how we got ourselves into this unsustainable mess and why so few economists speak out against conventional wisdom, even though most of them probably know better.  His clear and simple explanations of complicated issues remind me of an old axiom: “The better you understand something, the more simply you can explain it.”

Free Trade Doesn’t Work has three sections: The Problem in which we are mired, The Real Economics of Trade in which evidence and history contradict the prevalent mythology and The Solution a relatively simple but politically controversial alternative to Free-Trade that has been successfully practiced in disguised forms by the Japanese and Chinese, among others.

The Problem section describes our stumbling embrace of free trade without a strategic objective. Its causes are multi-dimensional but include short-term gratifications and fallacious beliefs about the automatic benefits of trade and its natural corrective mechanisms. One of the most telling Continue reading →

Twitt

Five steps to a healthy Postal Service

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Congress should stick to its role as a marginally competent board of directors and stop micro-managing the Postal Service into oblivion.

For 30 years, a meddling Congress has been driving the Postal Service from health into bankruptcy while ignoring the three major drivers of its collapse: Congressional mandates, defined-benefit plans for postal workers, and declining mail volume. Clean up the first two and the declining mail volume could be managed by competent executives and dedicated workers empowered to modernize and expand the system. I’ll suggest a cure that Congress can and should enact.  For details of the financial situation I suggest reading “The Cost Structure of the Postal Service: Facts, Trends, and Policy Implications,” released July 20, 2011 by the Office of the Inspector General

Congress mandates unnecessary services. To subsidize special interests, it compels delivery of 2nd and 3rd class mail at a loss. It limits any increase in the price of stamps to the rate of inflation and ignores more rapid increases in operating costs such as transportation. In 2006, it mandated that the Post Office pay $5.5 billion each year into Federal coffers until 2020, ostensibly to pre-fund health care costs for the next 75 years. (Gross revenues for the post office were only $63 billion in 2011). This last piece of micro-management was passed unanimously by Congress. It should have been obvious to any member with a business background that this would accelerate a financial crisis while doing nothing to solve the long term issues of fiscal soundness. It did, however make Congress look better. Through the magic of bookkeeping, it reduced the Federal deficit by $5.5 billion each year!

Defined-benefit plans, like the health care benefits for retired Postal workers, are intrinsically unsustainable because Continue reading →

Twitt