Myth #2 – Government should be run like a business - Revision 2.0

To begin with an example:  In a recent email that was forwarded to me there was a citation that the administration of George W. Bush had 55 percent of his cabinet members that worked in the private business sector prior to their appointment to the cabinet, this contrasted with 8 percent in the Obama Administration.  There was no citation as to the value of having had private business sector experience and so I thought I might help with that.

If we look at the case of Samuel Bodman, appointed by GW Bush in 2004 as Secretary of Energy, we find that he did indeed have private sector experience.  He began his work in the private sector as the technical director of a venture capital firm, later became Chief Operating Officer of Fidelity Investments and subsequently joined the Cabot Corporation as Chairman and CEO.  Under Bodman's leadership from 1987 until 2000, Cabot was one of the country’s largest polluters with 60,000 tons of airborne toxic emissions annually.

Bodman’s tenure was during the coltan boom (columbite/tantalite used in the manufacture of consumer electronics). Cabot was one of the companies listed in a United Nations report (http://en.wikipedia.org/wiki/United_Nations) detailing illegal exploitation of resources from the Democratic Republic of Congo.  As with other resources (diamonds), the sale of coltan by militias to fund purchase of weapons and ammunition was a factor in the longevity of conflict in Democratic Republic of Congo and elsewhere.

Did Sam Bodman apply his private sector experience to his government service?  Did he apply any experience to his government service?  I think not.  He was largely an ineffective secretary.

The following is a quote taken from an ABC News release of November 1, 2005,

          “Bush will also look to Bodman to advance his second term energy agenda that includes weaning the United States from foreign oil by strengthening energy development at home.

          In describing this agenda in his Dec. 10, 2004, announcement of Bodman's nomination, Bush said: ‘We will continue improving pipelines and gas terminals and power lines, so that energy flow is reliable. We will develop and deploy the latest technology to provide a new generation of cleaner and more efficient energy sources.’ “

We know all too well that none of that happened.

The following link to a Huffington Post article sums up Bodman's tenure very well:

http://www.huffingtonpost.com/raymond-j-learsy/our-forlorn-energy-secret_b_116029.html

If you read the entire huffpost article, it will become clear that Bodman was looking the other way while oil rose to $145 per barrel, at least he was looking the other way when he was not asleep.

In spite of the example of Samuel Bodman, there clearly are advantages that a cabinet person with private sector experience could bring to government.  Knowledge of the importance of profit and loss, brand loyalty, quality assurance, customer service and fidelity to shareholders can be of inestimable value in the operation of government.  These assets, however, seem to rarely survive beyond moving day.  The people of the United States are the shareholders to whom fidelity should be given in the case of government service, and yet it seems that all too often the allegiance of high level government officials (and yes elected representatives) remains with their previous corporate associates.  Customer service is reserved for high end campaign donors and quality assurance gets ground up in the pork barrel.  Friends and family (extended family) reap the profits and the average American sustains the loss.  In the private sector, the malfeasant would be thrown out by shareholders.  In the public sector, they are enabled to hide behind sham voting procedures and revised and extended recording practices until such time that they leave office. They are then rewarded with appointments to boards from which they seek favors from public officials who have not yet departed government.  

In summation I would argue that the issue of private sector experience is so minor as to be irrelevant.  Public sector managers (i.e. cabinet level appointees) can be highly effective if they possess the same assets that make any manager effective:  integrity, honesty, intelligence, life experience, education, ethics, passion, vision and a strong desire to be good at what you do.  Anything less will have disastrous consequences no matter what the previous job description.

Elgut Dlareg

Tradition, the Bubble

Each generation uniquely prepares itself to live with existing technology and the legacy of previous generations.  Most humans live in a bubble in which is collected the cognitive stimulations that have been most relevant to them.  For that reason they are unwilling or unable to accept as societally normal that which appears to them to challenge the contents of their bubble.  Elders condemn youth for departing from tradition.  Youth depart from tradition when it does not fit their needs.  A new tradition develops.

Elgut Dlareg

The truth about social media and screen time's impact on young people - New Scientist https://apple.news/AsEXr5zNIRHufEn3tl3Z83w

Point of View

“There are no new frontiers,” he said.

“The frontiers are within,” she said.

Media Method

I had a column to write,

My boss said, “Please don’t make it trite,

Give me some shame,

I can heap on a name,

And you can leave early tonight.

A Presidential Prosody dedicated to Bush 43

The Beast came among us.

He stared.

He ravaged.

He left us naked and bleeding.

And then he moved on in his self-constructed glory.

Elgut Dlareg

Mr. Speaker

And God said, “John, let there be jobs.”

And John said, “God, we need to stop abortions first.”

And God said, “John, if people have jobs, there will be fewer abortions.”

And John said, “God, we need to defend heterosexual marriage first.”

And God Said, “John, if everybody can marry, there will be more jobs.”

And John said, “God, we have to get rid of collective bargaining first.”

And God Said, “John, I like unions, they help job security.”

And John said, “God, dammit, I thought you were on my side.”

And God said, “John, I haven’t registered to vote yet.”

Elgut Dlareg

Foreclosure Solution

The number of foreclosed properties on the market and waiting to come on the market has contributed to a downward trend in home values and it appears that the incidence of foreclosures may be further fueled by the downward movement – a classic spiral which requires an outside event or intervention for its interruption.  The federal effort to offer a tax incentive for new buyers was effective but short-lived and the effort to force lenders to renegotiate loans never reached a sufficient volume to impact the market.

It seems to me that it would require at least half of the existing foreclosed properties to be removed from the market to create a sufficient interruption to change the downward spiral.  How to accomplish this is problematic and requires that financial institutions institute significant creativity which seems to be something that they do very well in the capital markets (i.e. derivatives), but at which they have been totally impotent in the mortgage arena. Even in the face of significant losses on mortgage portfolios, it seems that they are in total paralysis, having cranked the foreclosure machine to maximum speed and unable to see any other solutions.

It seems to me that the solution is at hand and available by use of the oldest principle in commerce – supply and demand.  By all accounts extant in the media, Americans are turning from home owners to renters.  It would follow that lenders could turn part of their inventory of “for sale” homes into “for rent” homes, thereby removing product from the oversupply of “for sale” and putting it into “for rent”.  Lenders could use this same mechanism to allow persons in, or close to being in the foreclosure process to remain in their homes as renters, thereby keeping the home from entering the "for sale" market.  Lenders could even use a “rent-to-own” option as one part of the operation.

I would even suggest that the major lenders in possession of foreclosed properties could put together a consortium that would assume the day to day operation of the rental process.

I am sure that there are many perfectly reasonable objections to this idea; however I do believe that there are sufficiently manipulative minds on Wall Street to create a way that this could work effectively and profitably.

Elgut Dlareg