Monday, October 31, 2011


The time has come once again when we turn to “Mr. Manager” to explain exactly what manager’s mean when they say such things as “people are our most valuable asset” or “we are looking for entrepreneurs” or “we want people who are not afraid of taking a risk” or the ever popular “we don’t shoot the messenger”. As everyone – including Mr. Manager – knows there is a huge difference between English and Management Speak. While the words sound the same the interpretation or meaning in Management Speak can be quite different from what the average employee may have understood. For example exactly what DOES a manager mean when he says people are our most valuable asset?

Well the typical employee hears and interprets this statement as focusing on “people” while the manager focuses on the word “asset”. The employees will see this statement as showing care and concern for the “people” and as an expression of concern and dedication to those who do the work but this isn’t precisely what is meant in Management Speak. While it is true Mr. Manager shows care and concern for his “people” he does the same for his Ferrari, after all one doesn’t mistreat an “asset” because it depreciates its value. So the focus by the Manager is not on the word “people” but the word “asset” because to the Manager these are interchangeable terms.

The proof of this assertion lies in the actions taken by the Manager when he is called to task by the accounting team and told he has to reduce his overhead, budget, or burn rate. Now the Ferrari, like most of the tangible assets have depreciated so the disposal value is much less than the cost of replacement, but not so that most valuable asset – the people. Disposing of a few hundred people immediately reduces the payroll, the travel, the healthcare, and all of the associated overhead. All of this falls to the bottom-line and thus demonstrates that People truly are the most valuable asset.

When the boss says “we are looking for entrepreneurs” or “risk takers” does that mean he wants people who are creative and willing to take a risk – as in high risk high reward? Mr. Manager can assure you that when the boss says he is looking for entrepreneurs he is telling the absolute truth. The boss is searching for entrepreneurs with the same verve and enthusiasm as the FBI is looking for serial killers with the same objective in mind – to eliminate them from society. Entrepreneurs are people who take risks, who see new ways, who – in short – upset the apple cart and threaten the status quo. No manager worth the name is going to tolerate having his apple cart turned into applesauce by some wild-eyed loose cannon who is out to reduce costs, improve efficiency, and show higher authorities that his boss is a moron. So yes indeed, the boss is certainly on the look out for entrepreneurs so he can give them the rewards they so justly deserve.

Periodically the boss will assure the staff that he is always looking for input from the rank and file and that he will reward good performance and sound suggestions. At some point, usually at some large gathering the Boss announces that he wants suggestions and that he wants to know what we think. Of course this is another one of those times when the English and the Management Speak don’t mean the same thing. The employee hears the Boss asking for the employees to give him assistance in determining the future – he hears a request for input and suggestions. But that is English and when you filter this through Management Speak, you immediately realize that while a cat might look at a King, it isn’t recommended procedure for an employee to take this statement seriously and to suggest anything to the Boss. When the boss says he is looking for input it is in the same category as the flashing “Applause” sign you see in TV studios. The Boss is willing to accept your compliments, applause, and congratulations but any actual advice is about as welcome as a bad case of hives – in fact your advice might just bring on the hives.

Of course the boss is always telling the employees that he wants their input and feedback and that he will reward their performance. Mr. Manager can assure you that when the Boss says “we reward performance” he is telling the absolute truth. Of course, you have to understand what is meant by “performance”. The more effusive your compliments, the higher your performance rating, while the more you actually offer advice or move outside of the established boundaries set by the boss, the lower your performance rating will sink. So my little Grasshopper, don’t be deceived when the Boss seeks your advice. When that happens, you smile, bow your head, and mumble that you cannot hope to improve upon the wisdom and brilliant incisive thinking that the Boss displays everyday. Assure him you hope to achieve only half of his wisdom and your performance rating will soar – as will the rewards.

It seems to me that you are telling us that we shouldn’t be candid when dealing with the boss, even though he tells us that he “won’t shoot the messenger”.

Well my little Grasshopper “We don’t shoot the messenger” is one of the most common management phrases that Mr. Manager is asked to comment on. Obviously your boss actually won’t shoot you – it’s against the law, besides it makes a mess on the carpet and possibly his Armani suit as well. But just because the boss won’t actually shoot you doesn’t mean that he is anxious to hear what you have to say. However, no manager is going to shoot the bearer of good news, effusive compliments, or outright flattery. Therefore, if you find yourself in the position of having to deliver bad news to the boss be sure that you wear your bullet proof vest. Well – not really because as we said it is unlikely the Boss will actually shoot you but come armed with some one to whom you can attribute bad news – sort of a human shield. Once the bad news is delivered don’t confuse the Boss’s silence or dumbfounded expression as acceptance. More than likely the boss is sitting there in stunned amazement at your complete lack of understanding of the issue instead. So while he won’t actually shoot the messenger he certainly will comment to his management colleagues on your lack of insight, reliability, and inability to grasp complex management problems. So in Management Speak, he really doesn’t shoot the messenger anymore than your typical crime boss actually disposes of an undesirable colleague – it just seems to happen.

I was due for a performance and salary review but my Boss promoted me from Bottle Washer and Coffee Maker Associate to the more prestigious position of Associate Coffee Maker and Bottle Washer and said that he would give me a review in six months. Why can’t he give me a review based on my previous position and another one on my new position in six months?

Mr. Manager must tell you once again that your question by itself shows you are not management material because you do not think like a manager. You look at this as performance review where the boss will tell you how well you are doing and give you tips on how to improve and possibly put yourself in line for his job. (Insert boss’s hysterical laughter) For the manager, the real reason is that he would have to increase your salary. The higher his operating costs the lower his performance bonus and no review means no increase in your salary. So when the boss tells you that he will conduct your review in six months what he is really saying, is that he will conduct your salary review after management bonuses are paid.

So there it is my little friend – all of your questions regarding what the Boss means when his actions don’t seem to fit with his words – have now been interpreted for you by Mr. Manager. Keep studying and watching how REAL managers operate and one day you too can become an oracle like Mr. Manager.

Thursday, October 27, 2011

A Review of the Arab Spring

The Arab Spring continues apace as one Islamic Dictator after another falls to popular uprisings. The US has either quietly stayed on the sidelines as in Egypt and Iran or played an active role as in Iraq and Libya. Although US involvement in Libya was sort of a one off since it was conducted via NATO which is a military euphemism for the US. The US along with the western powers see these uprisings as an effort by the people to be free and struggling for democratic representative government. While these uprisings may establish new representative governments any resemblance to any western style democratic government is wishful thinking. The western powers seem incapable of grasping the realities of the Middle East and Islam. In spite of the politically correct position of the US government and the West, the reality is Christendom ( read the West) is engaged in religious war with Islam.

The Obama administration has declared that all American Troops will withdraw from Iraq. For the anti-war crowd this appears as a victory instead of the disaster it may be because to the Islamic community they won and have succeeded in driving American Forces out of Iraq. Iraq is not politically stable and that instability is being driven by Iran whose objective is to create another Islamic Nation dominated by Iran. It is almost a certainty the current government cannot remain in power once the US leaves and any new government will be Islamic, not secular, and certainly anti-American and anti-Christian.

Currently the West is celebrating the fall of the Gadhafi Government with the belief (read hope) that the new government will be democratic, pro-west, and secular. The first step of the new government was to declare Sharia Law. Of course this doesn’t mean that will stand because like most of the Arab nations, Libya is tribal and each of these tribes is now fully armed and struggling to gain power. It is probable that Libya will remain unstable for the foreseeable future but regardless of who finally emerges as the new dictator he will not be secular or democratic but Islamic and certainly not pro-west. Abdul Jalil – the head of the Libyan transitional government has already announced that he intends to establish Sharia Law in Libya – thus firmly returning Libya to the 8th Century.

The Crown Prince of Saudi Arabia died recently and now who will be the new Crown Prince is undetermined but the probability is that the logical candidate Prince Nayef Bin Abdul Aziz will be chosen. Saudi Arabia is strictly Islamic and rules with Sharia Law. World opinion has increasingly pressured Arabia to abandon or at least not enforce some of the more barbarous parts of Sharia. While Saudi Arabia has supported the US in some ways that support has largely been because the Royal family is not loved and needs international support. This is why the current Saudi government has been softening its enforcement of Sharia. If Aziz comes to power there is little doubt but he would return to the strict enforcement of Sharia law and reduce his support for the US. With Aziz in power Saudi Arabia could become very unstable and it is feasible that the Monarchy could fall and be replaced by an Islamic dictator.

As a further example of the failed US foreign policies we have Syria. The US was quick to step into Afghanistan, Iraq, and Libya and to support the uprisings in Egypt but have done nothing to support the uprising in Syria. It is no secret that Syria has a well organized and capable military and Assad is supported by Iran. If the people of Syria by some miracle manage to overthrow Assad, can the US expect their support? Not very likely but if Assad manages to suppress his opposition which he is likely to do, he will be indebted to Iran and Hezbollah. He would then pose an even greater threat to Lebanon and Israel. What the US policy is toward Syria has never been very clear and the failure to support the rebels in Syria will strengthen the current government just as it did in Iran and America will once again appear to be an unreliable friend.

Iran is actually Persia and at various times in history Persia has been a mighty empire and it seems clear that the current government is intent on re-establishing that empire, if not directly certainly indirectly. As the Arab Spring progresses Iranian influence has spread from Iran across Iraq, Syria, and Lebanon. How Turkey, Jordan, and Saudi Arabia react to this is to be determined but the intransigence of America cannot make them overly comfortable in relying on America and that is before Iran gains nuclear power, which they are sure to do. And when they do gain nuclear capability there is no doubt they will use it as intimidation on all of the Islamic Middle East in their bid to re-establish the Caliphate and the Persian Empire. In the meantime the American public should not be so quick to celebrate the Arab Spring as an example of the rise of democracy because these governments are not going to resemble anything like western democracies and with a Nuclear Iran as the central power a major military confrontation may not be far off.

Monday, October 24, 2011

Is Wealth Zero Sum

The postulation that wealth is zero sum, meaning that whatever wealth I have has been gained at the expense of others, in effect total global wealth is finite but is inequitably distributed. This argument rests on the assumption that wealth cannot be created and wealth can be defined and quantified. I submit that this is a fallacious argument.

First wealth can be defined in many ways such as the value of knowledge, a great many friends, honors, respect, or many other abstractions where the “wealth” is self determined or determined arbitrarily by others. This type of wealth is not finite and can be both created and destroyed. Therefore, for any meaningful argument wealth must be defined in terms of tangible goods such as gold, money, art, land, etc. But the postulation is that wealth is zero sum meaning that it is finite when it is obvious that the world’s available wealth today is far greater than it was a hundred years ago. But the professor / philosopher avoids this inconsistency by stating that his zero sum argument only applies to the moment and cannot be viewed in any historical context. But this refutes his argument that wealth cannot be created because global wealth has increased and he acknowledges this. This reduces his argument to the total global wealth is finite at any given moment, which is true at that moment, but in the next moment new wealth can be created e.g. a gold strike, oil strike, new invention, etc. The professor / philosopher acknowledges this but then moves to the more abstract view of wealth common to those who argue that wealth can only be gained at the expense of others – hence that wealth is finite.

The argument then becomes increasingly doctrinaire as he attacks – without noting – capitalism. He argues as follows:

“Material wealth obviously originated in the creation/origin of the universe (that is where the stuff comes from). Once we had the earth and people, people could start acquiring material goods like land and resources. These resources can be made more valuable by the addition of labor, thus creating wealth. They can also be made more valuable by other means, such as creating scarcity and controlling pricing. These material goods can be acquired in various ways, fair and foul. The classic method is, of course, conquest.”

How this argument supports a zero sum conclusion is beyond me because it demonstrates how wealth can be created and shared yielding a wealthier population overall. The actual argument appears to be the inequity of some people being wealthier than others based on the assumption that unethical and even illegal means were used to accumulate that wealth. He leaves no room for wealth accumulation via fair means. But his argument has ceased being the creation of wealth but instead has shifted to the sharing of wealth.
At this point the argument shifts to the abstraction of money “the pieces of paper” whose value is commonly agreed to but his real argument doesn’t appear to be the creation of wealth but how that wealth is created.
“Monetary wealth is obviously a social construct: we made up the financial game and the “creation” of wealth depends on the sort of game being played at any given time. For example, some folks “created” wealth by clever repackaging of toxic assets. Other people “create” wealth by working and investing their money (which is supposed to give them more money). In many ways, this is “fictional” wealth in that we are literally just making this stuff up and its value depends entirely on how far we are willing to all play make-believe. Yes, I play the game-it is a convenient way to handle exchanges in some ways. But, I always remember that it is just a game we are playing (I work, I get some paper, I hand the paper to someone and they give me an apple).”
The point being made here is a little fuzzy to me because everyone knows that paper money is an abstraction whose value is set by common agreement and backed by the government. The creation of wealth followed the same rules when commerce depended entirely on gold and silver currency. It appears that he is simply opposed to how wealth is created and how it is inequitably distributed. But he concludes his argument that wealth is finite by arguing that currency (paper) is finite because printing more doesn’t create wealth but results in inflation. That is true but then at a stroke he reduces wealth to how much money you have and since that is finite wealth is finite and zero sum. That is ridiculous of course because tangible wealth can be created in many ways and the currency is simply a method of measuring the wealth created.
In my opinion this entire argument illogical and rests on false assumptions. And when the argument is reduced to its core it appears that it is anti-capitalism and the unequal distribution of wealth.


Monday, October 03, 2011

China -- Red Dragon or Paper Dragon

From what you read in such prestigious sources as the New York Times you would think that everybody should start learning Chinese because China is not only a rising military power but an economic power house that is overwhelming all competition. But is that a realistic appraisal of the situation? I think a little critical thinking may be in order.

First the New York Times is not noted for its veracity or being in love with capitalism nor is most of the American media The critical thinking seems to be reserved for American business and foreign policies rather than any critical analysis of what lies beneath the public policies and positions of the Peoples Republic of China. In fact when was the last time you saw any reference to China as the “People’s Republic of China”? Currently the PRC is simply referred to as China which may just be laziness of the part of the media but the fact is failing to call the PRC what it is in reality is misleading. The reality is that Communism or Marxism are demonstrable failures as a government. Furthermore Socialism as a governmental form is far from successful as can be seen in the current upheavals in Greece, Italy, France, and across Western Europe in general. The fatal flaw in these political philosophies is that their objective is employment not efficiency and wealth redistribution not wealth creation.

There is no free enterprise in the PRC in spite of appearances. Permitting a family or an individual to set up a noodle stand is not quite the same as opening a factory. The Chinese government permits these small businesses to operate more like a safety valve on a steam engine – the internal pressures on the Chinese government are immense and growing. These pressures are both political and economic but the economic ones are by far the greater.

In the PRC the government owns everything – there is no true private ownership. The government owns all of the factories, the land, and all means of production from rice to warships which mean that they are the sole employer and that they control all prices. But the PRC, like all governments is faced with a finite amount of revenue that must cover their overhead, but unlike capitalist governments they cannot raise taxes because that is just taking from one pocket and putting it in another. Consequently the PRC is forced to increase revenues from exports which means they must compete in a global market for both labor and goods. To date the PRC has been able to maintain the fiction that they are a competitive powerhouse but in reality they are operating a giant Ponzi scheme.

The PRC is manufacturing and exporting vast amounts of product because foreign manufacturers are sending thousands of jobs to this “low labor cost” market. But the manufacturing centers are along the coastal areas where the quality of life is far superior to the internal quality of life. This is leading to a growing influx of young people seeking a better life which in turn is causing pressures on housing as well wages as the cost of living increases. If the wages increase the competitive position vanishes and that foreign investment will move to other low labor cost markets. The PRC has attempted to deal with this issue by subsidizing the manufacturing which means that the cost of goods being exported are a) below cost b) at cost or c) with low margins. This in turn has led to quality issues but the real problem is that these subsidies are draining financial resources from the interior infrastructure. While the internal infrastructure cannot be improved the major problem is that it cannot even be repaired. The PRC has suffered greatly from major floods and earthquakes which have left much of the interior in need of repair, which means the government is faced with some very difficult decisions. They cannot reduce the subsidies without raising prices which will create a demand for higher wages which will drive foreign investment away. They can fail to quickly repair the damage but the rural areas are already restive due to their quality of life versus that of the coastal areas. What ever they decide there will be major changes in the economy of the PRC.

And this brings us to the Chinese Military. As Talleyrand once said regarding Napoleon’s military exploits “the problem with an army is that it eats” and thus the PRC has this issue to deal with as well. Armies are pure overhead. They cost a great deal to feed and equip while providing nothing in peace time, so they must be employed or reduced in size. The PRC cannot use their army by adopting an expansionist policy nor can they reduce its size because they would still have to pay the soldiers being released because the government is the sole employer. But there is another less visible issue and that is the military itself. Generals do not like to see their power reduced but more importantly the soldiers themselves are the sons and daughters of farmers and small shop keepers. These are the people who are suffering from a poor quality of life which is aggravated by the damaged infrastructure. A Failure to alleviate the suffering in the rural areas could easily transfer to a restive military, so the central government cannot ignore the problems of the interior and they are caught on the horns of this dilemma. If those weren’t problems enough there is another historic problem that has plagued China for thousands of years and that is corruption. Nepotism, bribery, and kickbacks are a way of life and part of the Chinese culture. The PRC does what it can to stop this and do prosecute and act on the most outrageous examples, but the problem is endemic and undermines trust in the government.

So China – the People’s Republic of China – is perhaps more of a Paper Dragon than a real one. While they appear to be crushing everything in their path, the reality is that Communism and Central Planning are demonstrable failures. The PRC cannot continue to sustain the house of cards they have built indefinitely and their dominant position in world trade must eventually collapse from the internal economic pressures.