Bernie Ebbers and the Know-It-All Executive

The case of Bernie Ebbers, former head of Worldcom, is now in the hands of the jury. The prosecution painted him as a detail person, who obsessed over the expenses for coffee service at headquarters. The main prosecution witness, Mr. Sullivan, the chief financial officer, said he discussed the accounting frauds with Ebbers and got his approval. The defense painted Ebbers as a good salesman, who didn't know technology (although he bought up a key piece of the Internet in UUNet) and didn't know accounting--just a good old phys ed coach.

Though I love to believe the worst of CEO's (part of my agri-populist background showing), I found the picture of this CEO a bit disconcerting--it reminded me so much of one of my past bosses, the one I think of as the dark prince. DP was a mix of insecurities and strengths. He loved to show his knowledge and he knew more than I liked to believe. But he didn't like to show any ignorance and he was expert at hiding it. He'd do a good show and tell for outsiders and usually try to skate his way past potholes in staff meetings. Dilbert partially describes him, but Dilbert's boss is too clueless too often. One of DP's ways of asserting his knowledge, and his power, was to focus on trivia (to me), on the details of correspondence, on the costs of minor expenditures. So without knowing the men, or hearing the testimony, I can believe Ebbers or I can believe Sullivan.

I can even believe them both--the slick numbers man not admitting openly that he's violating the law, or doing anything differently than his peers would do; the salesman who cons everyone and ends up agreeing to fraud, both in the service of the almighty dollar.

Bottom line--throw them both in jail--look at the great things jail has done for Martha. Maybe we should throw all CEO's in jail when they reach 60, just on general principle. A sort of blanket indulgence for all the sins we know they must have committed by being CEO.

An End to Days of High Cotton? (washingtonpost.com)

One of the joys of being an American studies major working as a bureaucrat in a national organization is running into tidbits that make history live. It' s natural to think that the melting pot and time have made Americans uniform, but not so. As here, in an article on Bush's proposed changes to the farm program.

An End to Days of High Cotton? (washingtonpost.com): "Despite the limits, for example, Colorado River Indian Tribes Farm of Parker, Ariz., collected $2.4 million in payments in 2003 related mainly to cotton production, and Perthshire Farms, a huge Mississippi cotton operation, took in $2.1 million, according to the Environmental Working Group, an advocacy organization that publishes and analyzes USDA data."

My guess is that the first operation is an Indian tribal venture, which, if memory serves (current rules may differ), were treated almost as if exempt from payment limitation. Remember that, except when forced by the government, Indians "owned" land in common, not as separate parcels. So modern Indian farmers might well want to farm together in a tribal venture using their commonly owned land. Assume there were 50 farmers in the venture and the limitation was $100,000 (for ease of calculation). Each, if farming individually, could receive up to $100K in payments (if otherwise earned). Because the 50 are farming together as a venture, we treated the venture as if it had a limitation of $5 million (50 x $100K) .

The Mississippi operation may be a "Mississippi Christmas tree"--that is an operation carefully constructed by lawyers to evade the limitation rules. The NY Times did a series on them in 1990 or so, but they've had the political clout (think Sen. Lott) to keep the rules from being changed.

The Ninth Annual Slate 60 - America's most generous philanthropists, and where they gave. By Jodie T. Allen

Slate, urged by Ted Turner, has compiled the 60 most generous philanthropists for the last nine years here:

"Alma maters and other institutions of higher learning remain the most popular outlet for munificence (56 colleges and universities make the 2004 list) followed by private foundations (25) and hospitals and medical centers (18). Museums, libraries, and other groups dedicated to the arts are also popular."

Zathras, as usual, is interesting (see the excerpt from the Fray below the article). Most of the following was posted there as a belated comment.

I suspect one factor is simply the structure of philanthropy. Having given (very modestly) to my alma mater and the Kennedy Center, I'm very aware of the fact that such institutions have a regular ladder of contribution levels. So someone who is competitive and has done well at competing has fund raisers beating at him or her to increase one's giving to the next level. And a reward for such giving is visibility--appearing on donor lists. Presumably most donors read the lists to see that they were recognized, and to see if they recognize other givers. One gets prestige by giving. And universities and such have a pre-existing community to solicit.

Mine is a circular argument--universities etc. get money by providing status and prestige to the givers. The better the university the more prestige derived by giving to it.

Helping the poor has little status, provides little prestige (except perhaps for saints like Mother Theresa, who may be highly regarded simply because they can't be a realistic role model for anyone), and there is no pre-existing community to solicit. People aren't automatically generous--the tsunami and 9/11 shows they'll respond to an event, but ongoing causes don't get money from heaven, they have to work at it. The high prestige cultural institutions have a big advantage there.

I might note that Dante needed the seven circles of hell to adequately distinguish degrees of evil. The Kennedy Center has eight circles distinguishing the different levels of giving. (Not that giving to the Kennedy Center is at all related to hell.)

The Golden Rule and the Founding Fathers

The New York Times > Week in Review > Putting God Back Into American History:

David Fitzpatrick has an interesting summary of arguments over how religious and Christian the Founding Fathers were, focussing on:

"Mr. Barton, who is also the vice chairman of the Texas Republican Party, is a point man in a growing movement to call attention to the open Christianity of America's great leaders and founding documents. The goal is to reverse what many evangelical Christians claim is a secularist revision of history, to defend displays of religion in public life and to make room for God in public school classrooms."

I'm comfortable that they were (mostly, coolly) religious, but it blurs the picture to focus on Washington, Jefferson, Franklin et. al. The best estimates are that the Revolutionary generation was mostly unchurched, with church membership in the 15-25 percent range. See a very interesting book called "The Churching of America" by Roger Finke and Rodney Stark. They say church membership/religious participation grew over the years, reaching a high in the 1960's with reasonable stability since. The reason for the "churching", compared to other developed countries, is the free market competition for members by the various American sects/denominations.

It's also true, IMHO, that we are today a more truly Christian nation in our practices than in 1776. We come closer to practicing the Golden Rule, than at any time in the past. Apply the John Rawls test--forgetting about standard of living, would you prefer to have been born in a time of slavery, patriarchy, etc. or now? I rest my case.

Reducing Farmer's Risk-- Community Supported Agriculture (CSA)

A reference in today's paper about making contracts with CSA farms sent me looking for this from USDA : Community Supported Agriculture (CSA):

"In basic terms, CSA consists of a community of individuals who pledge support to a farm operation so that the farmland becomes, either legally or spiritually, the community's farm, with the growers and consumers providing mutual support and sharing the risks and benefits of food production. Typically, members or 'share-holders' of the farm or garden pledge in advance to cover the anticipated costs of the farm operation and farmer's salary. In return, they receive shares in the farm's bounty throughout the growing season, as well as satisfaction gained from reconnecting to the land and participating directly in food production. Members also share in the risks of farming, including poor harvests due to unfavorable weather or pests."

Note the last sentence--CSA is another way for farmers to move risk elsewhere. (See my previous post on other structures. CSA also fits into the general boomer pattern of increased diversification and choice, instead of just plain blue jeans, we've all sorts of shades in all sorts of fits to choose from. Instead of plain old coffee, we go to Starbucks and get bewildered by the choice.

Dissing Politicians

Inside Washington, a political talk show (indeed, the descendant of the original talk show run by Martin Agronsky back before cable) last weekend included an exchange on the political life. Can't find a transcript (it runs on ABC's WJLA in D.C., run by Gordon Peterson now, with Charles Krauthammer, Nina Totenburg, Colby King, and possibly John Harwood the regulars (there's been turnover, Evan Thomas and Jack Germond used to be on with CK and NT).

The gist was amazement that anyone would actually want to go into politics, as mean and adversarial as it is now. The sentiment is distressing, even though the situation is realistically described.

John Grisham Can't Count

Just finished Grisham's "A Painted House", which is supposed to be semi-autobiographical. The 7-year old boy who narrates the story is the child of cotton farmers in Arkansas, with the story taking place during harvest in 1952. It's good, evoking the time and place, but not a thriller in his usual mode.

Turns out that Grisham is actually 50, so he's 10 years younger than the hero. That may explain the math errors in the book, which only a crazed bureaucrat would pick up on. Supposedly the family (3 generations) is farming 80 rented acres. The situation is that the crop is good, but pickers are needed to harvest the cotton. The pickers are a family of "hill people" and a set of 10 Mexicans (no blacks in the story, which was a surprise). Grisham gets a variety of characters and plot points out of the intermixture of locals and pickers.

Unfortunately, he says the cotton is 500 pounds per acre (sounds about right), so they have 40,000 pounds of cotton to pick. Given the workforce (10 Mexicans, 6 hill people, father, grandfather) and an average 400 lb per person, the cotton could have been picked in a week or 10 days. The book spreads the picking over a month or so, then a flood ruins a third of the crop, so the family heads to Flint to work in the car factories.

Summers and Idiocy

Only a total idiot would comment on the Dr. Summers controversy, so here it goes:

His first cause for the low number of women in science was the need for near total commitment to the profession/job, the need to work 80 hours a week to make one's mark. He called for consideration of: "Is our society right to have familial arrangements in which women are asked to make that choice and asked more to make that choice than men?"

One thing I don't understand is why scientists would be more apt to work long hours than other occupations, whether it's law, social scientists, business, moviemakers, or whatever. Even bureaucrats have been known to work long hours at times. I'm not sure Summers has data for this assertion, but it seems to have been skipped over in all the controversy over his other statements.

Added on Feb. 23
says, some women will always
I can understand why people work 80 hours--the desire to perform is addictive. But as Anne Applebaum says here some women will always choose to devote energy to children. That must mean that, unless women are on average smarter than men (quite possible), we won't ever have equality in the outcomes. Summers was speaking universally, but, except for Israeli kibbutzes, using American data. I wonder whether other cultures achieve excellence with a 50 hour week? I would if it's possible for us to become less competitive? (It's been a while since I read "The Winner-Take-All Society" but it might be relevant.)

Added evening of Feb. 23

According to an article in the New York Review of Books reviewing The Fly in the Cathedral (on splitting the atom by Lord Rutherford's in a race with Lawrence), in Rutherford's physics lab the rule was everyone out by 6 pm and 4 times a year the lab was closed for 2 week vacations. The lab won several Nobels.

Buggy Wheels, Automobiles, Bill Gates and Bernstein

Fair Warning: I'm about to violate the first commandment of blogging: Thou shalt only write what you know.

Professor Bernstein at Volokh.com has problems with this article on liability law and the introduction of cars. I am sure his criticisms of the literature are well founded, but my take differs from his and Prof. Clarke. I'm influenced by the writings of Profs. Henry Petroski, on the evolution of technology, and Clayton Christianson, notably "The Innovator's Dilemma". From them I take the lesson that technologies rest within a network of values, organizations, related technologies, etc. Innovations may evolve from experience and learning within a given environment, or break the context. Big innovations don't automatically represent progress, but a different package of costs, benefits and values than the dominant technology. And from Petroski, failure is necessary to learn.

The horse and buggy represented the dominant technology, with roads, watering troughs, oat fields, barns, manure removal, etc. all in place. The design of the buggy had evolved, and represented a compromise of materials for strength, lightness, cheapness, etc.

Comes the automobile and the roads are too bumpy, the gas pumps are missing, the oats are unneeded. Speeding along at higher speeds put new stresses on wheels and axles so that designs that worked for buggies wouldn't work for cars. Instead of being supported on four strong legs, the motive power is put in the carriage, increasing the load on the suspension and wheels.
Clarke states that: "Corporations thus faced a choice between acquiring the knowledge needed to design a safe product and exercising power in the market to impose the costs of defects on consumers...." and argues that they opted to impose the costs on consumers.

From the Petroski perspective, there was no realistic choice--in order to learn, the car manufacturers had to try and fail. In a theoretical world, they could have spent 20 years in the lab, testing the strength of materials. But in the real world, they relied on the early adopters to pioneer the systems needed for the car culture, the gas pumps, the better roads, the parts and service (remember the Jeff Bridges character in Seabiscuit). (Maybe, to males, the possibility of failure and accidents is an incentive?)

As I skimmed Clarke, there seemed a parallel to the world of PC's in 1975-95: lots of experimentation, lots of bugs, "never buy version 1.0 of anything", Bill Gates and his untested software. Just read your software licenses to see what rights you have as a consumer. What we end up with represents a compromise.

City Dwellers Plow Money Into Farmland

According to the LA Times outside investors are buying farmland, hiring professional farm managers to manage the land, who in turn hire "farmers" to do the work. The "farmers" don't call the shots nor take the risk.

It's part of a larger trend, first seen in hybrid seed production (not sure when it started) for the risk to move away from the person getting his/her hands dirty. The seed companies had to prescribe very tight conditions to the growers to get quality seed, so in turn they assumed much of the risk. Poultry (beginning in the 50's) and now hogs are part of vertical integration, where a company contracts with a grower for x number of (birds/eggs/hogs). Part of this is reducing the number of decision makers in an industry so there's less of a free market and less volatility, therefore less risk. It's the rationalization of an industry, perhaps much like old John D. Rockefeller did with oil in the original Standard Oil trust.

The investment in land also reminds me of the land boom in the 1970's. As they said then, God isn't making any more land. But it's also true that the boom went bust in the 1980's with lots of heart ache for many people. It doesn't sound as if it's gotten to the bubble stage yet, but the professoriate does say that one of the effects of farm programs is to increase land value--land owners capitalize the programs I think is their terminology. It would be ironic if Bush in the next farm bill and the WTO negotiations achieves cuts that also trigger a severe drop in land prices.