GOPR, Kinsley, and the Capitalist Hidden Toy Game

I invented GOPR (good old populist rage) yesterday, and revisit it today, inspired by Michael Kinsley's tirade today in the Post against capitalism. Kinsley takes off from the recent craze for leveraged buyouts to argue the capital markets don't work--witness the fact that companies have 3 different prices/values--one today's value as expressed in stock price; one the (slightly higher) price that people are willing to pay to take the company private through a buyout; and the final the much higher price asked when the company returns to public markets. It's good, Kinsley is always good, and seems convincing.

But I'm not convinced.

What Kinsley misses is the capitalist hidden toy game. For example, back in time (maybe late 60's) the craze was for conglomerates--assembling companies under one roof added value. That lasted for a while, then the conventional wisdom decided that more conglomerates were failures and they needed to be split up. That's just an example of the constant churn of capitalist deals. Remember GM used to own EDS? Sears owned a stock brokerage? GE owned many things, until Jack Welch decided he only wanted to be 1 or 2 in a field? Even today, Altria (i.e. Phillip Morris) is preparing to spin off Kraft Foods. But that's just one side. On the other you have the whole merger and acquisitions area of finance; so popular that it's known as M&A and doesn't have to be defined in stories.

It's the old story of boys and their toys. You hide a boy's toy for a while, then bring it back out and it seems new and different and worth more. There's nothing more attractive than a "deal", whether it's taking a company private, doing an IPO, doing a merger, or doing a spin off. Each is a "deal", a deal to publicized, exploited, envied, finagled, conned. It's all a part of "finance", which good old populists love to rage against.

The "Goldilocks" Options in Iraq

I've been reading "Dereliction of Duty, Johnson, McNamara, the Joint Chiefs of Staff, and the Lies that Led to Vietnam". (It's good, but I've not completed it yet.).

The author says after the Nov. 1964 election the administration set up a committee to develop options. It came up with three. From page 182:

Momentum formed behind Option C. George Ball observed that the committee had developed options on the 'Goldilocks principle'. Option A was 'too soft,' Option B was 'too hard,' and Option C was 'just right'.

Monday's Post has a lead article by Thomas Ricks beginning:

"The Pentagon's closely guarded review of how to improve the situation in Iraq has outlined three basic options: Send in more troops, shrink the force but stay longer, or pull out, according to senior defense officials.

Insiders have dubbed the options "Go Big," "Go Long" and "Go Home." The group conducting the review is likely to recommend a combination of a small, short-term increase in U.S. troops and a long-term commitment to stepped-up training and advising of Iraqi forces, the officials said."

One of the three authors of the review Ricks discusses: Col. H. R. McMasters, the author of "Dereliction of Duty". (As a captain, McMasters led an armored cavalry troop in a significant early battle of the Gulf war. He then went off to study and teach history at West Point, writing his book as a major. In the current war, he commanded armored cavalry at Tall Afar, and briefed in January on the results of his operation (Secretary Rice was promoting this as a model operation.)

Of course, the Goldilocks principle is well accepted in bureaucracy. When developing an options paper, you always include options more extreme than the one you favor. Option C in the Vietnam War was not a wise course; hopefully "Go Long" will be a better choice.

Good Old Populist Rage

Why do I feel GOPR when I read a piece like Greg Mankiw linked to (Larry Lindsey in the WSJ complaining about high tax rates)? I don't really know. Possibly because I'm sure that most highly paid people treat money as equivalent to gold stars--it's the status and the competitition, not really the goodies the money can buy. (Which means that a 92 percent tax rate, as when I grew up, doesn't inhibit production.) Or maybe it's the arrogance of someone who thinks he's "atlas" and an "entrepreneur", when he's really a modern witch doctor. See his web site.

I realize that he's justified in his language, at least in terms of common usage in the circles in which he moves, and he may well be a nice guy. And how can I be opposed to anyone who got fired for a warning about Iraq? Historians have a concept called "producerism", which the old Populists and my mother fiercely believed in. That ideology said that those who produced things were morally superior to those who just sat around on their rears. You couldn't feel proud of earning a living by talking or writing, you had to do. That may be why Dr. Lindsey's piece touches a sore spot.

After Elections: Lame Ducks Become Turkeys

NY Times has an explanation of "lame duck" (originated from broke investors lamely ducking out the back door to avoid creditors). I well remember the aftermath of 1994, when Democratic "lame ducks" became "turkeys" in the bureaucracy. That is, defeated Representatives and their staff found jobs in the executive branch. To be fair, we had one ex-Rep in FSA who just warmed a chair as an area director but another seemed to do a creditable job as head of the Tobacco and Peanut Division.

Hearing Loss and Paranoia

As I grow older I'm losing some hearing (happens to most I understand). I'm also reverting to childish emotions, so there's the odd moment when I'm sure that the person who just turned away from me and said something I didn't quite catch is deliberately torturing me. I'm still rational enough to suppress the feeling. But the existence of the term sotto voce is enough to say that there are times when people deliberately lower their voices. And that's just enough to keep the paranoia alive, simmering away on the back burner.

This is all by the way of referring to a Washington Post series, running occasionally, on being a black male in America. The most recent article focused on three entrepreneurs who'd founded an IT shop and were scrambling for business contracts. The main "suit" suffered from his suspicions--did he fail to get the contract because of an honest evaluation or because of discrimination? So I can empathize with the feeling.

Hypocrites All

The NY Times did an article on the complex of state-level conservative policy institutes today, including this little gem:

"Depending on one’s perspective, the Bluegrass Institute [one of the institutes] view of liberty can seem either steadfast or extreme. Walking to his car after a recent event, Jim Waters, the policy director at the institute, mentioned how he had recently survived a head-on collision thanks to his car’s airbags. A few moments later, describing the institute’s priorities, he said the Bluegrass Institute was fighting tougher seat-belt laws, which he called an intrusion on liberty. Car safety laws “did save my life,” he conceded when asked about the apparent contradiction."

Sen. McCain delivered separate speeches to GOPAC and the Federalist Society, telling them:

" 'I think they rejected us because they felt we had come to value our incumbency over our principles, and partisanship, from both parties, was no longer a contest of ideas but an even cruder and uncivil brawl over the spoils of power,' he said. 'I am convinced that a majority of Americans still consider themselves conservatives or right of center. They still prefer common-sense conservatism to the alternative.' " [In other words, the public thought Republicans had become hypocrites.]

And finally, House Democrats chose their Majority Leader--with many voting for an ethically impaired Represenative and the majority for a well-connected friend of lobbyists.

Fighting Terrorists--Applebaum and Karla

Anne Applebaum has a nice piece on Markus Wolf (Wpost and Slate), the East German spymaster who supposedly was the model for le Carre's Karla. She ends:

"As we now debate torture, or domestic spying, or other dubious methods that will allegedly help us defeat radical Islam, it's worth remembering that the West won the Cold War not by matching the nastiness of Markus Wolf—though some certainly tried to do so—but by being, and remaining, a more open society. "

What If--Hubris, Bay of Pigs, and Iraq

Just finished reading "Hubris" by Isikoff and Corn, focusing on the spinning of intelligence leading up to the war in Iraq. It was good, not too sensationalist. A main thread is the Niger uranium, Joseph Wilson and Valerie Plame, Scooter Libby and Karl Rove. I would have liked some speculation: did Bush have a "Beckett" moment--who will rid me of this priest--was it Cheney, was one or both doing the details, or did Libby and Rove work out their campaign together, or was it just the knee-jerk reaction of political operatives? We'll probably never know, at least until Libby's trial or someone writes their memoir.

There's a "what-if" scenario that intrigues me. If I remember Secretary Cohen was waving a 5 pound bag of sugar around on TV during the Clinton administration. And he and Albright were pushing an aggressive line until they ran into a buzz saw of questions at some college that they didn't have good answers to. So just suppose that on the final days of the Clinton administration George Tenet had completed the National Intelligence Estimate that was done in the fall of 2002? In other words, say the Clinton Administration on January 20, 2001 was where the Bush administration was on November 1, 2002. Then the Bush people come in. What happens?

There's a parallel in 1961--Ike leaves JFK the Bay of Pigs operation. JFK modifies it but goes ahead. A difference--JFK had hit Nixon for not being hard enough on Castro; Bush never mentioned terrorism. Another difference--there probably was more comity, more "establishment rule" in 1961 than in 2001.

So does Bush go ahead with the flawed intelligence and missing plans? Or does his team say--Not Invented Here--and tear it apart? I suspect, given today's atmosphere, the latter.

You Know You're Old (and Senile) When...

You know you're old when you happen on a newspaper report of your old high school (Chenango Forks, NY) winning a regional playoff game and you figure the hero is mostly likely a grandson of a classmate (or the nephew--it was a big family).

You know you're senile when it takes you 2 days to compute.

Bureaucracies, Codes--Separation and Integration

This is a fascinating piece in the Washington Post on a move among local police departments to end the use of "10 Codes"--as in "10-4". The major reason is that, when an emergency requires employees of more than one department to coordinate, they all need to speak the same language. Who knew that different bureaucracies would have evolved differences in their codes?

We should have, it's logical. This is just another instance of the general principle: you put any group of people to talk among themselves and they develop their own accent, or jargon, or language, depending on the circumstances. The mechanisms are the same as outlined here: the need for fast, clear communication among the in-group; the desire to mark off the difference between the in-group and the out-group. This is a simpler, clearer example than, say, the difference between the Agricultural Stabilization and Conservation Service and the Soil Conservation Service (circa 1960-1994 USDA) or between FBI and CIA circa 9/11.

I'd predict that the effort will fail--there's too much geographical specialization and not enough times where integration is needed. That will sap the will of the people pushing the change, the bureaucrats will comply pro-forma, but when the change-pushers go, so will the move towards English instead of codes. (Reminds me of a piece I saw today--polygamy is coming back in Muslim parts of the old USSR--the Communists suppressed it, but it's now gradually returning.)

Aardvark comments on the parallels with other technology.