The self-sufficient individual and bureaucracy

In 1984, northern New Jersey experienced some of the worse flooding the area had ever seen. At the time, I was a Private First Class in the NJ Army National Guard. I was called up on state disaster orders, and spent about 5 days as part of a team evacuating people from their homes.

It was a surreal experience, sitting in the passenger seat of a 5 ton truck as we drove on what we hoped were streets. I had two jobs while the sergeant drove, one was to help him identify where the road hopefully was, and to keep an eye on the floor of the truck to monitor how much water was coming into the floor drain holes. Yes, the water was coming into the cab through the floor drain holes.

At one point in Pequannock Township, the wake from our truck blew out several store windows. I bet that wasn't something the store owner ever expected to happen. Many of the visuals are etched clearly into my memory. An old man weeping, and saying "I lost everything" as we helped him into the back of the truck from a rescue boat. A couple waving from their window yelling for rescue. A flat bottomed rescue boat loaded with people, one holding a cat in her arms. The cat freaked out and tried to jump. The woman stood up to control the cat. The boat broached, filled with water, and dumped everyone and their possessions into the water. I still see that cat fighting to swim as the current swirled it away along with all of the luggage.

At the time, I was frustrated. People had been warned the waters were going to rise, yet many stayed behind in their homes. Some had to be rescued in dangerous conditions. Our lives were put in jeopardy from the poor choices the residents made. At least that was how I felt then.

As I grew older and gained perspective, I realized that these people were protecting their property. Like the old man who was weeping, everything most of these people had was in their home. What would you take with you if you had to leave?

I thought of this past experience as I read Zeitoun, by Dave Eggers. This book is about a Syrian born contractor named Zeitoun, married to an American woman, with four children and a thriving business.

As Hurricane Katrina approached New Orleans, Zeitoun's wife and four children left to stay with friends. Zeitoun stayed behind to protect their home, the several rental properties they owned, and their business. The author wrote the book from the perspective of Zeitoun, and from the perspective of Zeitoun's wife. Then he went and found many of the people who were in the story to get their accounts of what happened, and the pertinent facts were confirmed by the interviews.

In a nutshell, Zeitoun spent his days after the levees broke paddling his canoe around the neighborhood. He fed abandoned dogs, coordinated rescues for neighbors who stayed behind and had run out of food and water, and checked on his properties. In his travels, he tried several times to flag down the heavily armed "rescuers" who were buzzing around the city in boats. They didn't stop to see what he wanted or needed. According to his account, at one point, he headed to a hospital, and armed National Guard soldiers aimed rifles at him, and warned him off.

Zeitoun and three other neighbors were meeting on a daily basis to share stories of the people they had assisted, and to coordinate the use of one of the guy's boats for rescuing neighbors who had run out of water or patience. The home they met at was a rental owned by Zeitoun, and one of the men was his tenant. Each day Zeitoun would call his wife to provide an update. About 8 days after the levee broke, armed soldiers entered the home, and without any explanation, hauled the four of them off. Two of them were of Syrian descent, and the other two were your typical Americans. Zeitoun and his three friends were held for 28 days without the benefit of legal counsel, or a phone call, and for about a week without any protection from the elements.

I don't want to give too much of the story away, but it was amazing to Zeitoun how quickly FEMA and the Department of Homeland Security could construct wire confinement areas, and all of the infrastructure to cage people in such a short time. The government was also able to lease jail space, establish transportation routes, and process detainees. Yet the feds never thought to focus these resources on saving people in the flooded areas, or on moving supplies to the stadiums where they told people to evacuate to.

I am in no way removing any culpability on the part of the local and state government in what I am writing here. It has been almost 6 years, and residents are still waiting for someone else to rebuild their homes for them. But we'll leave this topic for another time.

This book was a chilling read. I always think that when the chips fall, our fellow citizens are the people wearing the uniforms. Our neighbors will have empathy, and be the people coordinating our rescue and relief in an emergency. Just as it was in 1984 when we went into the neighborhoods we were familiar with to rescue our neighbors. After reading this book, I lost much of my confidence that citizens would be anything more than objects to be dealt with by a cold and bureaucratic government.

I have been pondering what right the government has to forcibly remove someone from their home, if the residents are staying in it willfully. One of the book genres I like, are ones of rescues on the seas, as well as pretty much any story about humans against the elements. This led me to think about the many stories I read, and some of the aspects of rescues.

In the times before EPIRBs and satellite communications, when someone got in trouble, the odds were against their survival if they couldn't fend for themselves. Being lost for months at sea was not uncommon, and often times people would just turn up months after they were given up for dead. Even back in the old days, if a rescuer offered assistance, and the person in trouble declined, they did this at their own peril. Rescuers will not return for a second attempt.

Technology has provided the ability for people to call for help from anywhere on the planet. In fact, you can purchase a personal emergency locator beacon to take hiking with you, just in case you get lost in the woods and need to have a helicopter come save you. Is your life worth $370? I would probably die from the humiliation of getting lost in the woods.

Several of the books, including Perfect Storm, outlined how the Coast Guard would offer rescue, and if the people on the vessel refused assistance, the Coast Guard would let the vessel captain know that if they refuse now, they would not return later. The captain of the vessel would have to put on his big boy pants, and make the decision right away, and live with the consequences of the decision. Or in some cases, die with the decision.

So how should the policy differ in the case of a flood? If a citizen decides to stay behind, isn't it their choice? But if the choice is made to stay, they need to be prepared to face the consequences, if a later rescue would jeopardize the lives of the rescuers. Some may argue that allowing people behind allows for the opportunity to loot. Would you loot if you were left behind? I wouldn't. So why should we assume anyone else would loot?

As I thought about the story, I began to see the difference in why the response to Hurricane Katrina was so impersonal, and the response to the floods in New Jersey were much more personal. When the federal government declares an area a disaster, FEMA steps in, and takes over all... yes, all agencies and efforts. This bureaucracy assumes command of all of the local first responders (like your local police), the state relief agencies, all public transportation facilities, and coordinates with the local prisons to deal with the criminals they expect to arrest. They generally have little or no ties to the victims, other than they are all "items" that must be put in their proper place.

This dawned on me as I thought of my time in the National Guard later in my career. I was serving in a unit that ran simulations for state and federal agencies to train them in how to deal with disasters. The computer spit out reports of victims, displaced people, food shipments, disasters, crime, and all of the bad stuff that can possibly happen in the aftermath of a disaster. This is what these people became accustomed to, and they were trained to not just be ready, but to expect the worst.

Having to transport, feed, house, safeguard, and protect citizens became a theoretical exercise. The humanness of the victims was lost in the bits of data, and paper printouts of the simulation. When all you know how to use is a hammer, everything starts to look like a nail. I began to see how jails were built before people were fed. Few of the feds left the command centers, and all of their information probably came from network news, which of course only reported the crime.

So what is the take-away from all of this? Read this book, and then be prepared to fend for yourself in the case of an emergency - the government responds in days when hours count. Have food and water on hand to last you and your family a week. Designate an easily identifiable landmark well outside of the area where you live as a rendezvous point in case you are separated from your family during an emergency. Have a plan for how to deal with pets, and keep a bail out bag handy. The bailout bag should contain a few basic items of clothes, and some of the basic necessities. Keep a copy of any prescriptions in it. And don't panic. Being prepared for the bad stuff should make you calmer, not more nervous. 

Life lessons from an Erector Set - knowing when to start over

I remember playing with Lincoln Logs, Erector Sets, and Legos as a kid. There was a lot to be learned from these activities. Never mind the little lessons - the pieces never fit back in the box, some pieces will be found under the couch in a month or two, or you can really hurt yourself getting poked with a thin piece of metal. Those are the easy lessons.

One of the best lessons I learned, is that many times, regardless of how well I thought out the foundation, I would get to the point where adding more pieces made no sense. Adding pieces would make the pending failure even larger. When I got to this point, I would pull the product apart, put it back in a pile, and start from scratch. I'd apply the lessons I learned in my first attempt to my next iteration.

Other times, I would try to reinvent what I was building into something different. "I started with a house... where did that pointy side come from? Oh, who cares, I'll turn it into a boat. A big ugly boat. At least it won't feel like I wasted my time...".

Frequently we allow ourselves to become too deeply involved in what we are building, and as a result we are unable to see that we can't achieve our original objective using what we presently have. We can't continue to try and add on, tweak, or modify it, because all of this will just add to the costs when we fail, and be that much harder to start over. In fact it seems like the larger the scale, the harder it is to see how bad things are, and we continue to apply effort thinking that if we just do a little more, all will be well. If we stay the course, it will all work out.

I started to think of what I learned from an Erector Set as I looked at the challenges in our public school system, entitlement programs, bloated government bureaucracies, sickening levels of deficit spending, and ballooning national debt. The investment may be in emotion, time, money, effort, paycheck, fat union benefits, or voting block payoffs. This crosses party lines, and impacts the taxpayers the same.

Many of our government agencies have morphed into something different from what they were envisioned to provide, and have grown at a rate much faster than the general population has increased. They often do this as a self preservation tactic, to show value where maybe they would have a hard time measuring against their original mission. Our government is full of these. I won't mention any specific examples, since I am not writing this to be partisan.

When is it time to pull it apart and start over? How can we convince the people who are invested so heavily in their own large-scale, real-life Erector Set failures that it's time to start building from scratch? I don't have the answer, I was hoping you did.

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Striving for mediocrity, and why outcomes can't be guaranteed

No one wants to be in last place, but someone must. Being last has a stigma, and has caused many to get upset. Yet for thousands of years, these losers went on with their lives, and found areas where they could win. If they were bad at basketball, they may have focused on science. Some people with great potential in science may have become ditch diggers. Some people with no potential become politicians (I won't bother to link to the pitiful resumes online, you can find them yourself).



Back in the early 90s, I was attending an Infantry Basic Non-Commissioned Officers course. There were about 30 of us taking the course, and I knew many of the other soldiers attending. There were many days of classroom study and discussions, and some field work. This course was memorable for many reasons, one being that I contracted Lyme Disease from a tick that wasn't known to carry it at the time (I was diagnosed and treated early, and it has not returned).

One of the course requirements was to complete a night land navigation course. This module required each soldier to navigate at night through the woods to locate a placard attached to a tree, and at each one, refer to a cue sheet to determine a new direction and distance to the next placard. This was a timed event. I was surprised to hear that we'd be doing this in teams, and the instructors chose the teams.

On the night of the exercise, I was half of a two person team. Or was I 90% of a two person team? All other teams were 3-4 people. I looked at the person I was paired up with, and felt the fear of failure start seeping in. He was what we referred to as an "oxygen thief", or someone who was a waste of perfectly good food and air, at least in terms of their service in the military. (Although I later met TSA agents who were reservists, and I realized that I hadn't seen what a real loser looked like.) Throughout the course, he had many excuses as to why he couldn't run, walk, march, or do most anything else. His uniform looked like he just pulled it out of a duffel bag, and he kept misplacing his stuff. This couldn't be right, how did I get paired up with him?

After consulting with the instructors, they confirmed that the roster was correct, and I couldn't change teams. Of course anyone who knew me back then, knows I can be challenging in a discussion (okay, maybe that hasn't changed much). I had taken my share of unpopular positions in debating the instructors during class. I saw this team assignment as a payback for verbally dragging the instructors across the floor, and off the slippery slopes, and kicked myself for precipitating this.

When our time to start the land navigation arrived, my team mate and I headed off together. He had asked to lead to the first point, so I allowed him to do this. Each person knows how many paces on each type of terrain totals a kilometer, and most field soldiers wore beads on their vests to count the distance. As each kilometer was walked, one bead would slide down the rope. It is second nature to any good field soldier.

About halfway to the first point, SSG J. declared we had arrived, and began looking for the placard. I questioned him on the distance, and when he confirmed we walked the distance, I told him I thought it was farther. I had been counting my paces, and knew we hadn't arrived. He insisted, and wandered in the dark woods looking for the placard that didn't exist. I eventually convinced him to follow me, and we set off for the real location. After a short time, his poncho came untied, and then he started dropping stuff. He lost his flashlight, pulled a leg muscle, heard carnivorous wild animals, and asked if we should go back to the rendezvous point. He kept banging his legs on branches and cursing. The clock kept ticking.

A glance at my watch had me wondering if we should just admit defeat and head back. But that's not how I'm wired. There was a decision to be made, and I made it. I advised SSG J. to grab the back of my gear with one hand, and to not let go. He grabbed on, and I took off on the course. I dragged him through the course, in some places pulling him over downed trees by his straps. "We" completed the course within the cutoff time.

The soldiers who failed were given a retest. An instructor put a glow stick 100 meters into the woods, and the soldiers were sent into the woods to find it. They only had to say the color of the stick when they came out of the woods. The pinnacle of mediocrity had been achieved.

Everyone passed the course, and I was disgusted to see SSG J. on the promotion list ahead of people I knew to be much better leaders. Who suffers from this inequity? First the people who could have passed the course on their own, were now competing with a person who needed someone to pull them through. The soldiers this person eventually led were also victims of the equal outcomes the training tried to guarantee. If he couldn't do the basics himself, how could he lead others in accomplishing them? Luckily, this was before the war on terror, and hopefully he retired before his services were needed.

What this taught me, is that trying to guarantee an equal outcome is not a good approach to having a better organization (or society, for that matter). Each of us are born to a family, and some families have more than others. We each have different interests, abilities, and determination. How we apply ourselves to the challenges in life will determine the outcomes in our life. There is no law or policy that can change this, nor can we normalize the variables that we each experience. Illness, accidents, genetics, bad decisions, and sometimes the complete randomness of natural events will ensure that there is no equal outcome, even when we attempt to make all of the variables equal.

When we take away grading systems, we encourage striving for mediocrity. When we take away rewards, we encourage mediocrity. If we only have pass/fail, why put in the extra effort? If I were an "A" student, why should I put in more effort beyond what it takes to get a "C", if my "A" puts me on equal footing with those who attained a "C"?

If we can count on a handout to keep us from having to provide for the necessities in life, how can we expect people to apply efforts to better themselves, and in turn grow our society? If I have an idea that will change lives, and reward me financially, why should I bring it forward if the implementation of the idea will force me to hand over the majority of the reward to support others? This is how we encourage mediocrity, and lose innovation.

We are each individuals, and each of us have the right to pursue happiness. There is no right to find happiness. When we think that we are due happiness, we must remember that life isn't fair, nor is a bureaucratic government fair. Taking from one person to give to another is immoral. Individuals choosing to give to another is genuine.

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Head Start or Pisanki? Opportunity costs are lost in the government's process

Most activities in life are projects. Project management is the art and science of getting things done. A project is defined as having a beginning and an end, not to be confused with entitlement payments, which are by definition operations management, thus never ending.  Project management applies to so many areas of life. Vacations, home improvements, planting your garden, protesting our childish government, or updating your Facebook page are all projects.

Before project management was defined, organizations would have a thought (sometimes a whim, which is a little below a thought, but a higher level stimulation than a reaction) and apply resources to make an attempt for the thought to become reality. It would be supported by a big plan, and everyone would organize around it. Some organizations would have many thoughts, and pursue them all, straining their resources, running people into the ground, and burning up their resources. Sometimes an effort paid off, and the organization would reap the benefit of their effort. Many times the organization lost focus, didn't put their money into smart initiatives, and they ended up going out of business, or becoming insolvent and ineffectual. These concepts also apply to government.

Then along came project portfolio management. Some person came up with the crazy idea that if resources are limited, maybe the organization should determine what was most important, and apply their resources to the important stuff first. As the resources were depleted, less effort would be put into lower priority ideas, and some ideas would be abandoned completely. This way the organization wouldn't have to decrease peoples' pay, deprive them of food, or buy inferior toilet paper for the bathrooms to save money for funding projects.

In order to accomplish this, all of the efforts the organization was thinking about investing in had to be evaluated as a portfolio. Decision criteria had to be developed, and all proposed projects would need to be "normalized" by consistently applying the same criteria to all of them. In this way, an organization could make sure that the important stuff was identified, and got done first.

The way federal funding of programs and projects is completed now is some Congressman, the President, or someone at a town hall meeting speaking for millions of people comes up with an idea. The idea gains traction, and as a stand alone project, it looks like a great thing to do. Some examples of great things that were looked at individually are when our government gives a private museum that has assets in the millions of dollars a couple of hundred thousand dollars to restore their building.  The following items are from the 2010 budget, as reported on the Citizens Against Government Waste Web site:

$194,800 by Sen. Sheldon Whitehouse (D-R.I.) for completion of the historic restoration project at the Historic Slater Mill in Pawtucket, Rhode Island.  According to Slater Mill’s website, it is “one of the most visited sites in Rhode Island with 30,000 visitors per year, 80 years of preservation experience and long-term partnerships with major universities, public school systems, cultural heritage organizations, tourism agencies, museums, guilds, artists, the business community and many others.”  The website also discloses that the admission fees are $10 for adults, $9 for seniors and $8 for children.  Besides being a popular destination, the organization does not appear to be on shaky financial footing.  According to the Old Slater’s Mill Association 2008 IRS Form 990, it has net assets of $2,573,254. 


Another example is providing a museum a couple of hundred thousand of the taxpayers' dollars so visitors can leave with a Pisanki egg. At $30 for the class, you'd think the cost of the paint would be covered, and they'd not need our money.

"...$250,000 for the Wistariahurst Museum, Holyoke, for renovation and expansion.  The museum charges for a number of events, including, “a hands-on demonstration in Pisanki - the tradition of decorating eggs and one of the most cherished cultural expressions of Polish heritage around the Easter holiday. Participants will leave with their own designed and hand-dyed Easter eggs. Fee is $30 per person”, and a “Trash to Treasure” in which “scouts and youths will use their creativity to turn castaways into fun and functional stuff, letting their imagination run wild in this hands-on session! $8 per person.”


Taken as a single item, neither of these gifts of our tax dollars seem like much, and many of the rare readers of this blog may think "good, I like that we fund the arts". But what is missing in the decisions to fund these two items is the analysis of opportunity cost, which is what a good project portfolio management system takes into consideration. 

When we look at opportunity cost, and use a prioritization process, we will see why maybe spending $200,000 on something different may be a better choice for us. With $200,000, we can have more than 20 inner city kids participate in a Head Start program. There's a choice I'd like to see a Congressman make - Pisanki eggs for museum visitors, or a positive lifetime impact on 20 inner city kids. Or how about choosing between Pisanki, or 40 miles of bike paths to combat obesity? How about $300 million to PBS or 6,000 miles of bike paths - per year - to combat obesity and protect the environment? The choices are never simple, but if they were simple, someone else could make them.

Should everything that is good be funded, or should we only fund what we can afford to fund?

Super size, or stupor size?

Bigger is better. Big stores bring us big savings by driving down production costs, buying in volume, and passing on the savings to us consumers. Big cars make us safer, and help us merge in traffic. 

Big cruise ships and big airlines provide us with cheaper vacation options, and many destinations. Big fuel provides us with a reliable flow of gas for our automobiles. Big trees provide us shade, protect us from the winter winds, and yield lots of lumber.

There is safety in numbers. In the animal world, we see herds of four legged game staying together. They travel, eat, and sleep with their herd. When predators come, they often defend themselves as a group, or when faced with overwhelming fear, will run in a group to escape the danger. As I often say when I am hiking with friends, I don't have to out run the bear, I just have to out run you. 

Big companies are often thought of as a safe employment option. With so many employees, it is less likely you will be singled out to be downsized. It's the herd mentality, without the bear. If you can make sure you aren't in the back of the pack, you can feel safer in your job. 

When my honey and I raced sailboats, we preferred larger fleets. The same herd mentality applies here. With a large fleet, we could expect a certain number of boats to have equipment failures, make tactical errors, mess up a tack or jibe, or not be hearty in bad weather. We improved our place in the regattas by just showing up and crossing the finish line. In a small fleet, finishing 3rd out of 4 boats sounds bad. Finishing 15th out of 20 sounds much better. 

But is bigger better? Safety in numbers is statistically accurate. You're less likely to be the loser when there are more players. But I've never seen a hungry hawk after it chased a flock of birds. 

Terrorists don't attack sparsely populated areas, they look for density to perpetrate their crimes. They have more targets there.

Large ships have become the favorite target of the pirates. Their size makes them hard to hide and not very maneuverable. 

Big cars are only safe when they are light. Big heavy cars are dangerous not only to the occupant of the car, but also to those around it. 

Big trees fall and crush homes. When was the last time you had a sapling cause heavy damage to your home? 

When big businesses fail, whole divisions of "safe jobs" are sent to the streets for the reporters to take pictures of. Think of Enron, Global Crossing, Merril Lynch, and we saw the Big Three Automakers downsie, along with companies that supported them. 

We've also seen large investment funds disappear. People must have felt very safe adding a hundred thousand dollars to a fund worth $50 billion. Safety in numbers. A small player on a big field. One in a large herd. A small fish in a big pond. This equates to less you have to worry about. 

In a large fund, every investor is represented by numbers. There is an account number, and a balance number. Humanity is removed. No longer is the hundred thousand dollar investment associated with your neighbor Joe, it is a number in a large pool of numbers. A faceless victim, "they should have known better", and "better them than me". 

Look at our government. Approximately 10% of the American workforce is employed by our tax dollars. This represents a tremendous voting bloc, and the dollar amounts are huge. 

How else would a group of people think that spending a trillion and a half dollars for a short term bailout is a good idea? This equated to 10% of our entire economy, and coincidentally, 10% of our existing national debt. 

As the numbers get bigger, the numbers mean less. A billion here, a billion there, pretty soon you're talking about real money. How can we not fund a billion dollar program when our numeric reference is so big? Trillions? What is that?

The bigger they are, the harder they fall. That was one of my Dad's favorite sayings. He usually threw that one out there over the top of the Daily News when a politician took a hit. 

Maybe bigger isn't better? Throw a small rock into a lake. The splash is small, the ripples are low, and they don't last long. Now throw a big rock into the same lake. Note the difference in splash size, the height of the ripples, and how far they travel - they often reverberate, bouncing back and forth across the surface.

Maybe smaller is better. Small is manageable. Small is agile, it can change as needed.  Small is easy to understand, we can get our arms around it. Smaller food servings, smaller waists, smaller health bills.

Small banks, where we know the employees and they know us. Loans would be written based on our ability to pay, not some big algorithm crushing numbers in a big data pool. 

Small is green. Over half of our workforce works for a small company. Small homes, small obligations, and most importantly, small government. This will mean small tax bills.

Small must be the status symbol of our future. We must get back to being small. Smaller is better. 

Economics, the dismal science - Junior Achievement class

"How come rich people like Donald Trump get richer in a recession?", followed by "how come the government doesn't tell companies they have to charge less for their products so people who are struggling can pay their bills?" were two of the questions that came up today in the high school class where I am teaching Economics through Junior Achievement. I put on my screen saver face and formulated my answer in my head... but first a little aside.

I don't remember anyone explaining economics to me as a kid, at least not in a structured sort of way. Economics was taught in real-time, with instant feedback for wrong answers. If I wanted to purchase something, I wasn't able to go to the governing entity (my parents), and get a bail out (allowance). I had to come up with ideas on how to make money. This environment forced me to become an entrepreneur at an early age.

My first few businesses were started when I was around 9 or 10, and revolved around filling a need in our household. My older brother didn't want to feed the family dog, which was his job. So he paid me $1 a week. He also hated to put his clothes in the laundry, so I would load the hamper in return for any loose change in his pockets, or from the floor. This business soon grew into cleaning cars in our driveway, and getting to keep the change. After a time, the money was not so good, since it takes months for change to fall out of a pocket at a rate I could justify doing the work for, so I started charging for car washes. As the youngest of 9 kids, there were lots of cars in the driveway.

Tom Finnegan was a nice guy on our street who was friends with my father. Tom asked my dad if he could pay me to cut his grass, and my dad agreed. So at about 12 years old I started to cut grass, which grew into 40 lawns spread across Pompton Plains and Pequannock Township, and was my primary income until I was in my early twenties. During that time, I worked regular jobs, such as at a local nursery where I started out planting mums, and stayed on for a couple of years picking vegetables and working in the greenhouses.

When I started to work, my parents made me buy my own work clothes, such as jeans, work boots, and whatever I'd wear to work. They covered school and church clothes. When I turned 16, 1/3^rd of my income was taken to cover my home expenses, plus I covered my own work clothes costs. At 18, the third was capped at $20 a week, and if I didn't work, they ran me a tab.

We learned early about economics. So back to the class today. In one of the first classes I taught, I asked who had a job that paid money. About 25% of the students raised their hand. I then asked who received a weekly allowance from their parents, with no strings attached - meaning they just received it, no chores required. Over half of the hands went up. Things have changed since I was a kid, and it is bad.

So my answer to the questions at the start of this blog were real simple, and derived by asking questions of the students. First, smart people make money in a recession. Having money going into a recession allows you to purchase at a deep discount. So don't waste your money buying stuff in a good economy, at least not on credit. Cash is king in a recession. But this recession has not been an opportunity for everyone. By taking money from the taxpayers and using it to prop up poorly managed banks, the government artificially kept home prices high, eliminating the opportunity for the average person to take advantage of the cheaper homes in the recession. As low as the home prices are, they are still artificially high because the banks don't have to sell the homes the foreclose on, since they now have our money to keep their business running. So Donald Trump got rich because he is smart, not because he is rich.

I also asked who pays for employees' health insurance - "employers". Does the company consider the cost of health insurance when determining how much to pay an employee? - "yes". So who pays for health insurance? - "the employee". So is government forcing insurance good for small business? We'll leave it there...

We covered many topics, mostly around entrepreneurship, risk and reward, taxes (including hidden taxes), regulations, and how much a company must to do comply that costs them money and time, without revenue for them. My last comment was that I talk economics with many people, and few understand it in even a basic way. Learning economics will act as insurance against being poor. The market cycles, and they are in school in a down cycle, and knowing about cycles, and not getting into debt will give them a much better chance at a good life.

It is very fulfilling being involved with Junior Achievement. If you haven't been involved yet, you should contact your local school and see if they participate, and how you can help.

Water Wars - real or imagined?

I think you'll find a common theme in many of my posts. I don't trust large organizations, whether they are government, charities, or business. Last night I watched an interesting movie about water, titled Blue Gold: World Water Wars. The movie focused on the large water companies, and how they collude with small government to buy water and resell it, often out of the area where it is located. To the average person, this sounds like a far-fetched conspiracy. Having lived in Rockland County, NY, I see the reality behind the story.

Rockland County can no longer provide enough water for their rampant development, and United Water - Suez (a French company) is more than happy to install a high cost, resource intensive solution to meet the growing demand - a desalination plant. Never mind the PCBs, radiation leaks, Yonkers leaking sewage, or Riverkeeper's opposing position on the desalination plant. Rockland County will receive the highest priced water in the nation once this scheme is implemented.

As part of the continued isolation of the general population from water resources, most water companies used post-9/11 hysteria (more on this soon...) to fence in the reservoirs. This looked prudent, but what is the threat? I can see fencing the pumping stations, but how much contaminant would be required to poison a reservoir? You'd see the tanker trucks lining up long before the first drop ended up in in the water. Biological agents can't be deployed easily, and few would survive a short period of time in a large body of water with the sun shining. UV rays sterilize. So why are the reservoirs fenced?

We see many people move to the desert for the drier air, and then they recreate their lush landscapes in the desert. What is the impact to the hydration cycle? We are building golf courses in the desert, emptying aquifers, and not thinking of the long term effects of this. Water taken into an arid environment condenses in the arid environment, and at some point, will that area still be arid with millions of gallons of lawn sprinkler water heading into the sky and forming clouds? Where is the water coming from, and at what cost?

Droughts are a great opportunity for water companies, when people are conserving water, the water companies increases rates to make up for lower revenues to cover the infrastructure costs.

Be careful if you stand against the "progress" of our government selling our water to a corporation, or you may find yourself hit with a Strategic Lawsuit Against Public Participation, which scares citizens into not protesting for their rights. Or you may find yourself in a situation where your activism lands you on the Department of Homeland Security's terrorism watch list, like Mark Ruffalo, when he questioned what fracking for oil and gas will do to the water supplies.

I thought I had a solution. I started using rain barrels years ago to capture run off from our roof for watering our plants. I don't pay for the water, and the rains in NJ come frequently enough that even in a drought, I can usually get through the worst of the season without pulling my hose. It is a simple enough solution, but did you know that in many states, including Colorado, using a rain barrel to capture water is illegal, but you can buy water from the water company to water your lawn. They want the rain to run off your roof, and work it's way back to the reservoir in the water shed so they can resell it to you. If you don't own the water that lands on your roof, why should it be owned by a corporation?

What is the solution? I think one pearl in the movie was stated by the Alaska water guy - a three way partnership between government, corporations, and activists must be put in place to manage water resources. But this is only part of the solution. I also believe that we must bust up the big corporations, and put control of resources at as low a level as is practical. This model should apply to all utilities, since they are all part of the public good. I of course don't count cable television as a utility, so you will still pay a premium for that.

Small is best. Big is bad. Think small, and be a locavore. Go ahead, share this with your network using the buttons below.

Food regulations - if something is so big it needs regulating, then it should be too big to survive

I am often amazed when I go on Facebook and see the reactions people have to pictures of animals that were hunted and are in the process of being butchered. The same people who call hunting "barbaric", eat meat. They show up at the grocery store, pick up their allegedly sterile shrink wrapped pack of meat with the gray side placed on the white tray with the absorbing pad, and head to the check out counter. They don't make the association between the meat and a living thing. I don't eat very much meat, having given up beef and pork about 12 years ago, and consuming very little fowl or sea food. But I know where meat comes from, and don't begrudge anyone the right to eat it. Animals eat each other, so why shouldn't we eat other animals? 

Our current food distribution system has placed the consumer very far from their food sources, and in the process has removed much of the consumers' ability to make healthy and safe choices. The next time you food shop, try to determine where the food came from, and how it got to you.

If you've ever been to a food process facility, you will be amazed at how sterile it appears on the surface, but how easily one could contaminate large quantities of food - knowingly or unknowingly. Tons of raw products are shipped to the food processor, along with tankers full of preservatives and chemicals. These are all mixed in huge vats, and squirted, mashed, pushed, belted, baked, fried, bagged, boxed, palleted, and loaded on a truck. The people working in the food processing facility may not even recognize the raw ingredients, because they are also far from the food source.

Many years ago I worked on the renovation of a mixing facility in Paterson, NJ where dough was produced. The dough was shipped to bakeries with names like "Moms Home Cooked", "Healthy Eats", and other friendly names the marketing gurus came up with. These bakeries would bake the goo we sent them, and you'd be able to buy these delectable items at the cash registers of your local convenience store. I haven't eaten one since seeing how the dough was mixed.

Today the Senate passed a food regulation bill. On the surface, many may see this as a great thing. I don't see it that way. I see a big handed government continuing its pageantry of pretending to help the people, while colluding with big business to suppress competition. The only reason we need to have food regulations is to control the behavior of food producers who have such economies of scale that when they screw up the quality control process, the negative impact is very large.

Who pays for the regulations? Is it the company being regulated, the government, or the consumer? The consumer pays. We pay not only increased costs that are passed on to the consumer, but also from the loss of competition. Regulations drive up the cost of entering a business, to the point where the only companies that can compete with a big company is another big company.

So many see regulations as keeping the big businesses in check, but in reality the regulations aid the companies being regulated, since the regulations increase the costs of entering an industry. Big business is great for big government, the politicians have fewer people to shake down for PAC money.

The automobile manufacturing industry is a great example of how regulations hurt the consumer. Every car manufactured must pass the same highway crash tests in order to be sold. In order for an entrepreneur to enter the automobile industry, she'd have to lawyer up, and have full legal representation to understand and comply with the laws. They'd also need a large accounting department to decipher the tax laws. So before the first laborer is hired, or the first part is installed, they must already have a significant investment into regulatory compliance.

What if NYC had a market for a small 2 seater car that would only be driven during rush hour? Speeds tend to be about 5 miles per hour average, with a top speed of about 20 miles per hour. A vehicle built for inner city driving can be sold for a fraction of what the least expensive car presently sells for. This type of car would have broad appeal, be inexpensive, and allow more people to have better transportations options. Since the vehicles are smaller, they could use less room to travel, as well as to park. They would also require fewer resources to build, and fewer resources to make them move. But regulations require all cars that are used on any road to comply with the federal crash standards.

So regulations cost the consumer, and society at-large. In the case of food, US agri-business used their size and money to lobby the federal government to not require labeling of genetically altered food, even though most countries require this. Our food is genetically altered, and we can't even tell from the label which are, and which aren't.

So how do we get away from the mass food producers, and back to local sourcing? We use Purple Dragon Food Co-Op, an organization which buys local organic produce first, and then organic non-local second. We pay a subscription fee of $49 every two weeks, and pick up an Ikea bag full of healthy and fresh produce. We never lack for good food. In the summer we supplement this with local farmers' markets. It's hard to completely avoid processed foods, but we do what we can.

By supporting local small food producers, we help our neighbors, keep local farms financially healthy, and stick it to "the man". No big conglomerate touches our food if we can help it. In 2011 we intend to start a small garden on our property. Of course we'll need to wrap it in some pretty heavy wire to keep the squirrels and chipmunks out.

Small business and small government, this serves the peoples' interest the best. 

Why governments must lead the fight against obesity - McKinsey Quarterly - Health Care - Strategy & Analysis

Why governments must lead the fight against obesity - McKinsey Quarterly - Health Care - Strategy & Analysis

Why do we insure health care? Food has a much bigger impact on our health, yet we don't insure food. With health insurance, we purchase a policy at a rate that ensures that all of the collective health expenses of the group can be paid for, that administrative costs are covered, and that our collective premiums provides a profit to the insurance company shareholders. Anyone who consumes less than the average amount is paying too much for their services. Someone in Minneapolis determines how much a doctor can charge for a service, and the doctor must figure out how many people he can pump through his office, and what he can bill the insurance company for to make a living. The consumer has few choices, and has little say in what they can consume.

If we applied this model to food, we'd all pay our money to a food insurance company at a rate above the average per person grocery bill, with additional money to cover administrative costs and profit. Once we pay our premium, we'd have no incentive to only take food that we need. Instead our incentive would be to make sure we get more food than our premium cost us. And this would drive the food insurance premiums up.

This is what happens with health insurance. We all pay a premium, and try to consume all of the medical services we can in order to ensure the policy is a good value, while staying within the limits of the policy. Feeling sick? Call the doctor.

A better system would be to eliminate routine health care insurance, and only insure catastrophic events. If I get sick, I could decide if I want to pay the doctor to confirm I have a cold, prescribe bed rest and liguids, and maybe an unnecessary anti-biotic, or if I want to wait a few days to see if I feel better. The costs would decrease, since a doctor can charge you twenty five cents for a Band-Aid^(r), and still make a profit. This is far less than the $4 the insurance company pays. The doctors would also be able to reduce staff, since they generally have someone who spends their day submitting claims to the many insurance companies.

I remember growing up, if I was sick, my parents would wait to see if I got better. If I didn't get better, they'd take me to the doctor. We were tight on money growing up, so I know my parents would often work out payment plans with the doctor. It was a personal relationship, and he always got paid.

McKinsey thinks government should lead the fight against obesity? What a crock. The politicians are just as obese as the general population, and have no solutions other than bigger government and more taxes.