As a subscriber to “The Economist”, a conservative British weekly publication (Sarah Palin, after not naming any publications she reads during the Katie Couric interview later listed a few including The Economist.) I get an annual booklet entitled “Pocket World in Figures, a compilation of international statistics. We often hear qualitative statements and slogans, which arouse emotions but have no basis in fact. The booklet contains 250 pages containing 229 tables of statistics and a summary of 68 countries and regions. I have selected a number of statistics based on what I consider may be ones that we are generally uninformed about, ones that are important or ones I find just plain interesting. As to countries, I list the top few in a category and if they do not appear there then data relative to our country, Russia which under the Soviet regime was our existential enemy; China in many peoples minds has replaced Russia as the existential threat; Japan was the economic threat toward the end of last century; Indonesia is the largest predominantly Muslim country and Islam is portrayed by the extreme right as the next existential threat; Sweden because conservatives often cite it as an example of socialism, Brazil is large and up and coming; Cuba, one of the last communist states and next door neighbor; and France just because we like to pick on it.
Note: If I don’t list a country and value in a category it is because it is of the chart.
I apologize for the length but hope you find it interesting

Countries: the largest in ‘000 sq km; 1 Russia – 17,075, 2 Canada – 9,971, 3 China – 9561, 4 United states – 9373, 5 Brazil –8512, 16 Indonesia – 1,904, 48 France – 544, 55, Sweden – 450, 60 listed

Largest Populations in millions; 1 China – 1.336.3, 2 India – 1,186.2, 3 United States – 308.8, 4 Indonesia – 234.3, 5 Brazil – 194.2, 9 Russia – 141.8, 10 Japan – 127.9, 21 France – 61.9, 66 listed

Biggest economies GDP in $bn (2008); 1 United States – 14,093; 2 Japan – 4,911; 3 China – 4,327; 4 Germany – 3,649; 5 France – 2,857; 8 Russia – 1,679; 10 Brazil – 1,575; 22 Sweden – 479; 46 listed

Highest GDP per head; 1 Luxembourg – 109,900; 2 Bermuda – 100,190; 3 Norway – 94,760; 4 Qatar – 88,900; 14 Sweden – 51,950; 20 United States –46,350; 22 France – 44,510; 29 Japan – 38,460; 70 listed

City Living - Quality of Living Index (New York is 100) based on 39 factors including political stability and natural environment; 1 Vienna, Austria, 2 Zurich, Switzerland, 3 Geneva, Switzerland, 4 Auckland, New Zealand, 4 Vancouver, Canada, 20 Stockholm, Sweden, 31 Honolulu, US, 31 listed

Quality of Life – Human development index. Developed by the UN it includes adult literacy, life expectancy, income levels; 1 Norway – 97.1; 2 Australia – 97; 3 Iceland – 96.9; 4 Canada – 96.6; 5 Ireland – 96.5; 7 Sweden – 96.3; 8 France - 96.1; 9 Japan - 96.0;
13 United States – 95.6; 49 Cuba – 86.3; 60 listed

Asylum applications in industrialized countries ‘000; 1 United States – 49.0; 2 Canada – 36.9; 3 France – 35.4; 4 United Kingdom – 31.3; 6 Sweden – 24.4; 18 listed

Economic freedom index. Ranks countries on basis of how government intervention can restrict economic relations. Published by the Heritage Foundation; 1 Hong Kong - 89.7; 2 Singapore – 86.1; 3 Australia – 82.6; 4 New Zealand – 82.1; 5 Ireland – 81.3; 8 United States – 78.0; 19 Japan – 72.9; 21 Sweden – 72.4; 38 listed

Government debt as % of GDP 2009; 1 Japan – 189.3; 2 Italy – 123.6; 3 Iceland – 117.6; 4 Greece – 114.9; 7 France 84.5; 8 United States – 83.9; 20 Sweden – 52.7; 29 listed

Government Spending as % of GDP 2009; 1 Denmark – 57.7; 2 Finland – 56.2; 2 Sweden – 56.2; 4 Iceland – 55.9; 5 France – 55.5; 24 Japan – 41.6; 25 United States – 41.5; 29 listed

Tax Revenue as % of GDP 2009; 1 Denmark – 48.3; 2 Sweden – 47.1; 3 Belgium – 44.3; 4 Italy – 43.2; 5 France – 43.1; 26 listed

Tax Wedge as % of total labor cost, 2009. (gap between labor cost and net take-home pay)l 1 Hungary – 43.7; 2 France – 41.7; 2 Greece – 41.7; 4 Belgium – 38.8; 5 Sweden – 37.5; 17 Japan – 23.7; 25 United States – 13.7

Aid - Largest Bilateral and multilateral donors % of GDP 2008; 1 Saudi Arabia – 1.19; 2 Sweden - 0.99; 3 Norway - 0.88; 4 Denmark - 0.82; 14 France - 0.38; 22 Japan – 0.20; 24 United States – 0.19

Largest industrial output $bn 2008; 1 United States – 3,073; 2 China – 2104; 3 Japan – 1282; 6 Russia – 625; 8 France – 584; 10 Brazil – 440; 16 Indonesia – 246; 21 Sweden – 134; 43 listed

Largest Manufacturing Output $bn 2008; 1 China – 1850; 2 United States – 1,831; 3 Japan 1,011; 4 Germany – 855; 7 France – 341; 8 Russia – 293; 9 Brazil – 281; 15; Indonesia – 140; 22 Sweden 93; 39 listed

Largest service output $bn 2008; 1 United States – 10,562; 2 Japan – 3,036; 3 Germany – 2,517; 4 France – 2,215; 6 China – 1,734; 9 Brazil – 1,029; 10 Russia – 970; 15 Sweden – 338; 50 listed

Largest Agricultural output $bn 2008; 1 China – 489; 2 India – 202; 3 United States – 183; 4 Brazil – 106; 5 Russia – 84; 6 Indonesia – 74; 8 Japan – 63; 9 France – 57

Energy – Largest Producer (all sources hydro, oil, coal, nuc etc.) million tons oil equivalent;
1 China – 1,814; 2 United States – 1.665; 3 Russia – 1231; 4 Saudi Arabia – 551; 8; Indonesia – 331; 13 Brazil – 216; 23 France – 135; 29 Japan – 90; 30 listed

Global Competitiveness - Overall based on 246 criterion; 1 Singapore; 2 Hong Kong; 3 United States; 4 Switzerland; 6 Sweden; 18 China; 24 France; 27 Japan; 38 Brazil; 44 listed

Global Competitiveness - government efficiency – public finance, fiscal policy, institutional and social frameworks, business legislation; 1 Hong Kong; 2 Singapore; 3 Switzerland; 4 Australia; 13 Sweden; 24 Franc; 27 Japan; 35 Indonesia; 38 Brazil; 44 listed

Global Competitiveness – Infrastructure; 1 United States; 2 Sweden; 3 Switzerland; 4 Canada; 13 Japan; 14 France; 31 China; 38 Russia

Business Environment – Hindrances to and opportunities to conduct of business; 1 Singapore – 8.7; 2 Switzerland – 8.44; 3 Finland – 8.43; 4 Canada 8.4; 4 Hong Kong 8.4; 8 Sweden – 8.2; 13 United States - 8.01; 19 France - 7.73; 26 Japan – 7.35; 40 Brazil – 6.62; 46 China – 6.36; 46 listed

Innovation Index – adoption of new technology and interaction between business and the science community; 1 United States - 5.77; 2 Switzerland – 5.56; 3 Finland – 5.53; 4 Japan – 5.51; 5 Sweden – 5.39; 18 France - 4.5; 24 listed

Technological readiness index – Ability of economy to adapt new technologies; 1 Sweden – 6.15; 2 Netherlands – 6.02; 3 Switzerland – 6.01; 4 Denmark – 5.92; 13 United States – 5.61; 23 France – 5.23; 24 listed

Total Expenditure on R&D as a % of GDP 2007; 1 Israel – 4.68; 2 Sweden – 3.64; 3 Finland – 3.47; 4 Japan – 3.40; 5 South Korea – 3.01; 7 United States – 2.67; 14 France – 2.08; 23 China – 1.4; 24 listed

Highest car ownership number of cars per 1000 of population; 1 Iceland – 669; 2 Luxembourg – 664; 3 New Zealand – 656; 4 Italy – 609; 12 France – 496; 19 Sweden - 468; 23 Japan – 446; 47 Russia – 193; 50 listed

Car Production – ‘000, 2008; 1 Japan – 10,108; 2 China – 6,712; 3 Germany –5,527; 4 South Korea – 3,804; 5 United States – 3,750; 6 Brazil – 2,427; 7 France – 2,145; 12 Russia – 1,309; 25 Indonesia – 314; 29 Sweden – 252; 40 listed

Largest tourist receipts, $m, 2008; 1 United States – 110,090; 2 Spain – 61,826;
3 France – 55,595; 4 Italy – 27,956; 5 China – 40,843; 20 Sweden – 12,490; 22 Russia – 11,943; 24 listed

Education – Highest tertiary enrolment. (post secondary school), % of relevant age group;
1 Cuba – 122; 2 South Korea; 96; 3 Finland – 94; 4 Greece – 91; 5 Slovenia – 85; 6 United States – 82; 13 Russia – 75; 13 Sweden – 75; 20 listed

Life Expectancy, years; Japan – 83.7; Hong Kong – 82.8; 3 Andorra – 82.5; 3 Switzerland – 82.5; 5 Iceland – 82.3; 7 France – 81.9; 8 Sweden 81.6; 32 United States – 79.9; 40 Cuba 79.1; 48 listed

Women who use modern methods of contraception (excluding rhythm); 1 China, 2 Norway, 3 United Kingdom, 7 France, 17 Cuba, 17 listed

Lowest infant mortality – number of deaths per 1000 live births; 1 Bermuda – 2.5; 2 Iceland – 2.8; 3 Sweden – 2.9; 4 Singapore – 3.0; 5 Japan – 3.1; 12 France – 3.8; 22 listed

Highest health spending – as % of GDP; 1 United States – 15.7; 2 Burundi – 13.9; 3 Timor – Leste – 13.6; 4 France – 11.0; 7 Cuba – 10.6; 23 Sweden – 9.3; 30 listed

Lowest population per doctor; 1 Cuba – 156; 2 Greece – 187; 3 Belarus – 205; 4 Georgia – 220, 5 Russia – 232; 17 France – 268; 17 listed

Most hospital beds, beds per 1000 of population; 1 Japan – 14.0; 2 Belarus – 11.2; 3 Russia – 9.7; 4 Ukraine – 8.7; 15 France – 7.2

Highest cost of living – US is 100; 1 France – 150; 2 Japan – 146; 3 Norway – 144; 4 Denmark – 138; 22 Sweden – 104; 24 United States 100; 25 Listed

Telephones – telephone lines per 100* people; 1 Bermuda – 89; 2 British Virgin Islands – 82.9; 13 Sweden – 57.8; 14 France – 56.4; 23 United States – 49.6; 38 listed

Mobile phones subscribers per 100* people; 1 United Arab Emirates – 208.7; 2 Estonia – 188.2; 3 Bahrain – 185.8; 13 Russia - 142.8; 33 Sweden – 118.3; 58 listed

Computers per 100* people; 1 Israel – 122; Switzerland 96.2; 3 Canada – 94.2; 4 Netherlands – 91.2; 5 Sweden – 88.1; 6 United States – 80.6; 12 Japan – 67.6; 14 France – 65.2; 44 Russia – 14.3; 50 listed

Broadband Subscribers per 100* people; 1 Sweden 41.1; 2 Denmark – 36.9; 3 Netherlands – 35.3; 4 Switzerland – 33.7; 9 France – 28.4; 14 United States 24.1; 17 Japan 23.6; 40 listed

* I believe there was a typo and it should have been per 1000 as was with other data

Beer Drinkers – retail sales in liters per head of population; 1 Czech Republic – 82.2; 2 Venezuela – 74.4; 3 Russia – 73.0; 4 Poland – 71.5; 11 United States – 61.0; 22 listed

Wine Drinkers; 1 Portugal 28.8; 2 Switzerland – 28.4; 3 France – 27.7; 4 Italy – 27.1; 13 Sweden – 18.1; 21 listed

Alcohol drinkers; 1 Finland – 99.8; 2 Australia – 99.7; 3 Czech Republic – 98.3; 4 Russia – 97.2; 15 United States – 73.2; 20 Sweden – 66.3

Robberies per 100,000 of population; 1 Belgium – 1,837; 2 Spain – 1,067; 3 Maldives – 196; 4 Chile – 180; 5 Russia – 173; 6 France – 172; 8 United States – 142; 11 Sweden –97; 20 listed

Prisoners per 100,000 of population; 1 United States – 753; 2 Russia – 660; 3 Rwanda – 593; 4 Virgin Islands (US) 561; 5 Cuba – 531; 24 listed

Our Constitution as Scripture

I had dinner (great beet soup) at a niece’s house last night where we started talking politics and got onto the subject of guns. My niece pulled out a little “black book”, the Constitution, from her purse and read the second amendment. I also have a copy of the Constitution though mine is in the form of a small pamphlet I was handed when I happened to be staying in a hotel, which hosted a North Carolina Tea Party Convention. Following is a transcription of the Second Amendment from it. “A well regulated Militia, being necessary to the security of a free State, the right of the people to keep and bear Arms, shall not be infringed. (But that’s another topic.)

The Constitution in the form of a little black book carried in a purse, along with the edited version of it read in the opening of the new Congress, makes me think of the dominance of “scripture” in religion and ideology. The Bible of the Christians, Koran of the Muslims, Torah of the Jews and the Vedas of the Hindus, are either explicitly or implicitly poetic in their nature and their content complex, multidimensional and open to, what I believe is intentional study and interpretation. (Though I suspect there would be reasonable arguments from each disputing this point.) The meanings expressed in these writings are profound but I think fundamentalists of all brands hold the books in greater esteem than the meaning contained within them.

The fact that my niece had the little black book in her purse is coincidental. She had been just recently looking something up. However, I have a fear that our Constitution, though a great piece of work, I am afraid that the right is starting to attribute it with a sacred status much as “Scriptures” and we will lose the ability and right to interpret and revise its content. You may recall, not too long ago during the horrific “Cultural Revolution” in China, ultraconservative young people were running around waving Mao’s little “Red Book”, quoting passages from it and terrorizing their “intellectual elite” elders.

Our President a Socialis?

I watched Solidad O’Brien of CNN interview a Georgia Senator (he may have been a congressman) but it does not matter for this discussion. During the President’s State of the Union Address, he tweeted that the president was a socialist. I was very disappointed because even though she may have had a strong disagreement with his views, she did not allow him to answer the questions she was asking and let her emotions get the better of her. First I would like to have heard her ask how he defines socialism and secondly when he said, holding a copy of the Constitution in his hand that all laws should have a basis in the Constitution, she got all emotional about slaves counting for only ¾ of a person for seating in Congress and said it should be the Constitution as amended. He tried to agree with her stating that he had a proposal on the floor to amend the Constitution, but she didn’t hear him nor allow him to make the point. His claim, and I have no basis for disputing it was that both parties essentially pass laws that are not constitutional instead of doing it the proper way, i.e. amending the Constitution which would require ¾ of both houses and ¾ of the states.

Getting back to the first point, I believe there is a semantic disconnect when it comes to using the term socialist. Webster’s defines socialism as “a theory or system of social organization in which the means of production and distribution of goods are owned and controlled collectively or by the government.” I suspect in the Senators mind a system that gets involved with the care of the underprivileged would be a socialistic one. I am not sure that progressive pundits don’t also operate by the same definition. I have seen progressives ask conservatives if they are in favor of Social Security and Medicare, and if so then they are also in favor of socialism. Because it was practiced by the former Soviet Union, a part of the “Evil Empire”, socialism has a very negative connotation for most Americans, particularly on the right.

The two definitions of socialism are so far apart it is difficult to have a conversation without first establishing which definition we are invoking. Though the right often accuses President Obama of being a socialist, I can’t believe in their heart of hearts they truly believe he wants the government to control the means of production. Even with the bailout of GM where the government took control, it was only temporary and shares of a healthy GM are again traded on the stock exchange.

The discussion relative to social programs is an entirely different one. All modern industrialized countries employ welfare state capitalist systems, each in their own way for somewhat common reasons though with differing orders of priority. Some of the rationale is strictly altruistic and part of human nature. Another is that the free markets are very volatile always innovating and in their wake leaving behind human casualties. To allow the market to continue functioning somehow those devastated in the process need to be uplifted. Yet another, though I am not sure to what extent it is publicly discussed is the fear that if a large enough portion of the population goes into deep poverty there will be civil unrest culminating in a totalitarian regime much as happened in Europe following the Second World War.

There are basically three kinds of welfare systems employed having different impacts, not only on the poor but also on women in general. In the Scandinavian countries the bar for poverty and government assistance is set very high and consequently the tax rate is very high and most families need two incomes to live a comfortable life given the taxes. It is easy to set the bar high there because the poor have common ethnicity and culture with the rest of the population. Though with an influx of immigrants in recent years there is a lot of pressure to lower the bar. The second system exists in the Christian Socialist governed countries like Germany and Italy. There they have imposed a very high minimum wage and passed laws making it very difficult to remove someone from their job unlike here where most are employed “at will” and with the exception of a few reasons like race or age, can indeed be terminated at the will of the employer. Because of the high minimum wage and the breadwinner’s (traditionally the man) job security, the woman can stay home and raise the children. The high minimum wage also makes it difficult to hire someone to assist with the house and kid even if the woman wants to work. (Family Value Conservatives should favor this system.) Here in the United States we live in a “Liberal Welfare State”. The bar for poverty is set at one of the lowest level among industrialized states and a smaller portion of the budget goes for caring for the needy. I believe the reason for this is that historically, the descendants of slaves and new ethnic groups come to this country and take the lowest paying jobs and during economic upheavals caused by free market dynamics tend to be most disenfranchised. Unlike in the case of Scandinavian countries where the needy are relatives of the affluent, these new immigrants are very different from the general population and the desire to contribute to their well being less strong. Also our minimum wage is among the lowest in the industrialize world. From the standpoint of women in the workforce, the lower minimum wage allows a families to hire assistants for the household and daycare for the children and lower wages often require her to work.

What I would like to see are better informed and skilled interviewers in the media willing to ask the hard questions and insist they get answered but then allow their guests time to answer them. It may be less entertaining but it will greatly contribute to a better informed public. I would like to have seen the gentleman from Georgia be interviewed by Fareed Zakaria, also of CNN and we may have better understood his position and form a better basis for agreeing or disagreeing. Fareed is well informed, respectful of his guests, ask hard questions and is not overcome by his ideologies and opinions.

Loss of Manufacturing Jobs

There is great consternation in the United States today over the loss of our manufacturing to Asian countries, mainly China. How much and how quickly will depend on a number of global economic, technological and political factors. There is a valid argument that this competition is not a “zero sum game”. Lower cost manufacturing in Asia will bring down prices for our consumers and as the prosperity of Asian workers improves there will be an ever-increasing market for our “more advanced “ products. The question is what “more advanced” products and what makes us think that these will be manufactured here?
As global competition continues to grow, the struggle to maintain, if not increase, profits will continue to drive companies to lower costs. A way to reduce labor cost, a large contributor to overall cost, is to move manufacturing to places where it is cheaper. Another way is to improve productivity with systems and automation, which not only cut labor, but improve the quality of the output along with efficiency. This drive to improve quality, in the near future will become a point of contention for China. Deming, the father of Japan’s statistical quality systems said that automation only makes sense if there is a shortage of labor or is required for precision and consistency. Currently China has an abundant workforce that can be moved from inefficient small farms to grow manufacturing well into the future. To make up for the migration of farmers to the cities, agricultural efficiency will need to be improved. The buying power of the population will increase dramatically during the growth phase but then will start to shrink, as it has here (We hid this fact by maxing out our credit cards) reducing demand.
With increased prosperity, labor costs will rise and to compete on quality more automation will be implemented. China’s manufacturing advantage will diminish and a labor surplus created. Japan’s manufacturing advantage lasted only a couple of decades before it started moving to Singapore, Malaysia, Vietnam, etc. Singapore then started losing its manufacturing to China. Our advantage only lasted from the end of the Second World War (1946) to about the nineteen eighties. These advantages are relatively short lived with ever decreasing life-spans, ours was 30 years, Japan’s 20 and Singapore’s 10.With the improvements in agriculture, the transplanted workers will not have farming to return to and will be limited to low value service sector jobs in the cities. Though a portion of access will be absorbed into China’s developing military/industrial complex, this will reduce demand and create even more access labor. A society can sustain a large service sector if it is producing real value either through farming, mining or manufacturing. As long as there are adequate commodities produced, how much labor is utilized to produce them is less important. After all, the goal of manufacturing is to devise methods that eliminate labor from the production floor. To that point, we are a major agricultural producer yet the total labor employed in agriculture is relatively small.
China has land and minerals and its manufacturing base is expanding. In china there is emerging a very wealthy business class creating an ever-increasing gap between the rich and poor. When manufacturing shrinks, allowing the poor to return to pre “boom” poverty will lead to social unrest. So whether there will in fact be social unrest will in part depend on how well the service jobs are compensated and how large the gap between the very rich and very poor becomes. Studies have shown that social ills are caused more by this gap than poverty in absolute terms. Here China has an advantage in that their totalitarian government can more quickly and easily intervene, adjusting wages or with their military.
Over the last several decades, in the United States there has been more and more wealth going to the “traders”, bankers and administrators of multinational companies. This is contributing to a widening gap between the very wealthy and those living on so called “Main St.” With high paying jobs, whether they were high paying because of union negotiations or skill requirements, shrinking, and as manufacturing continues to shift to Asia, the labor accustomed to high wages will increasingly turn to low paying service work. As more money is concentrated in the hands of fewer, as has been the trend in the last several decades, there will be fewer people with the resources to pay for the service. After all there are only so many lawns to mow and dinners to serve. Though we still have our agriculture and mining, if our manufacturing base diminishes, so will our value created and thus our ability to sustain a service economy. Having said this, I am optimistic that this trend need not continue.
As mentioned in the previous posting on “Workplace Quality of Life”, manufacturing can be broken down into three phases. A product, with methods required to build it is developed. There is an initial production phase where it is tested and tools and methods improved. Once refined and fully documented it matures and goes into the third phase, mass production. The Free Market System without government intervention, will push to build things in regions that make most economic sense. Production labor (or direct labor in manufacturing parlance) cost is the key consideration in the mass production phase. Though it is also an issue in the development and initial production phase, engineering, administrative and management (indirect labor) costs are proportionately higher in the first two phases.
I believe we have an advantage in the initial manufacturing phase. First let’s look at development. There are indications that diversity of ideas brought about by diversity of disciplines, cultures and experiences is a major contributor to creativity and thus innovation. Our ability to accept and assimilate people from different cultures and backgrounds gives us a lead in this area. Sustaining this diversity is the strongest piece of “American exceptionalism”. Though there is some ethnic diversity in China, it pales by comparison to ours. The development will be done where the innovators live and work. Then, since there needs to be heavy interaction between development and the initial manufacturing phase, it will be done wherever products are developed. Furthermore our culture of ingenuity and independence along with our capital markets will certainly add to this advantage. Technologies are evolving at an ever more rapid pace and the new widgets will become increasingly more complex and more quickly obsolete the old. This fact should lead to a trend reducing the life of production runs and increase the number of new developments and thereby “initial manufacturing”.
So if the above argument holds true, we will retain the higher value, short run and initial manufacturing jobs and increase the value and improve the quality of work life of our factory workers. What can screw this up? First, if we allow ourselves to be drawn into the movement toward a white, Christian, ethnically pure theocracy, we will lose our diversity and thereby our strong advantage in creativity and innovation. Secondly, if we do not recognize the importance of allowing workers to exercise their ingenuity in the initial manufacturing phase and force long run production systems onto the work floor (see post on Workplace Quality of Life), which I believe we are trying to do now, we will lose the advantage of proximity to development. This will also weaken our development and thus our overall economic advantage. I think we are a rational people and unless there is a very serious economic meltdown, the probability of instituting a theocracy is very slim at best. The second, however, I am not that sure about. Will we acknowledge the difference between phase two and three manufacturing and not force systems that stifle factory innovation? This requires a longer-term strategy and Wall Street rewards short-term gains and industry leaders with longer-term strategies may not survive.

Ingenuity in the Workplace

There are a number of factors beside wages, commonly referred to as “quality of life” issues that affect job satisfaction. Obvious among these are safety and general working conditions. But probably at least as important are opportunities for self-expression and being treated with dignity and respect. At different periods following the Industrial Revolution some or none of these existed. This was a major contributor to the rise of communism and then fascism to counter it. Throughout history job satisfaction and the ability of workers to express themselves through their creativity has ebbed and flowed. I believe today it is in decline. Between the government and unions wages and general working conditions were improved but as far the ability of workers to express their creativity, they probably made that worse. The question is can it recover?
In “The Wealth of Nations” Adam Smith writes about advances in manufacturing technology, saying that many of them came from ideas of people working in the factories. He cites a major innovation of the time (mid 17 hundreds) coming from a young boy whose job was to activate a lever when another moved. Wanting “more time to play” he connected the two levers with his shoestrings negating the need for him to stand at the levers. And so during the time preceding Henry Ford’s production line, though many things were made by craftsmen needing to be filed, trimmed and fitted, more and more things were made in factories where “simple manufacturing” was carried out. Here there was always room for improvement and the factory workers could exercise some creativity. The Industrial Revolution all but negated the application of ingenuity on the production floor. Machines and methods standardized operations and outputs became independent of operator. The factory workers became interchangeable and easily replaced and thus their value diminished along with their quality of life.
In the 20th century new technologies started to emerge and manufacturing technology development could not keep pace. Products were being manufactured while tools and methods were still being developed and the lot of the factory worker improved. Before products matured, the output to some extent, again started to became dependant on the skill and creativity of the worker. Toward the end of the century, ever more sophisticated “high tech” manufacturing further raised the lot of the factory worker by creating high paying jobs for a new class of worker, the technician. Though we were loosing “mature” large scale manufacturing there were enough new technologies springing up to keep us at somewhat of a standstill.
We Americans take pride in our ingenuity being able to solve complex problems with baling wire (today its duct tape) and bubblegum like TV’s McGiver. This ingenuity gave us a strong edge until the introduction of the quality systems by Deming et al into Japan. The Japanese, not being as “ingenious” (or so we thought) could not as effectively make the “fast fixes” as we could. So the equipment and instructions we worked with could be flawed because we could work around them. The Japanese could not. They were forced to figure out how to make thing right the first time and gained an advantage when it came to making complex electronics and cars in volume. The up-front investment in time and money was large but it was more than made up for by the savings on long run production by not having to always fix, adjust and correct. Thus our manufacturing advantage deteriorated. Ingenuity being a source of national pride, improving manufacturing systems did not become a high priority for us.
When Japan started beating us in automobile and electronic manufacturing, we saw the light. However, as more and more new technologies started to emerge, manufacturing technology development, though accelerated, still could not keep pace. New products were being manufactured while tools and methods were still being developed and the lot of the factory worker, especially in the “high tech” sector, improved both in value and quality of life. Before products matured, the output to some extent again became dependant on the skill and creativity of the worker. Toward the end of the century, ever more sophisticated “high tech” manufacturing raised the lot of the factory worker and created high paying jobs for a new class of worker, the technician. Though we were loosing “mature” large scale manufacturing there were enough new technologies springing up to keep us at somewhat of a standstill.
More than 30 years ago I attended a four-day seminar presided over by Deming, the legendary American quality consultant who went to Japan and introduced statistical quality methods. I took away two things from the seminar. One was; don’t put up motivational posters because they don’t address the problems or help the workers do a better job but just frustrate them by suggesting that things would be better if only they just tried harder. The second thing was that 80% of problems are system problems. (My experience suggested 90%.) I believed that as soon as you lay the blame on individuals you capitulate and the problem, if it is indeed a systemic one, which the odds say it is, will never be solved. Today’s Quality Systems go even further assigning 100% of the blame to systems and an “operator error” becomes a system error attributed to things such as improper qualification, training or direction. Having learned from the Japanese experience, the modern manufacturing and quality systems now call for extreme rigor, demanding thorough specifications, instructions, methods and tools.
The instructions are becoming more precise and need to be followed to the letter. If they result in errors the operator cannot change the procedure on his own but must stop the work until the equipment, method or instructions are corrected. In a rigorous manufacturing system even the tools, paper and pencils have very specific spots designated on a workbench. The aim of management and engineering is to get to a point where there is no difference between the output of one operator from another given they were qualified and trained properly. Thus individualism in the manufacturing workplace is not only discouraged and reduced, it has now been forbidden and eliminated. The method works. It indeed improves productivity where the product and methods are mature. This is a system increasingly employed around the world and if we intend to be competitive with mature manufacturing, we have to continue implementation. However, I am not sure what taking away individualism from the job will do long term though I suspect it will not be good.
In my experience manufacturing can be broken down into three phases. A product with methods required to build it is developed. There is an initial production phase where the product is tested and tools and methods improved. Once refined and fully documented it matures and goes into the third phase, production. When I was running a manufacturing company, we decided to make a living in the first two phases. We continuously took on new and challenging work and training operators for new tasks. This strategy, besides creating a strong well-differentiated niche, combated the diminution of individual expression on the production line. The value of workers increasingly was determined by their intelligence, flexibility and speed with which they could master new procedures. Dan Land, the founder of Polaroid presented a paper at a Chemical Society Conference in Canada in 1937 entitled “Research and Development in a Small Company”. In this paper he spoke about an ideal situation where production workers would spend part of their time on the production floor and part in the development facility. This way they could add their experience to development and then, when it is time to move the project into manufacturing, they could better facilitate the transition. In essence he proposed combining phase one and two, which is what we did. And by allowing workers to use their ingenuity we were able to successfully build “leading edge” parts without needing to wait for their full maturity.
As long as there is recognition that there is a second phase, the initial production, there will be an opportunity for factory workers to be more than cogs in a machine. If not, and mature production rigors are applied to initial production, both workers and management will be frustrated and progress will slow. Unfortunately the third phase manufacturing will continue to diminish the worker and eventually automation will replace them. The question is what will be the ratio of phase two and three? My sense is that because of the accelerating rate at which new products are introduced and more automation in mature manufacturing, phase two will grow at a more rapid rate and the ingenuity of a segment of factory workers will be valued and quality of life in the workplace retained.

Role of Government

Last week I watched an interesting discussion about the reform of the law relating to filibusters in the Senate. The filibuster is a technique used to force a “super majority” vote of 60 instead of a pure majority of 51 to enact any legislature. The Constitution specifies a few cases, such as ratification of treaties and overturning a presidential veto, which do require a super majority. Other than that the Senate can set its own rules. In recent couple of years the filibuster has been used more than in the previous two decades. This creates a situation where it is very difficult, if not impossible to pass any legislation.

One of the individuals on the panel, a Libertarian, made a very interesting point. He suggested that passing laws should be difficult since they are authoritarian dictates from Government. From a Libertarian perspective any intervention from government that does not involve physical protection of life or property or infrastructure is unwarranted and in fact unjust. From that perspective, seeing the legitimate role of Government as very limited, making it difficult to pass new laws makes a lot of sense and the filibuster indeed makes it difficult. Currently there are less than a handful of Libertarians in the Senate and the filibuster is not used to limit “authoritarian dictates” but to not allow the other side to pass legislation that does not advantage their patrons.

So this brings us to the question of what is the legitimate role of Government in a Free Market Democracy? At the Federal level we have three major branches of Government, the Executive, Judiciary and Legislative. The Legislative is divided into the House of Representatives and the Senate. From my perspective, the role of these three branches of Government is to uphold the Constitution, protect life and property, ensure that free markets remain free and work for the benefit of our society and finally to facilitate commerce. These major categories have within them many sub categories such as civil rights and the pursuit of happiness under the Constitution. Antitrust legislation come under keeping markets free and ensuring that markets benefit the general society. Social Security and welfare allow the markets to be innovative and dynamic without destroying the society within which they function along with its customer base. The military protect from foreign intervention and laws and their enforcers protect both lives and property. Roads, airways and the internet, as well regulations and the printing of money and managing its supply facilitate commerce. The Free Market is causing very rapid changes in technology and commerce. These along with the ever-increasing mobility of people and goods throughout the world are having political and economic repercussions and the Government needs to adjust and create policies to keep up with these.

Our Presidents and Congressmen take an oath to uphold the Constitution but since 9/11 it seems that though the oath has not changed, the rhetoric has. And now the primary role of the President is stated as keeping us safe from external harm, even at the cost of the Constitution as was demonstrated during the last administration. But I digress. The role of the President is to provide the vision for the direction of our Country going forward given the anticipated environment, take the position of Commander and Chief of the armed forces during war and to ensure that any laws passed are consistent with the Constitution and the well-being of the Nation and the entire population. I would like to see added to this making us all free from fear.

The House of Representatives is populated in proportion to the regional population and is charged by their electorate to make sure that they prosper and are not disadvantaged by policies passed that may favor other regions. The Senate, on the other hand is not staffed in proportion to the population. They are 100 members chosen, two from each state, based on their wisdom and charged with seeing to the well being of our total society and not the narrow interest of the States they were elected in. That is the Congressman’s role. They declare War, ratify treaties and make sure that policies proposed by the House will indeed benefit society on the whole.

Unfortunately this not the way our Congress works. Our system has evolved into one with multiple agendas and the well being of society, regional or national, unfortunately is at the bottom of that list. At the top is the quest for reelection followed by the loyalty to a political party. So a decision is tested first against its impact on reelection. Will it benefit the people who fund their campaign and be perceived as a positive by the people who vote for them? (Their concern is the perception and not the reality.) If it passes that test than the question is how does it fit with the party’s ideology? (In our two party system, this answer also impacts reelection at the primary stage.) Finally after passing the first two hurdles they get to the real question. Within their understanding of how the world works, will it help their total constituency in the case of the House and the entire population of the Nation in the Senate? In the case of the Senate, since voters are regional, they duplicate the Representatives role and often sacrifice the common good for the regional one. I don’t mean to imply that there are no politicians who have the order of priorities right, but I am afraid they are the minority.

The Supreme Court ensures that laws are within guidelines set by the Constitution. Long term they may perform the most important function in that they can and do use their political bias to interpret some laws as constitutional and others not and essentially determine which segment of society is best served.

The good news is that in a Democracy we can do something about it. However, it is not easy. The powers (read that as money) in positions of influence have great resources and given today’s “24 hour news cycle, and ability to communicate, they use these to distract and confuse us. There is talk of this one being a Communist and that one a racist, and the Muslims will force Sharia law on us or that terrorists with the ability to inflict major damage are lurking everywhere and white supremists training in the woods will overthrow the government and impose a Fundamentalist Christian Theocracy. All this chatter distracts us from addressing the root cause of the dysfunctional system and allows it to continue for the benefit of special interests and makes it ever more difficult for us, as a society, to grow, be happy and prosper. Further more, the energy and resources used creating these diversions then allows little work on issues of how we rise to the challenge of the twenty first century and maintain our leadership position.

"Between a Rock and a Hard Place"

We often find ourselves in situations in which we have to make difficult choices where not only the outcome is uncertain but our principles may need to be compromised. Looking at these options from the outside, especially one dimensionally, the correct choice may seem obvious especially in the context of a different familial, cultural and religious perspective and even there the situation becomes more gray as one looks deeper.

I saw a movie a few years ago where the hero, played by Ben Kingsley, took a sick son to a hospital and because of the lack insurance, the administrator did not admit him and a doctor and nurse would not look at him but told them to go to a different hospital where uninsured people would be tended to. On the way to the hospital the son died. Ben’s character went home, got a gun, returned to the hospital and shot the secretary, nurse and doctor. He surrendered to the police and was assigned a lawyer who wants him to plead insanity. He refused. During a consultation the lawyer said, “it is hard to do the right thing”. To this Ben’s character replied, “it is hard to see what the right thing is but once we see it, its hard not to do it.”

With people falling on hard times during this recession there has been criticism of the long term unemployed in that they would rather collect unemployment than get a lesser paying job. On the surface this looks like a reasonable criticism but let me paint a scenario where it may not be so obvious. Let’s say a man with a wife and two small kids loses a job. He collects $500 per week in unemployment benefits and is out looking for work and finds a jobs at $400 per week. He has a difficult choice to make and the degree of difficulty will depend on a whole range of cultural issues. From a shallow perspective of someone who comes from a culture where honor is a strong attribute, the choice is obvious. Get a job.

One can look at this differently. Doing the honorable thing and retaining ones dignity is a selfish act. It satisfies the individual’s ego and personal needs at the expense of the well-being of the family. The family is better off with $500 per week than with $400. The man is between a rock and a hard place. He has a social obligation to provide the best care he can for his children and on the other hand he wants to retain his dignity and there is no way he can do both. (Of course there are arguments that will say he can get several jobs but if there are no jobs where will he get them) or he can steal. Nevertheless the choices are difficult. Ironically, maybe the move in Congress to not further extend unemployment payments would eliminate the choice and possible make it easier on the man but certainly not on the children.

Above I alluded to the cultural influence on the perception of honor.
A good extreme example of this is the legendary war between the Hatfields and McCoys in the Ozarks nearly one hundred years ago. The feud started over ownership of a hog with a member of one family killing a member of the other. Honor dictated that the killing be avenged. The feud continued for more than a decade anding with the deaths of 10 people. All in the name of honor.
This feud prompted a study about honor and the cultures influencing it. Both the Hatfields and McCoys were of Scots-Irish ancestry where honor has a very high priority so within that culture their behavior was not totally irrational. The study further indicated that in the rural South honor has a stronger position than in the urban North. To prove this point they tested young men by exposing them to personal insults and measuring the points at which they were ready to fight. In the news these days one also hears about “honor” killings of women in backward predominantly Islamic counties. The women by some action reviled by tradition have tainted the family name, dishonoring the family and to regain their dignity the family kills the woman. This is generally attributed to Islam but as the acts of the Hatfields and McCoys were not driven by religion but by culture so is the case of those “honor” killings.

Another example of a difficult decision was used in a lecture on Islam presented by Professor John Swanson of the American University of Cairo. The context was a discussion on the cutting off of the hand of a person convicted of theft. The professor pointed out that severing a hand was an infrequent occurrence and gave an example of how a case might evolve.
A farmer’s well runs dry and he cannot irrigate his field and his family is starting to starve. He asks a neighbor for permission to use some of his water but the neighbor refuses. The man is between a rock and a hard place. The Qur-an prohibits theft but also requires that a man care for his family. The farmer can’t meet both requirements and has to make a hard choice. He needs to brake one or the other law. So he steals water in the night, is caught and brought in front of a Sharia court. If the jurist is wise and experienced he would understand the dilemma and set the man free, fine the neighbor because he has an obligation to help his needy neighbor which he did not and furthermore the court would chastise the local government because it also to care for its needy.

In business, a person highly valued is the “no nonsense” person capable of making “hard” decisions. These hard decisions seldom affect them but can be catastrophic for those subordinate to them. They are decisions to terminate employment, freeze salaries, reduce benefits, change vendors etc. These decisions seldom, if ever, affect the well-being of the individual manager or their families but always someone else. The ability to make “hard” decisions is almost a prerequisite for a job in top management. In fact the decisions may or may not be hard at all depending on the background and character of the individual making them. If they see their staff not as fellow humans but just as resources to advance their agendas, the decision is not hard at all and there is no sleep lost. If, on the other hand, the humanity of the subordinates and the pain they will suffer is recognized, these decisions are indeed very hard. My guess is that those who have climbed the ladder to the highest positions in very large organization, because they have not crumbled from the weight of these decisions, must view people just as another resource.


I realize that the above may be oversimplifications but the point is that we often are faced with choices that are difficult. How difficult a given choice may be depends a lot on our individual backgrounds and environment. Often even we ourselves do not fully understand the underlying conflicts driven by believes, circumstances and cultures. These are the choices that cause sleepless nights and give us indigestion if not more serious health problems. The greater difficulty is seeing what the “right” thing to do is and the stress comes from facing two paths neither of which is a “right” one.