March 2007 – Page 3 – artdiamondblog.com

Job Market Resilience: Going to the Dogs

Patrick Logue the former real estate agent and current dog trainer. Source of photo: online version of the WSJ article cited below.

Selling homes has turned into a dog-eat-dog business, so Patrick Logue decided to work with some friendlier canines.

Mr. Logue quit his job as a real-estate agent near Fort Myers, Fla., in December. Then he set up shop as a franchisee of the dog-training chain Bark Busters. So far, he says, "I have zero regrets."

. . .

Mr. Logue, a 34-year-old former golf pro, became an agent for the Assist-2-Sell franchise chain in the Fort Myers area about three years ago. He says his commission income was nearly $100,000 in his first year and $180,000 in his second. Then it plunged to $40,000 last year. "Nothing was selling," he says.

For the full story, see:

JAMES R. HAGERTY and ANJALI ATHAVALEY. "Amid Slump, Real-Estate Agents Hang Up Their Blazers; Housing Downturn Leads To an Industry Shakeout; Seeking Alternative Careers." The Wall Street Journal (Weds., February 7, 2007): B6.

(Note: ellipsis added.)

Many Muslim Newcomers Did Not Embrace Dutch Tolerance

Source of book image: http://images.barnesandnoble.com/images/12210000/12213853.jpg

Two key moments in Ms. Hirsi Ali’s life stand out. One is her arrival in the West, a moment she considers to be her "real birthday." On the day her husband shows up at the refugee camp in Holland to claim his rights, Ms. Hirsi Ali finds that she can say "no" to a man stronger than she is, thanks to the protection of a democratic state, a protection made visible, in this case, by the presence of Dutch policemen. She thus experienced an imperative that to most of us is a mere abstraction: Individual freedom needs the rule of law.

The second pivotal moment in her life, Ms. Hirsi Ali says, was the 9/11 terrorist attack on the U.S. She understood what drove Mohamed Atta and his co-hijackers; she once shared their values and had known people like them in the Muslim Brotherhood. "Every devout Muslim who aspired to practice genuine Islam," she writes, "even if they didn’t actively support the attacks, they must have at least approved of them." With 9/11, Ms. Hirsi Ali’s religious doubts erupted into defiance of what she had known while growing up.

From that day onward, Ms. Hirsi Ali became a public voice in the Dutch post-9/11 debates. Eloquently, she made bruising, sometimes inflammatory, arguments. Islam was backward, she said, and needed its Voltaire. She declared that, considered by modern standards, the Prophet was a "pervert" because he had married a 9-year-old girl. Elected an MP for the market-oriented VVD Party in 2003, she became a politician in the grand, passionate style, breaking with Dutch habits of consensus and accommodation.

A nation of 16 million people, with a Muslim minority of about one million (mostly Moroccan and Turkish immigrants), the Netherlands was at the time (and is still) trapped by its carefully nurtured sense of tolerance and hospitality. The trouble was that its newcomers did not necessarily embrace tolerance, women’s rights, free speech and other core Dutch values. Ms. Hirsi Ali knew that she was courting danger by openly addressing such concerns. Nonetheless, she pushed ahead and began working with director Theo van Gogh on "Submission," the film about the mistreatment of Muslim women. When van Gogh was murdered on Nov. 2, 2004, the police found a knife stuck in his body — the weapon was holding in place a letter threatening Ms. Hirsi Ali.

For the full review, see:

LUUK VAN MIDDELAAR. "BOOKS; Out of Europe How a prominent African refugee confronted Islam — then fled to the U.S." The Wall Street Journal (Sat., February 3, 2007): P12.

Reference to the book:

Ayaan Hirsi Ali. INFIDEL. Free Press, 2007. (353 pages, $26)

Omaha Public Schools’ Attack on Other Districts Costs $12 Million in Lawyer Fees

Source of graphic: online version of the Omaha World-Herald article cited below.

(p. 1A) Who’s winning in the Omaha-area disputes about school finances and boundaries?.

So far, it looks like the lawyers.

Taxpayers have shelled out $12 million to private lawyers hired to handle those matters for Omaha-area school districts and the State of Nebraska, a World-Herald study found.

Nearly all of that has been paid during the past 3¹/₂ years to two Omaha firms: Baird Holm, hired by the Omaha Public Schools, and Fraser Stryker, which was hired by the state and separately by the suburban districts.

The money has been spent on three interconnected items:

• The OPS lawsuit against the state’s school funding system, which accounts for most of the $12 million.

• The Omaha district’s effort, now on hold, to take over its suburban neighbors.

• And fallout from the Legislature’s 2006 law that would break apart OPS and create a two-county "learning community" for the Omaha metro area.

The $12 million doesn’t include lobbying costs or staff time for the three matters. And it doesn’t include millions of dollars the districts paid lawyers during the same period for routine legal work.

The three items have fueled a stunning increase in OPS payments to lawyers. The district now pays about $400,000 a month in legal fees – four times what it (p. 2A) paid five years ago.

"This seems to me to be crazy," said State Sen. Ron Raikes of Lincoln, who introduced a bill this year aimed at curbing school districts’ spending on legal fees.

"These are legal fees, paid pretty much by taxpayers, for a school district to conduct a legal war against another school district or against the state," said Raikes, who heads the Legislature’s education committee.

For the full story, see:

PAUL GOODSELL. "Lawyers reap OPS windfall; District, state actions cost taxpayers $12 million, so far." OMAHA WORLD-HERALD (Sunday, March 4, 2007): 1A & 2A.

(Note: the online version had the somewhat different title: "OPS legal fees cost taxpayers $12 million, so far.")

Communists Import Giant Rabbits to End Starvation in North Korea

Apparently the North Korean Communist government’s plan to end starvation in North Korea, is to import and breed giant German rabbits. If they were really serious, they would do better by respecting property rights, and embracing the free market.

EBERSWALDE, Germany — Few people raise bigger bunny rabbits than Karl Szmolinsky, who has been producing long-eared whoppers since 1964. His favorite breed, German gray giants, are the size of a full-grown beagle and so fat they can barely hop.

Last year, after the retired chauffeur entered some of his monsters in an agricultural fair, word of his breeding skills spread to the North Korean Embassy in Berlin. Diplomats looked past the cute, furry faces with the twitching noses and saw a possible solution to their nation’s endemic food shortage: an enormous bunny in every Korean pot.

The North Koreans approached Szmolinsky in November and asked whether he’d advise them on how to start a rabbit breeding program to help "feed the population," the 67-year-old pensioner recalled in an interview at his home in Eberswalde, an eastern German town a few miles from the Polish border. Sympathetic to the Koreans’ plight, he agreed to sell some of his best stock at a steep discount and volunteered to travel to the hermetic nation as a consultant.

. . .

In December, Szmolinsky stuffed six of his rabbits into modified dog carriers and took them to the airport in Berlin, where they boarded a flight for Pyongyang, via Frankfurt, Germany, and Beijing. Robert, a 23-pounder, was the largest of the bunch, which included four female rabbits and one other male carefully selected for their breeding potential.

How, exactly, the Democratic People’s Republic of Korea intends to parlay the small herd of German Flopsies into hunger relief for its 23 million citizens is unclear.

For the full story, see:

Craig Whitlock. "A Colossal Leap of Faith In Fight Against Famine North Koreans See Potential in German Breeder’s Giants." The Washington Post (Friday, February 2, 2007): A10.

(Note: ellipsis added.)

A giant German rabbit. Source of photo: http://www.spiegel.de/img/0,1020,774187,00.jpg

In Health Care “the U.S. is a Model of Inefficiency”

Source of graph: online version of the WSJ article cited below.

When it comes to managing its citizens’ health, the U.S. is a model of inefficiency.

Recently released figures from the U.S. Centers for Medicare and Medicaid Services show that in 2005, the U.S. health-care tab came to 16% of gross domestic product, more than any other country. France spends 10.5% of its GDP on health care, according to the Organization for Economic Cooperation and Development, while Japan spends 8%.

Americans don’t seem to be getting much for the money. In both France and Japan, the average life expectancy is higher than in the U.S., and the infant mortality rate is lower. This is true in most other OECD countries, so green tea and red wine don’t explain it all.

This is a drag on U.S. companies, raising their costs, pulling money out of consumer pockets and giving overseas firms a competitive edge.

For the full commentary, see:

JUSTIN LAHART. "AHEAD OF THE TAPE; Rethinking Health Care And the GDP." The Wall Street Journal (Thurs., January 25, 2007): C1.

The New York Times Bests the Wall Street Journal at Business

We had a major winter storm in Omaha on Thurs., March 1st. Schools were closed on Thursday and again on Friday. Throughout the storm, the Omaha World-Herald got a paper delivered every day.

The New York Times missed Thurs. and Fri., (there is no Saturday delivery). The Wall Street Journal missed Thurs., Fri., and Sat.

The main difference is that in the end, the New York Times made good on eventually delivering me all the papers that I had paid for.

After a half hour wait to get through to a customer service person, the Wall Street Journal told me that they could not get me copies of the Thursday and Saturday papers. They were all out, and I "should go to the library." (During the long wait, every couple of minutes, an automated voice would come on to tell me how important my call was to them—if the call is so important, why don’t they hire enough people so that customers don’t have to wait for a half hour?)

The weather problem was not a secret. Wouldn’t a good business anticipate publicly known problems, and have a contingency plan for dealing with them? Wouldn’t they increase their production in order to be able to make good on the papers their logistical operation was incompetent to deliver? Even if they did not have a clue at the beginning of the storm, couldn’t they have acquired a clue by Saturday, three days into the storm?

If the Omaha World-Herald can deliver, and the New York Times can make good when it can’t deliver, then the Wall Street Journal should be able, at least, to do as well as the New York Times. The Wall Street Journal insults its customers when it tells them to "go to the library."

It’s no way for the nation’s leading business newspaper to run its own business.

Mugabe’s Hyperinflation Destroys Zimbabwe Economy: More on Why Africa is Poor

The article excerpted below does a good job of sketching some of the effects of hyperinflation on the people of Zimbabwe. But it does little to illuminate the cause. As Milton Friedman definitively demonstrated, inflation is caused by government printing too much money. Mugabe and other tyrants are motivated to print too much money so they will have more money to spend, without having to raise taxes. The ploy seems to work for a little while sometimes, but in the end it results in inflation.

Gideon Gono is the governor of Zimbabwe’s central bank. Note Mr. Gono’s display of chutzpah in his blaming the people for inflation, and note the wonderful just symbolism of the power black out that cut off Mr. Gono’s speech.

(It almost sounds like an outtake from Atlas Shrugged.)

(p. A1) JOHANNESBURG, Feb. 6 — For close to seven years, Zimbabwe’s economy and quality of life have been in slow, uninterrupted decline. They are still declining this year, people there say, with one notable difference: the pace is no longer so slow.

Indeed, Zimbabwe’s economic descent has picked up so much speed that President Robert G. Mugabe, the nation’s leader for 27 years, is starting to lose support from parts of his own party.

In recent weeks, the national power authority has warned of a collapse of electrical service. A breakdown in water treatment has set off a new outbreak of cholera in the capital, Harare. All public services were cut off in Marondera, a regional capital of 50,000 in eastern Zimbabwe, after the city ran out of money to fix broken equipment. In Chitungwiza, just south of Harare, electricity is supplied only four days a week.

. . .

In the past eight months, “there’s been a huge collapse in living standards,” Iden Wetherell, the editor of the weekly newspaper Zimbabwe Independent said in a telephone interview, “and also a deterioration in the infrastructure — in standards of health care, in education. There’s a sort of sense that things are plunging.”

. . .

(p. A6) The trigger of this crisis — hyperinflation — reached an annual rate of 1,281 percent this month, and has been near or over 1,000 percent since last April. Hyperinflation has bankrupted the government, left 8 in 10 citizens destitute and decimated the country’s factories and farms.

. . .

The central bank’s latest response to these problems, announced this week, was to declare inflation illegal. From March 1 to June 30, anyone who raises prices or wages will be arrested and punished. Only a “firm social contract” to end corruption and restructure the economy will bring an end to the crisis, said the reserve bank governor, Gideon Gono.

The speech by Mr. Gono, a favorite of Mr. Mugabe, was broadcast nationally. In downtown Harare, the last half was blacked out by a power failure.

For the full story, see:

MICHAEL WINES. "As Inflation Soars, Zimbabwe Economy Plunges." The New York Times (Weds., February 7, 2007): A1 & A6.

(Note: ellipses in original.)

For a lot of evidence on what causes inflation, see:

Friedman, Milton, and Anna Jacobson Schwartz. A Monetary History of the United States, 1867-1960. Princeton: Princeton University Press, 1963.

German Brain Drain

Engineer Benedikt Thoma is moving his family to Canada from Germany for a brighter future. Source of photo: online verion of the NYT article cited below.

ESCHBORN, Germany, Feb. 3 — Benedikt Thoma recalls the moment he began to think seriously about leaving Germany. It was in 2004, at a New Year’s Day reception in nearby Frankfurt, and the guest speaker, a prominent politician, was lamenting the fact that every year thousands of educated Germans turn their backs on their homeland.

“That struck me like a bolt of lightning,” said Mr. Thoma, 44, an engineer then running his family’s elevator company. “I asked myself, ‘Why should I stay here when the future is brighter someplace else?’ ”

In December, as his work with the company became an intolerable grind because of labor disputes, Mr. Thoma quit and made plans to move to Canada. In its wide-open spaces he hopes to find the future that he says is dwindling at home. As soon as he lands a job, Mr. Thoma, his wife, Petra, and their two teenage sons will join the ranks of Germany’s emigrants.

There has been a steady exodus over the years, but it has recently become Topic A in a land already saddled with one of the most rapidly aging and shrinking populations of any Western nation. With evidence that more professionals are leaving now than in past years, politicians and business executives warn about the loss of their country’s best and brightest.

. . .

. . . , there is plenty of anecdotal evidence that Germany has become less attractive for people in fields like medicine, academic research and engineering. Those who leave cite chronic unemployment, a rigid labor market, stifling bureaucracy, high taxes and the plodding economy — which, though better recently, still lags behind that of the United States.

. . .

In Mr. Thoma’s view, the root of the problem is [that] . . . Germany, . . . , has a “blockage” in its society.

“Germans are so complacent,” he said, sitting at the dining table in his neat-as-a-pin home here. “They don’t want to change anything. Everything is discussed endlessly without ever reaching a solution.”

As an example he cites the stalemate between his family’s firm and its 89 employees. After the firm became unionized, he said, the two sides began bickering over wages and working conditions.

With much of his 80-hour workweeks eaten up by those disputes, Mr. Thoma said he had developed high blood pressure and other ailments. He told his brothers he was burned out and ready to leave.

For the full story, see:

MARK LANDLER. "Germany Agonizes Over a Brain Drain." The New York Times (Tues., February 6, 2007): A10.

(Note: ellipses added.)

Source of graphic: online verion of the NYT article cited above.

Rock Icon Abandons France Because of High Taxes

French rock icon Johnny Hallyday. Source of photo: http://hosted.ap.org/photos/6/6b7deb53-a318-477d-90b7-fb5abe488774-big.jpg

In the dark of winter, the French rock ‘n’ roll icon Johnny Hallyday has abandoned France to settle in a snow-dusted mountain chalet, joining a scattered flock of superrich tax refugees in serene Switzerland.

Numbering about 3,700, according to Swiss statistics, these millionaire and billionaire exiles are variously coveted and resented in Switzerland, where local governments are competing in what critics scorn as a fierce race to the bottom to lure wealthy foreigners with individually negotiated tax breaks.

”I’m sick of paying, that’s all,” Mr. Hallyday, 63, said in a rebellious outburst to the celebrity magazine Paris Match, which devoted eight pages to his departure. ”I believe that after all the work I have done over nearly 50 years, my family should be able to live in some serenity. But 70 percent of everything I earn goes to taxes.”

The notion of a French symbol decamping to a newly renovated refuge in the town of Gstaad had an incendiary effect on French politics, prompting President Jacques Chirac to express restrained regrets about the rocker’s actions.

For the full story, see:

DOREEN CARVAJAL. "Swiss Tax Deals Lure the Superrich, but Are They Fair?" The New York Times, Section 1 (Sun., January 14, 2007): – B11.

Hallyday’s chalet in Gstaad, Switzerland. Source of photo: http://www.20minutes.fr/articles/2006/12/20/20061220-people-A-Gstaad-le-chalet-de-Johnny-fait-etrique-pour-une-rock-star.php

“Market Research Rarely Reveals New Insights”

Source of book image: http://images-eu.amazon.com/images/P/1591396190.01.LZZZZZZZ.jpg

(p. 69) Competition in an industry tends to converge not only on an accepted notion of the scope of its products and services but also on one of two possible bases of appeal. Some industries compete (p. 70) principally on price and function largely on calculations of utility; their appeal is rational. Other industries compete largely on feelings; their appeal is emotional.

Yet the appeal of most products or services is rarely intrinsically one or the other. Rather it is usually a result of the way companies have competed in the past, which has unconsciously educated consumers on what to expect. Companies’ behavior affects buyers’ expectations in a reinforcing cycle. Over time, functionally oriented industries become more functionally oriented; emotionally oriented industries become more emotionally oriented. No wonder market research rarely reveals new insights into what attracts customers. Industries have trained customers in what to expect. When surveyed, they echo back: more of the same for less.

Source:

Kim, W. Chan, and Renée Mauborgne. Blue Ocean Strategy: How to Create Uncontested Market Space and Make Competition Irrelevant. Boston: Harvard Business School Press, 2005.