Infrastructure, India and Intellectual Capital

These are three very powerful “I” words – Infrastructure, India and intellectual capital. They are related in one key fashion. The failure of the US to address each of these issues has hastened its forthcoming demise as the world leading economy. China, of course, plays a key role, but we sometimes lose track of the other fastest growing economy in India, who has been creating a technology proficiency that rivals and may surpass Silicon Valley.

Per Vice News, India is well positioned for two key reasons. They have one billion people and are much more heavily focused on STEM education than the US. Even if the US had the same focus, India is three times larger and has been doing major call center and technology outsourcing for US and other companies for years. Now, they have companies that only focus on the domestic market in India. And, one other key is important. Indians who have traveled to the US to be educated are returning home rather than staying here. Why? Opportunity back home and the fact the welcome mat has been thrown away by the current US President for immigrants of color.

The other two “I” words are crucial. India is investing in their infrastructure and intellectual capital. The US has forgotten what got us to a world dominant economy. In the book “That used to be us: How America fell behind in the world it created and how it can come back,” by Thomas Friedman and Michael Mandelbaum, it describes an America that used to invest along with a blend of local government and private funding to do great things. Now, we are more concerned with cutting revenue to dare fund things like our dilapidated infrastructure and intellectual capital.

Both the US Chamber of Commerce and labor unions have been pleading for years to invest more in our infrastructure. While interest rates were low, it was the ideal time to borrow to invest in depleted assets. Infrastructure investing also would create jobs and enhance productivity, the latter through saving of time by reducing the time when roads, canals, locks and bridges have to be shut down for repair. The President rightfully noted this need on the campaign trail and then shelved a report to do anything about it one month into his Presidency. Who says so? The man he asked to do the report.

Like India, we should be investing in new technologies and our infrastructure. Plus, we should be more welcoming of immigrants, especially those who are educated here. Innovation is portable, so if these folks leave the US, the Innovation will occur elsewhere. This coupled with a better and protective patent system will promote growth.

Like America, India is not perfect. But, they are focused on the future moreso than the US leaders are. We tend to be focused more on protecting legacy industries, than greasing the skids for new ones. Fortunately, other Americans are more forward thinking, in spite of our leaders. But, it would be nice if we helped them out more.

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Rewarding inefficiency

As a former consultant, I have witnessed too often how some are rewarded for their inefficiency. For those who have never worked for a consulting firm, the management goal is to bill all time to a client. So, pressure is applied to record all time spent working on that client, then pressure is placed on the account manager to bill the time charges in the system.

The dilemma begins when you are working on a set  budget for a project and the agreed upon maximum amount cannot be billed, unless you speak with the client first about why additional work is needed. With those further removed from the budgeting/ billing process, they are told to record time, whether they are inefficient or not. As they are measured on billable hours, people who are inefficient are actually rewarded for their inefficiency.

So, Joe is inefficient on his work and has 1,800 billable hours for a year. Susan is efficient and works well within budgets and has 1,500 hours. Joe will get more rewards for his work, even though the company had to write off 300 of his hours that exceeded budgets with clients. I should note this is not an uncommon dilemma. What Joe fails to realize is future project managers may say we cannot use Joe as we always have a write off. So, this may right itself long term, but in a matrix managed world, Joe does not report to the account and project managers, so he will be judged by his supervisors.

Why am I thinking of this? Our President is getting kudos from his followers for doing what he said he would do. The problem is much of what he said he would do may not be the best course of action. While I applaud looking at infrastructure and looking strategically at how we can increase domestic jobs, measures like building a wall or introducing a travel ban will do very little to accomplish making us safer and dealing strategically with immigration. Neither will ignoring the far greater terrorist threat in our country of anti-government and other domestic hate groups that are already here.

I have written earlier these tactics are more like a gorilla beating on his chest than they are about solving real problems. Data centric analysis should drive what we should do, rather than the campaign rhetoric of a man who is not known for his desire to perform due diligence. So, let’s not reward inefficiency. Let’s focus on doing smart things that can help our country. Building a wall and banning travel are inefficient.

 

 

 

Big Issue #1 – Dealing with our Debt

A topic that was discussed very little during the campaign and debates is our ticking time bomb problem of US debt. At almost $20 trillion and growing, it deserves its ranking as Big Issue #1 as it will impact everything we do as interest cost becomes an even greater part of our annual budget.

Let’s start with a few quick numbers in our 2015-16 fiscal year for context:

Current Debt = $19.8 trillion
Annual Revenue = $3.267 trillion
Annual Expenses = $3.854 trillion
Annual Deficit = $0.587 trillion
Annual Interest Cost = $0.284 trillion

Note, the annual interest cost is included in the expenses. If we did not spend one cent outside of paying the interest cost, it would take almost seven years to pay down the debt. But, we do have major and minor expenses, so it will take a concerted effort that will need to include some revenue increases, as cost cutting will not get us there unless we are prepared to make significant cuts to defense and major programs like Social Security and Medicare, the top three cost items.

What is troubling is our President Elect’s economic and tax plan has been measured by two non-partisan groups – The Committee for a Responsible Federal Budget and The Tax Foundation – to increase our debt by $5.3 trillion over the next ten years. Quite simply, we cannot afford to do that.

So, we must be smart about what we do it or we will make the problem much worse. The President Elect has said we will make it up in an expanded economy, but several  economic modeling firms, such as UK based Oxford Economics and US based Moody Analytics, project his plans as creating from malaise to recession in our economy.

We are at the point where we must set campaign rhetoric aside and govern off real data and analytics. There are things we can do to decrease the debt. Two non-partisan organizations – The Concord Coalition (www.concordcoalition.org) and Fix the Debt (www.fixthedebt.org) – have good exercises where you can value the impact of certain changes on the expense side and revenue side.

It should be noted, like Corporations, there are areas where we need to increase spending such as on infrastructure investment, while we make cuts in others. Also, as we are an aging country that is the most obese country in the world per the World Health Organization, there will be upward cost pressures on health related programs.

This is not an easy exercise, but one we must do. Cutting revenue through less taxes is an easy thing to promise during the campaign season, but we are at the point where we must make tough decisions and decreasing revenue is one we probably should avoid. And, the longer we wait, it will become even tougher to solve this problem.

Which country is being talked about?

Which country are the Republican candidates speaking about? The one I live in has had 67 consecutive months of private sector job growth, with an unemployment rate of 5.1% and a stock market that has more than doubled since January, 2009. Coupling this with expanded health care opportunities for many who did not have affordable access, increased consumer rights under the Consumer Financial Protection Bureau and fewer Americans fighting abroad, things are better than portrayed by these candidates. And, this is in a world where some countries are struggling.

However, this economy has not benefitted everyone equally, but the demise of the middle class and increase in poverty has been created over the last 35 years with technology improvements, offshoring, outsourcing and lack of infrastructure investment. Data also shows with the tax simplification plan under President Reagan which significantly reduced the upper tax bracket, the disparity between the haves and have-nots got much larger over these 35 years. But, it should be noted both Democrats and Republicans failed to halt this widening chasm.

We need to work together to address these systematic problems, which should be owned by all leaders as it has been a building problem that became more apparent with job losses created during the recession. What troubles me greatly is our desire to look past data focusing on overly simplified and often-wrong campaign slogans. There are things that we could be doing that we are not, due to these kinds of politics.

The easiest measure would be to invest in our infrastructure. Our roads, bridges, ports, railways and railway bridges are in need of repair and maintenance. There is a bipartisan plea by the former Transportation Secretary Ray LaHood and former Pennsylvania Governor Ed Rendell to invest in these needs before a ticking time bomb  explodes like another huge train derailment or bridge collapse. This plea is supported by both the US Chamber of Commerce and the AFL-CIO labor union. The additional reason beside the need to repair and renovate crumbling infrastructure is these initiatives are known job creators. That was supposed to mission one of this Congress.

Congress has kicked the can down the road with short-term funding for 33 consecutive quarters under both Republican and Democrat leadership. I fault Congress and the President for not making this a huge priority. Both parties are to blame for not acting on this issue as we need to be banging on a gong as this so important. Yet, we hear so little about it. The next chance to do something is at month’s end, but with the state of disarray in Congress without a speaker and the existing divisiveness in the majority party, I am not hopeful anything tangible will be done except another short-term funding.

I have written before (and will again) about other issues that will help, but this one truly is a ticking time bomb. We will have another disaster, but we should not let Congress or the President ask why did someone let this happen? Quoting Michael Jackson, they need to start with the “man (and woman) in the mirror.” Our country is not as bad off as it is portrayed, but we have real problems that need to be dealt with. Not investing in our infrastructure is one of them. Please reach out to your Congressional representative, Senators and the President and tell them to make a move before more Americans die or get hurt and let people get to work to fix these problems.

A little bit of this and a little bit of that

TGIF for those who can still call it Friday and happy Weekend to our friends in Australia, Japan, Indonesia, etc. Just a few odds and ends to chew on for the week that was. Or, as the cooks would say about seasoning, “a little bit of this and a little bit of that.”

In America we have so many GOP politicians trying to garner attention away from The Donald, that they are making beyond crazy remarks. Maybe those who don’t want to look at real data and look at what is happening through a reasonable lens of eyeglasses might appreciate the middle-aged craziness, but those who stay in closer proximity to real news are not impressed by these remarks. I would ask these politicians to not try to “out-crazy” a man who is willing to say anything. The Donald will crash and burn as he is his own worst enemy, but he also has more baggage than a normal caravan could transport, which will eventually come out. Yet, he does make good copy for the media.

Our Congress just kicked than can down the road for the 34th time on the Highway Trust Fund, which funds needed infrastructure and road improvements. We have yet another stop-gap measure for three months. At least the Senate passed a three-year bill, but the House did not want to take it up, so they could take a month off from their ineffective job performance. You know, you get tired from pretending to govern for a few months. In short, our infrastructure is badly broken in terms of roads, bridges, ports and grids. These include railway bridges which were reported on “60 Minutes” that could go any day with 500 trains per day going over them. With interest rates low, we have had a window to borrow to maintain and build assets. Plus, there is no better jobs program, which as I recall is “the number one issue” per our Speaker. This is the same Speaker who did not want to take up a longer term fix.

When our Congress returns in a month do not expect great things, as we have some very important financial matters to vote on, including extending the debt ceiling. As you may recall, this is what caused Senator Ted Cruz to single-handedly shut down the government a couple of years ago, to the chagrin of the rest of the world who begged us not to go down this path. It took six female senators to reopen the government by making the deal. This is one reason we need more women in leadership, as men like Cruz like to play more win-lose politics and grandstand. It should be noted that the President had to cancel two global trade meetings in Asia-Pacific and Europe which promote trade because of Cruz. So, the shutdown put even more headwinds into our sails and the meetings were rescheduled with some additional cost.

While the economy, stock market and jobs numbers under this President have done pretty well over the past four years, and while he has been speaking to the real dangers of climate change and doing something about it, he has been disappointing in one major area to me. I am going to set aside transparency and use of drones and spying for now, as he has left a lot to be desired there. What I am speaking to is his cheerleading for fracking. This surprises Conservatives to hear this, but our President has been pro-fracking to the extent he has bifurcated the EPA. The EPA released a report noting the leakage of fracking into groundwater, but the press release noted the opposite. Since few folks read anymore, the press release was latched onto and used to show how safe fracking was (as an aside, it did not speak the vast use of water, the earthquakes, the air pollution or the environmental degradation). The press release was retracted on a Sunday after a Friday release, but the story was already out. This is not the first time that the White House has pressured the EPA to sand around the edges on their findings on fracking.

Well, that is enough grist for this mill. I don’t know if I helped your weekend with my little news report or not. Have a wondrous weekend.

 

 

But, how could you let that happen?

It is not uncommon when a tragedy occurs, where politicians want to come across as great stewards, by asking “but, how could you let that happen?” The tragedy could range from a child under social services being maltreated by guardians to a train catastrophe, where safeguards that could have been in place are not. Yet, it also is not uncommon for part of the answer to the question to be from an overworked and underfunded department, who is overwhelmed and doing the best they can with limited resources.

I recognize budgets are important, but we seem to reconcile budget cuts on areas that can least afford it. These underfunded departments are ticking time bombs. For example, a social worker should ideally have about sixteen clients, more or less, depending on the complexity and coverage area. Yet, with budget cuts, you may hear of social worker in social services with 160 clients, a tenfold increase. The social worker cannot do an effective job with that many clients and something will slip through the cracks. “But, how can you let that happen?” will be asked.

Or, a train will crash or a car part recall will be handled poorly, because the Department of Transportation is so underfunded to make sure procedures are in place. Just today, Congress called the DOT on the carpet for not handling the announcement of the Takata recall very well. While Congress was not incorrect, a department of eight people was doing the best they could with all the things on their plate. Underfunding the DOT and the Highway Trust Fund worries me, as we will have more and more incidences occur where bridges collapse, poor roads will cause significant accidents or a train will derail. Our Congress has kicked the can down the road 33 times on funding a long time plan to address our infrastructure deficiencies.

This is basic stuff and does not even include preparing for natural disasters and the impact of climate change. To give an example, the Army Corp of Engineers told the US government in the early 2000s, that the city of New Orleans could not withstand a direct hurricane hit and the levees would give. That was before Katrina. Yet, nothing was done in advance. We have a water crisis that will continue to get worse if we do not plan ahead. These water crises will affect more than just California, Texas and Oklahoma. And, the water crises will be exacerbated by climate change, which will cause other problems, as well.  Yet, we do not want to openly talk about it and we have one political party who wants to deny a problem exists, that the rest of the world is dealing with.

Failing to plan ahead is planning to fail. And, we will see a lot more of these failures in the future. But, how could you let that happen will be asked when those failures occur.

America is one big pothole – stupid is as stupid does

In January, 2014, I wrote the blog “America is one big pothole” after seeing former Pennsylvania Governor Ed Rendell and former Secretary of Transportation Ray LaHood, on PBS Newshour. They have joined together for a bipartisan effort to promote much needed investment in our crumbling infrastructure – roads, bridges, railways, ports, etc. and have been in front of Congress to discuss these needs. Fifteen months later, not much has been done about the growing problems, and at the end of this month, our stop-gap funding of the Highway Trust Fund will expire one more time.

The Amtrak accident has caused people to recognize the need, but to be honest politicians do not need anymore wake-up calls. They are fully informed of the problems, but choose not to do anything about it. Their lack of stewardship is not a surprise, but in this case, people have died and will die from their failure to act. The interesting sidebar to this is any investment in infrastructure will create jobs and, as you may recall, that was supposed to be the number one mission of this and previous Congresses. These jobs will dwarf the jobs that could be created with a Keystone Pipeline, for example, and certainly deserve more attention than many of the items discussed in the chamber of Congress.

As reported on a repeat episode on “60 Minutes” last night, this is one issue that the leaders of the US Chamber of Commerce and AFL-CIO labor union agree on. Both were in front of Congress last fall to plead with them to invest in our crumbling infrastructure. Yet, the leaders of these Congressional Committees refused to be interviewed and will not act. And, fifteen months after the following post and six months following these pleas by the US Chamber and AFL-CIO leaders, not much has happened.

The Speaker of the House has reacted with criticism over linking the Amtrak train derailment with a lack infrastructure investing. He even stated the question as “stupid.” I recognize, as do many, that this accident is likely due to excessive speed. But, one of the investments would have added a breaking system that may have kicked in. One thing is for certain, a question about failing to invest in our infrastructure is not “stupid.” What is “stupid” is failing to act when the information to do so is so compelling and business and labor are pleading for action.

Just a quick example from the “60 Minutes” episode re-aired last night. A key railway bridge has 500 trains per day crossing it, the most heavily used railway bridge in the western hemisphere. This bridge is on the most traveled rail line in the country from Boston to New York to Philadelphia. If this bridge goes, it will not be an accident. It will be an accident waiting to happen that could be prevented.

There are other arguments noted in the attached post. Please join with me and write your Congressional representatives and ask them to act. In fact, we should tell them to act as their lack of stewardship is beyond poor. Using the Speaker’s word, their failure is “stupid” and we will be the ones who pay for their stupidity.

https://musingsofanoldfart.wordpress.com/2014/01/10/america-is-one-big-pothole/