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Current Affairs

What has Dean done?

John Robb points to passionate article by Everett Ehrlich about the power of today’s technology for political purposes (with a tip of the hat to Ronald Coase) — in Sunday’s Washington Post.

No longer. Now anyone with a Web site and a server, a satellite transponder and about $100 million can have — in a matter of months — much of what the political parties have taken generations to build.

Technology, of course, has changed politics before. Television changed the two parties, for example, but it didn’t make the parties obsolete. In fact, in the day of Richard M. Nixon and John F. Kennedy, television strengthened the two-party duopoly (the economist’s term for a shared monopoly), as only those two parties had the resources to use it competitively.

But the Internet doesn’t reinforce the parties — instead, it questions their very rationale. You don’t need a political party to keep the ball rolling — you can have a virtual party do it just as easily. And that’s what Howard Dean has done.

Be sure to see the predictions at the end of the piece. Out here in California, a “third party” candidate was successful in winning the governorship — through a recall process — something he’d never have won through the traditional party process. Does this ever happen for the presidency?

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Current Affairs

Deflation?

Just reading about the 2004 price increases being imposed by UPS and FedEx, it strikes me that worries of deflation certainly aren’t playing out in certain infrastructure costs. UPS is taking prices for shipping goods by air up almost 5% while FedEx is increasing prices 2.5%.

Meanwhile, the airlines are getting hammered — following pre-announcements by Southwest and jetBlue. Airlines pricing is soft and may get softer as capacity remains to be filled.

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Current Affairs

Productivity and Scrap Steel

After watching Kudlow & Cramer on CNBC last night and their interview of the guy from Schnitzer Steel (SCHN), I was struck by this morning’s announcement of a 9.4% increase in US productivity by the Department of Labor.

Morgan Stanley’s Stephen Roach has an Op-Ed piece in Sunday’s New York Times about this productivity paradox. In particular, he highlighted that it’s not just US worker productivity that’s affecting the numbers:

That underscores another aspect of America’s recent productivity miracle: the growing use of overseas labor. While this may increase the profits of American business — help-desk employees or customer-service representatives in India earn a fraction of what their counterparts in the United States do — the American worker does not directly share the benefits. The result is a clash between the owners of capital and the providers of labor — a clash that has resulted in heightened trade frictions and growing protectionist risks.

In other words, the Department of Labor’s measurement of productivity — flawed in a number of other respects — really doesn’t measure US worker productivity but, rather, the productivity of all labor — including offshored labor — used by US businesses.

Listening to the guy from Schnitzer, he spoke in glowing terms about how his business exporting scrap steel to China was exploding. Separately, another economic report a week or two ago reported that Chinese imports were actually up over 40% year over year. A front page story in today’s Wall St. Journal reports on China’s hunger for petroleum imports — now second in the world only to the US.

The contrast between what we’re exporting (scrap steel — that we can’t put to profitable use domestically) and what we’re importing from China (undoubtedly soon to be automobiles!) is striking. Ironically, the Schnitzer guy commented that it was much cheaper for him to ship his scrap steel to China (via ship) than to ship it to Detroit via US railroad.

We certainly are now living in a global economy — one that feels like it’s become totally globalized over just the last few years. The power of the Internet in enabling this acceleration of globalization has been amazing.

On Monday, I ordered a spare power supply for my PowerBook from the Apple Store. It arrived on my doorstep earlier today — shipped by Apple/Compai via FedEx direct from Taiwan, not Cupertino.

Steel tariffs — imposed about 18 months ago as a crude attempt to protect US jobs — will reportedly be eliminated by the administration tomorrow. In the meantime, we’ve just started tariffing Chinese bras in a fit of administration schizophrenia.

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Current Affairs

Thanksgiving

baycam_quart-4.jpgIt’s a beautifully clear evening tonight in San Francisco.

Lots to be thankful for this year — a great family, wonderful friends, colleagues, and clients. A new puppy to keep us company.

Good health, delightful projects, new learnings and explorations. New tools and technologies — although I think I’m losing my fascination with new “toys”. (That must be a sign of getting old!)

Thanks to all who make all of this possible. Sincere thanks, in particular, to the families of those in the US armed forces who gave their lives for our freedom this past year.