Wretched Article in the Wall Street Journal Today

In today's WSJ, Henry Mintzberg, a professor at a university, wrote a piece about how we should do away with all executive bonuses.  The article made a weak effort to be fact driven and scenario driven, but ended up being illogical, unsound and wrong!  I was most disturbed at how this piece, supposedly written by a scholar of business, failed to identify and address the real issues at stake.  It was as if the free market had never existed, and rather that bonuses paid to date have simply been the result of some "we must pay big bonuses" government policy.

First, the reason we (the shareholders) pay performance bonuses is we believe we need to attract the best people.  For a person to argue to do away with these bonuses and to NOT address the ability of companies to still be able to attract people means that this piece is not credible.  I am disappointed the editors at the Journal did not insist this be addressed prior to publishing.  I might as well argue for NASA to launch a space program to put  a man in another galaxy without addressing whether such a mission is physically possible!   The implicit assumption by Mintzberg is that these bonuses are completely optional and not needed to attract and retain these people.  Really?  Defend that position.  I do not want to indict all of academia, but this flawed "out of market" logic is what I read all too often from those who are not in the market, insulated from the market, and who live in a world of "tenure" supported by unseen, unknown and unappreciated donors.  I think the donors do more harm than good.

Second, on the dynamics Mintzberg cites regarding CEO leadership, culture building, and stock price being the best indicator of a company's health...false, false and false again.  I sit on many boards, and this is not the case.  A CEO sets the culture for an entire company.  Implicitly or explicitly, every organization has a value system and the CEO either actively manages those values or chooses not to address them and they develop on their own -- either way a company's culture is the responsibility of the CEO.  While stock price is not perfect, it is tied closest to shareholder value, and no better way has been shown to date (one suggestion, -- lengthen the measurement period to several years to better align with shareholder interests.)

Finally, the entire issue of executive bonuses is a straw man around an emotional issue to many, meant to deflect attention from the true issue.  This is not about whether I "think it is fair" that some CEO make "too much" (too much according to whom?  no answer).  This is about whether an individual, ANY individual, and whether YOU have the ability to enter into a private contract with or without the approval of society.  This is about the freedom of an individual (and private company)  to have the choice and liberty to voluntary decide to trade on terms they wish to honor.  The statists in our society have chosen a populist, personal issue surrounded by class warfare and the fanned flames of envy to cloud the issue.  Storm

Great post from Charles Krauthammer at Washington Post

I thought this was well written and well researched and represented a unique take from all the articles I have scanned.  Republished with the (implied) permission of Mr. Krauthammer -- his email at the end of this post.

The myth of '08, demolished


By Charles Krauthammer

Friday, November 6, 2009

Sure, Election Day 2009 will scare moderate Democrats and make passage of Obamacare more difficult. Sure, it makes it easier for resurgent Republicans to raise money and recruit candidates for 2010. But the most important effect of Tuesday's elections is historical. It demolishes the great realignment myth of 2008.

In the aftermath of last year's Obama sweep, we heard endlessly about its fundamental, revolutionary, transformational nature. How it was ushering in an FDR-like realignment for the 21st century in which new demographics -- most prominently, rising minorities and the young -- would bury the GOP far into the future. One book proclaimed "The Death of Conservatism," while the more modest merely predicted the terminal decline of the Republican Party into a regional party of the Deep South or a rump party of marginalized angry white men.

This was all ridiculous from the beginning. The '08 election was a historical anomaly. A uniquely charismatic candidate was running at a time of deep war weariness, with an intensely unpopular Republican president, against a politically incompetent opponent, amid the greatest financial collapse since the Great Depression. And still he won by only seven points.

Exactly a year later comes the empirical validation of that skepticism. Virginia -- presumed harbinger of the new realignment, having gone Democratic in '08 for the first time in 44 years -- went red again. With a vengeance. Barack Obama had carried it by six points. The Republican gubernatorial candidate won by 17 -- a 23-point swing. New Jersey went from plus-15 Democratic in 2008 to minus-four in 2009. A 19-point swing.

What happened? The vaunted Obama realignment vanished. In 2009 in Virginia, the black vote was down by 20 percent; the under-30 vote by 50 percent. And as for independents, the ultimate prize of any realignment, they bolted. In both Virginia and New Jersey they'd gone narrowly for Obama in '08. This year they went Republican by a staggering 33 points in Virginia and by an equally shocking 30 points in New Jersey.

White House apologists will say the Virginia Democrat was weak. If the difference between Bob McDonnell and Creigh Deeds was so great, how come when the same two men ran against each other statewide for attorney general four years ago the race was a virtual dead heat? Which made the '09 McDonnell-Deeds rematch the closest you get in politics to a laboratory experiment for measuring the change in external conditions. Run them against each other again when it's Obamaism in action and see what happens. What happened was a Republican landslide.

The Obama coattails of 2008 are gone. The expansion of the electorate, the excitement of the young, came in uniquely propitious Democratic circumstances and amid unparalleled enthusiasm for electing the first African American president.

November '08 was one shot, one time, never to be replicated. Nor was November '09 a realignment. It was a return to the norm -- and definitive confirmation that 2008 was one of the great flukes in American political history.

The irony of 2009 is that the anti-Democratic tide overshot the norm -- deeply blue New Jersey, for example, elected a Republican governor for the first time in 12 years -- because Democrats so thoroughly misread 2008 and the mandate they assumed it bestowed. Obama saw himself as anointed by a watershed victory to remake American life. Not letting the cup pass from his lips, he declared to Congress only five weeks after his swearing-in his "New Foundation" for America -- from remaking the one-sixth of the American economy that is health care to massive government regulation of the economic lifeblood that is energy.

Moreover, the same conventional wisdom that proclaimed the dawning of a new age last November dismissed the inevitable popular reaction to Obama's hubristic expansion of government, taxation, spending and debt -- the tea party demonstrators, the town hall protesters -- as a raging rabble of resentful reactionaries, AstroTurf-phony and Fox News-deranged.

Some rump. Just last month Gallup found that conservatives outnumber liberals by 2 to 1 (40 percent to 20 percent) and even outnumber moderates (at 36 percent). So on Tuesday, the "rump" rebelled. It's the natural reaction of a center-right country to a governing party seeking to rush through a left-wing agenda using temporary majorities created by the one-shot election of 2008. The misreading of that election -- and of the mandate it allegedly bestowed -- is the fundamental cause of the Democratic debacle of 2009.

letters@charleskrauthammer.com

Elevating the Debate

If you are one who seeks the truth, outside of any political or politically correct narrative, then I will assume that you (also) are disappointed (or absolutely apalled) at the nature of the public debate.  The liberties on logic taken by those behind the mic to make their point inspire nothing but skepticism.  I am currently reading a wonderful book, Team of Rivals, by Doris Kearns Goodwin that (in addition to remaining as unbiased as possible) lays out in well researched detail Lincoln's rise to power and his political genius of enrolling friends and adversaries alike into his cause.  Of particular note is the nature of structure, rules and logic demanded in debate by the mid 19th century public.  Lincoln won points by extolling his audience to follow his logic as he deconstructed the premises of his opponents stated positions.   It is hard to accept how far we have fallen in the last 150 years and that we now live in an age of short attention spans, gossip TV, one liners and 'gotchas.'  Indeed, in the book Goodwin lays out a great point  -- that the attention audiences invested in structured political debate in Lincoln's time is now reserved for sporting events!   Finally, I thought this email, from a friend, whom I will keep anonymous, was an excellent checklist on the high side of debate....


There are very strict rules about debate and presentation of opposing views that have worked for years to keep order and to elevate the level of discourse. I would like to remind everyone about relevant rules. Not just in the Climate discussion but any time you want to elevate a dialog.


Often truth can be figured out just by judging the debate.

1. Any character assassination means the assassin immediately loses.

2. “My experts” are better than “your experts” without further definition is a waste of time and points are lost.

3. The use of “everyone agrees” when they don’t disqualifies the assertion and casts a pawl over the speaker.  In general I have found that anyone using that assertion is wrong, lying, or biased and that hypothesis upon which the assertion is made is wrong and that the use of the assertion is to stop inquiry about the counter argument.

4. Always separate questions of fact from questions of belief. Facts can be verified, compared or discussed separately from belief assertions.

5. Never confuse correlation and causality. The jump from a correlation to causality is huge. Most science is involved justifying that jumping that chasm. In general the weaker the expert the easier they will make the jump.  Good science is very careful about the jump.

6. Never ascribe big outcomes from small things when there are other items that are larger and more important in the same system. (This one comes from engineering training not debate but I thought I would throw it in.)

7. Announce your personal biases and examine them yourself. A good exercise is to argue for the position you do not favor and often it is amazingly enlightening.

8. Mistrust crowds, groups, committees, politicians, preachers, and the consensual agreement.

9. No one has a right to an uninformed opinion -- "what do you know and how do you know it?"

 -- Storm