Dangerous lawmakers

Twice now in the past few months Congress has voted on bills that many members have not read. The Stimulus Bill was over a thousand pages and members were given barely 24 hours to read it. The "Cap and Trade" Bill was 1000 pages, and 300 pages were added at the last minute. Our President insists that these bills are so urgently needed that Congress must act quickly. But what happens to people who sign papers they haven't read? Answer: whatever the writer of the paper wrote would happen. If an individual signs a contract without reading it, he's stupid and deserves whatever he gets. But when a member of Congress votes yea on a bill he hasn't read, he's voting to bind the nation to whatever reckless provisions are written into the bill. This ought to be grounds for the voters who elected him to recall him, and possibly grounds for criminal prosecution.

To prevent mischief, the following ought to be added to Congress' rules for processing bills.

1. For bills longer than a specified number of pages, x days must be allowed for every y pages to give members an opportunity to read the bill
   
2. The bill shall have a table of contents and an index
3. The bill shall address only a single subject
4. The bill must be readable by a sixth grader of average intelligence
5. Any member caught voting on a bill he has not read will be suspended
   

A letter sent to the retirees of a large company ends with
[The company] reserves the right to change, amend, modify, suspend or terminate its employment practices, policies, employee benefit plans or programs at any time…

One can easily understand why this company includes such warnings in its employee communications. Over the years they have been sued many times.

But consider the message this sends to salaried employees: You can’t count on any future benefits from the company. Forget about all the enticements we offered you to join us. They aren’t worth the paper they’re printed on. It’s no wonder people graduating from college today often go into business for themselves. There’s no point working for someone else for 30 or 40 years if he fails to keep his promises.

Eventually this trend will take its toll on large companies. People involved in design and engineering are salaried, so they don’t have the protection of a union contract. The absence of any guarantees that would entice such people to stay on board long term will lead them to job hop or work as independent consultants. But design, engineering, software development and other technical functions need continuity, and continuity is lost when the work force is constantly shifting.

One solution might be for these people to unionize, but professionals are generally too independent to work under the constricts of a union, and experience has shown that most unions are not good for the employer, either. Another solution is 401(k) programs that don’t require employees to invest in their employer, and medical savings plans. In both these programs the money contributed to date is under the employee’s control – within the strictures of the laws governing such programs.

It’s clear that some solution is needed if our large companies intend to remain competitive and in business.

Why regulation fails

An article reported by AP June 17, 2009 says in part:

Obama's sweeping change of business regulation also embraces new powers for the Federal Reserve and new rules that would reach into currently unregulated regions of the financial markets. An 85-page draft details an effort to change a regime that Obama's economic team maintained had become too porous for the innovations and intricacies of the today's financial markets.

This of course is not the first attempt to close up loopholes in the regulatory structure. Sarbanes-Oxley was supposed to improve reporting on corporate governance and prevent disasters like Enron and MCC. Before that many other regulations were published to deal with other loopholes.

But people are resourceful. Whenever a strategy that makes money for its practitioners is prohibited by regulation, people put their lawyers to work to find workarounds, or entirely new strategies. Over time the regulatory structure begins to look like Swiss cheese, because it’s impossible to anticipate and evaluate every strategy an innovative investor or his lawyer will devise. Some of the strategies of course are perfectly reasonable and perhaps even benefit society. Legislators and regulators don’t always make that distinction.

So what’s the solution? I argue for minimal government regulation and lots of transparency in the conduct of business affairs. The transparency ought not to be achieved by government regulation however, or we will end up with another expensive nightmare like Sarbanes Oxley. Transparency can be best assured by the most basic of laws, trade associations, and customer due diligence. With less regulation customers will realize enough additional profit to more than make up for the occasional shyster that slips past law, trade association policies, the Better Business Bureau and customer due diligence.

Windows Vista x64 and other software don't mix

Last September our apartment was burglarized. Among the items stolen was my wife's Toshiba Satellite PC. Since we had been quite satisfied with the Toshiba (It was good -- for a PC. I'm a Mac user myself) we bought another Toshiba. But this one had a 64 bit processor and came preloaded with Windows Vista x64.

We have a Canon printer/scanner/fax that we love. So naturally it was one of the first devices I wanted to get working with the new computer. On Canon's web site I found a driver for the printer, but the scanner toolbox wasn't available for Vista x64. I contacted Canon and they had no idea when or if one would be available. After sending them a somewhat sharply worded email I got a promise to bounce my request up to a higher level, but so far nothing has come of this.

Other software that doesn't work with x64 includes Palm Desktop and the driver for Belkin's USB Bluetooth adapter. This is particularly annoying because Palm states on their website that Palm Desktop isn't available for Windows X64, "but some users may be able to synchronize using Bluetooth"

I wouldn't be so steamed about this if the Canon was old, but we bought it in 2007. If I wanted to play the blame game, I'm sure Microsoft, Toshiba and Canon/Palm/Belkin would all point the finger at one another. But my vote goes for Canon, Palm and Belkin. Vista x64 has been on the market for some time now. Canon, Palm and Belkin have had ample time to write drivers.

I have been a Macintosh user for 20 years, and never have I had problems like this with new architectures. I started out with the Motorola 68xxx version, moved to the PowerPC version and finally to the Intel version (which can run Windows, and seems to run Windows with fewer glitches than a PC) and never had these kinds of problems.

My advice: stick to 32 bit versions of Windows, or, better yet: Get a Mac.

Review of Climate Change Papers by Nicola Scafetta, Bruce West et al

Introduction

Climate scientists in general attribute global warming to the increase in CO2 in the atmosphere[IPCC]. Since the variation of the sun’s irradiance amounts to only about 0.1 percent[IPCC], this seems to be a reasonable conclusion.

However, Nicola Scafetta of Duke University, Bruce West of the Army Research Office and several colleagues have identified a stochastic resonance phenomenon between the sun and the earth that indicates a substantial part of global warming may be due to solar influence.

In part this result is not new. C. Nicolis studied the nearly periodic recurrence of ice ages using stochastic resonance theory [Anishschenko 2002, Scholarpedia Stochastic Resonance article] and concluded there is substantial solar influence on climate over the approximately 100,000 year period of the ice ages [Nicolis 1981]. What is new is that Scafetta et. al. find evidence that the 11 year Schwabe (sunspot) cycle and other short term cycles in solar output influence earth’s climate. This review provides a roadmap of several of Scafetta et. al.’s papers that lead to their results.

Their result doesn’t contradict the overall conclusion that global warming has been occurring since the early part of the twentieth century. However, if correct, their result indicates that limiting CO2 emissions may not have the desired effect. Indeed, their results indicate that we may be on the verge of a global cooling cycle, in which case limiting CO2 emissions is exactly the wrong thing to do.

Outline of Scafetta et. al.’s approach

Scafetta and colleagues demonstrate three points:
1. Solar flares can be characterized by a time series in which the probability density of the waiting time between solar flares is an inverse power law. The solar flare time series exhibits Levy scaling with an inverse power law scaling exponent between 2 and 3
2. Temperature changes in earth’s atmosphere exhibit a slight Levy component with inverse power law scaling exponent between 2 and 3
3. When two coupled processes, one, the source, delivering energy to the other, the sink, are characterized by Levy scaling with similar inverse power law exponents, the sink becomes synchronized to the source and energy transfer is maximized.

Frequency of solar flares

Scafetta et. al. present the results of a statistical analysis of several records of sunspot activity dating back to 1600, [Scafetta 2007] postulating that periods of high sunspot activity correspond to periods of high solar irradiance. They verify this assumption with 20th century data records, which include both sunspot activity and solar irradiance.

They analyze the solar irradiance data using wavelets, [Grigolini 2002] Diffusion Entropy Analysis (DEA) and Standard Deviation Analysis (SDA) to show that the solar irradiance exhibits Levy statistics.

Frequency of atmospheric temperature fluctuations

In [Scafetta 2004, Scafetta 2008] atmospheric temperature fluctuations are studied and a Levy component is identified. They show that the temperature time series is a nonpoisson renewal process with an inverse power law exponent close to that of the solar irradiance time series.

The Complexity Matching Effect

In [Allegrini] 2006] the Complexity Matching Effect (CME) is studied. Briefly the CME is a phenomenon in which two coupled systems whose time evolution is described by inverse power laws with similar exponents can become synchronized, achieving maximum energy transfer between the two. They demonstrate that when the inverse power law exponent of the perturbing system (the sun, which they denote by P) approaches the value of that of the driven system (the earth, designated by S), that energy transfer is maximized. I am less certain that they demonstrate that the earth’s temperature fluctuations can inherit the sun’s solar flare power law exponent. However, if the two power laws have similar exponents, energy transfer is maximized. They display a figure (their Figure 1, reproduced below)that looks very much like the resonance experienced when a second order system is driven near its resonant frequency.



FIG. 1: Inset: fitting of Eq. (9) (solid lines) to Monte Carlo
data (open circles) using TS = TP = 1, μS = 1.6 with μP =
1.35 (upper) and μP = 1.85 (lower). Dashed lines are the
asymptotic dominant term in Eq. (9). Our Monte Carlo used
107 system-perturbation pairs. Main figure: Amplitudes AP
(squares), AS (triangles), Eqs. (8) (solid line) and (7) (dashed
line) as a function of μP , with μS = 1.6.


References

Note that the papers for which Scafetta is author/coauthor are available from Scafetta's web site: Scafetta web site

[Allegrini] 2006] Paolo Allegrini, Mauro Bologna, Paolo Grigolini, and Bruce J. West, Response of Complex Systems to Complex Perturbations: the Complexity Matching Effect, Draft kindly furnished by Bruce J. West

[Anishschenko 2002] V. S. Anishschenko, V. V. Astakhov, A. B. Neiman, T. E. Vadivasova, and L. Schimansky-Geier, Nonlinear Dynamics of Chaotic and Stochastic Systems, Berlin, Springer 2002

[Grigolini 2002] Paolo Grigolini, Deborah Leddon, and Nicola Scafetta, Diffusion entropy and waiting time statistics of hard-x-ray solar flares, PHYSICAL REVIEW E, VOLUME 65, 046203

[IPCC] Various Reports of the Intergovernmental Panel on Climate Change:
IPCC

[Nicolis 1981] Solar Variability and Stochastic Effects on Climate, Solar Physics 74 (1981) pp 473-478

[Scafetta 2007] N. Scafetta1 and B. J. West, Phenomenological reconstructions of the solar signature in the Northern Hemisphere surface temperature records since 1600, Journal of Geophysical Research 112 (2007) D24S03

[Scafetta 2004] Nicola Scafetta, Paolo Grigolini, Timothy Imholt, J.A. Roberts and Bruce J. West, Solar turbulence in earth's global and regional temperature anomalies, Phys. Rev. E 69, 026303 (2004)

[Scafetta 2008] N. Scafetta, T. Imholt, P. Grigolini, J. Roberts, Statistical analysis of air and sea temperature anomalies, (Preprint retrieved from Scafetta’s archives)

Reflections on the firing of Rick Wagoner

I worked for GM during most of Rick Wagoner’s tenure as President/CEO and chairman of GM.
On balance I believe Rick was a good chairman. He reputedly got GM’s management into the computer age by requiring managers to take courses in computer literacy, and he pushed for GM to develop its internal and external web presence.

He certainly had his share of mistakes. The abortive deal with Fiat comes to mind. GM purchased a 15 or 20 percent equity stake in Fiat, which was perhaps defensible. But the contract also required GM to buy the remainder of Fiat if the management of Fiat decided to sell out. They did and GM had to pay several billion dollars to get out of that obligation. Perhaps that infusion of cash has made Fiat healthy enough to be able to contemplate an alliance with Chrysler.

On another occasion, before he was chairman, Wagoner orchestrated one of GM’s many reorganizations. This reorganization had people all over the corporation not knowing who they should be talking to in order to get things done. In the midst of all the confusion Wagoner said, “If we didn’t get this one right, we’ll do another one tomorrow.” That of course was the exact opposite of what was needed. Like many GM managers Wagoner seemed to think that you could change how something functioned by renaming it.

But at least he didn’t get caught in any major snafus like Roger Smith’s BOC/CPC reorganization which did away with Fisher Body – the only organization in GM responsible for maintaining standards for making dies.

Whether or not Wagoner was an able chairman, it must be asked whether the Obama administration made a wise choice in asking him to step down. It seems incredible that a government task force, after few months of study, can make such a decision. Other corporations should look at this example carefully before accepting loans from the government

Why layoffs?

Corporations in financial straits lay off people “to protect the future of the corporation”. There are at least two fallacies inherent in this reasoning:
1) If the people laid off are developing future products, the ability of the corporation to bring these products to market will be impaired. You may think no corporation would ever lay off product developers, but based on 34 years working in technology-based companies, I can assure you they do.
2) If the number of corporations laying people off becomes too large, the impaired purchasing power of consumers may sink the economy.

Alternatively some companies have simply cut the salary and hours of staff members. The individual remains employed and therefore available to the corporation, albeit at a lower salary, but with more free time, which he can use as he sees fit.

Why isn’t this done more frequently? I suspect the main reason is the cost of keeping an employee on the payroll: Insurance, withholding, social security, paperwork, various government mandates … There is a minimum cost just for maintaining an individual on the payroll.

There are financial considerations for the employee. A company cannot pay an individual’s medical insurance if he works less than 30 hours per week. There is no such thing as partial unemployment. Either an individual is employed and ineligible for unemployment, or he’s not employed and can’t earn any money without endangering his unemployment.

One solution is simply for the employer to change the employee’s status to that of a contractor, so the company doesn’t have to withhold Social Security and income tax. This might require a change in the law, or a reinterpretation of existing laws defining what a contractor is, but it would allow the employer to reduce the cost of keeping the employee on the payroll.
Better yet would be looser laws about employment. Let employees opt out of social security, medicare and withholding . Let the employer decide what level of employment is necessary to extend healthcare benefits.

Thanks to Bob Kuhl for a discussion that gave some insights into the consequences of part-time employment.