Do No Evil

Via Venture Chronicles.

What's more ironic is the fact that the Chineese Communist Party is now a successful real estate company! Hat tip to Brad Setser.

An Embarassing Episode for Italy

Nouriel Roubini on his encounter with Italy's Economy Minister:

On Friday I was in Davos in a panel on the "Ups and Downs of EMU" (European Monetary Union) where ECB head Trichet, Italian Economy Minister Tremont, a few other EU officials and myself were supposed to discuss the following questions: Will EMU collapse in the future? Which country will exit first? What will be the consequences of a break-up of EMU? How to avoid that? And what are the prospects for the Growth and Stability Pact? Unlike the other panelist that ignored the topic and spoke instead about all the good things allegedly associated with EMU, I took the questions seriously by considering some of the problems and risks faced by EMU and the risks of a break-up, especially for the case of Italy.

My remarks caused a stir with Minister Tremonti who interrupted me in the middle of my remarks, went into a temper tantrum and shouted - to the consternation of all participants - to me: "Go Back to Turkey!!". I happen to have been born in Istanbul; but more than offensive to myself his pathetic burst of uncivilized anger was an insult to the decent Turks who are currently trying to negotiate an agreement to enter into the EU. Before I give a full account of this incident that altogether embarrassed the irascible minister who made a fool of himself in front of a crowd of Davos participants, let me report almost verbatim my constructive remarks on EMU that triggered the pathetic and embarassing outburst of the minister.

"I have been introduced in this panel as presenting the "transatlantic" perspective on EMU. Actually, as I spent twenty years of my life in Italy and as I was born in Istanbul Turkey that will hopefully be one part a member of the EU my perspective is internationalist rather than transatlantic.

James Hamilton: Gloomy GDP Report

Here is the post.

The job market, at least in SF Bay area, seems strong: lots of recruiters are contacting me, and I'm not exactly looking for a new gig.

Solar Becomes Practical in California

The SF Chronicle has an article on the growing popularity of solar panels in residential homes:

The sun's shining a little more brightly here in California since the state Public Utilities Commission approved a new California Solar Initiative earlier this month.

The goal of the initiative is to stimulate the installation of 3,000 megawatts of solar power generation capacity on about a million California rooftops (there are currently about 130 megawatts installed).

It does this by setting up a decade-long program of homeowner rebates for installing and using solar electric panels. Incentives totaling $3.2 billion will be available, at a cost of about 50 cents per month to each residential electricity customer in California. The program officially starts in January 2007, when an existing short-term measure runs out. (This stop-gap measure's terms are similar to those of the California Solar Initiative, so it's not too early to apply for rebates.)

Because it is structured to wean the solar sector off subsidies, rebates are highest in the early years of the plan -- in other words, now. So like 73 percent of Californians who think solar power is a good idea yet haven't been moved to install panels, I think it's a good time to look into the latest developments to see if solar makes sense for me.

A program that reduces pollution and greenhouse gases, contributes to a sustainable state economy and literally brings power to the people seems tailor-made for Bay Area homeowners. Mike Hall, chief marketing officer at Borrego Solar agrees. "Our customers are a pretty good demographic match for the Bay Area -- they're homeowners and professionals. They're upper middle class and they're probably living in a 1,500 to 2,000 square-foot home and looking at $100 to $150 electric bills."


The rest of the US tends to follow California, and from this article things are about to get really sunny in the Golden State.

Roubini Gives Geithner some props

On his way to Davos Nouriel Roubini comes through with an excellent post:

And Geithner gave the most interesting speech at the conference, a keynote address that was remarkable for his concerns about the sustainability of the US current account deficits. While Bernanke blames these deficits on forces external to the US - a global savings glut - Geithner reminded us that these imbalances have also to do with US domestic imbalances, i.e. the US structural fiscal deficits that need to be reduced in order to reduce the risk of a disorderly rebalancing.

Geithner also listed five arguments that have been advanced by many to argue that US current account deficits are sustainable; but then, one by one, he refuted each of these arguments. First, even if the imbalances are partly due to a savings glut it would not be prudent for the US to run such deficits for a long time. Second, the argument that deficits are optimal if the result of private sector savings and investment decisions is refuted by the evidence that the US deficit has been recently the result of fiscal deficits and financed with the accumulation of public debt. Third, deficits may be due to Bretton Woods 2 effects but this regime is not consistent with the domestic balance of these countries (i.e. implicitly he was saying: watch out China about the financial imbalances of accumulating reserves and keeping the currency weak). Fourth, past adjustments of current account imbalances have not been that orderly as investment and growth fell in many. Fifth, dark matter a' la Hausmann and Sturzenegger will not save the US as the net factor income balance is rapidly going into negative territory.

It was the most clear, intelligent and thoughtful analysis made by a Fed official on why we should worry about the US current account deficit and its potential disorderly rebalancing. A really impressive and honest intellectual discussion of serious policy issues. He also correctly argued that if the U.S. fixes its domestic problems that lead to the deficit, i.e. the fiscal deficit, the US will be in stronger position to be tell China and other BW2 countries that they should do their fair share of the global adjustment.

Compared to Geithner, the other officials at the conference were quite blase' about global imbalances or altogether ignored them. The Chinese central bank deputy governor and now head of their Ex-Im bank Li Ruogu gave a speech about the imbalances in the international financial order where he did not even mention the term global current account imbalances. And he argued that exchange rate stability is necessary not only for China but also for all major currencies (sic!). The Bank of Japan Deputy Governor Hirano hid behind the arguments that the Japanese current account surplus has been shrinking as a share of Japanese GDP; he also argued that population aging in Japan would lead to a fall in the savings rate and, thus, a current account surplus shrinking. In other terms, Japan does not need to do anything, currency-wise or policy-wise to contribute to global rebalancing.

The rest of the post is chock-full of links and insights, definitely worth a read.

Off-label Use of Cancer Drugs

Business Week has an excellent article on Cancer Drugs. Did you know that most insurers do NOT cover the use of cancer drugs for forms of cancer other than what they were approved for:

... Avastin costs anywhere from $4,400 to $8,800 a month. The drug has Food & Drug Administration approval only for the treatment of colon cancer, so many insurers are refusing to pay for its use against breast and lung cancer. "It is naive to think that a patient's ability to pay wouldn't affect the practice of medicine," says Dr. Neal J. Meropol of Fox Chase Cancer Center in Philadelphia.

Cancer has always been an expensive disease, but the stratospheric prices of the newest drugs are injecting cost into treatment decisions to a degree rarely seen before. As a result, some doctors, patients, and even whole nations are beginning to reject the latest treatments, no matter how effective.

Drug companies argue that the high prices are necessary to offset development costs of these complex drugs. They also note that the newer products are more effective and safer. Before these were available, "the patients died quickly, so their treatment didn't impact the cost of health care," says Ian T. Clark, head of Genentech's commercial operations.

... Insurers are watching this trend with alarm. Most drugs are only prescribed for FDA-approved uses, but oncologists routinely administer cancer drugs for unapproved, or off-label, uses if supported by clinical trial data. Medicare is required to pay for most off-label cancer treatments, and private insurers used to follow suit, but recently they have started to balk. Morgan Stanley surveyed 100 U.S. oncologists in December and found that their off-label use of Avastin for breast and lung cancer was very low, even though clinical data showed the drug could improve survival for those diseases. The doctors said they expect to step up their use of Avastin once they are assured of reimbursement. "We're finally beginning to see some pushback on off-label uses,"says Dr. Steven Harr, a Morgan Stanley analyst

I think safety is an important concern, but most Oncologists are responsible and are looking out for their patients' best interests. Cancer research and treatments change rapidly, we need insurance companies who are willing to trust Oncologists when it comes to prescribing medications. For most people, these drugs are simply too expensive without insurance, and in some cases, it is literally a matter of life and death.

Socially Positive Portfolios

The Christian Science Monitor has an article on a new breed of investors who use a POSITIVE screening method:

When money manager Lloyd Kurtz listens to clients these days, he hears a message that's gaining currency across the world of ethical investing.

"The most common question I get from clients is, 'How can we make this portfolio more socially positive?' " says Mr. Kurtz, a senior portfolio manager at Nelson Capital Management in Palo Alto, Calif. "Just avoiding bad companies doesn't cut it anymore."

One solution has been positive screening - a strategy that sets the social or environmental bar high enough so that only top-performing firms win an investor's dollars. The approach breaks from the status quo of socially responsible investing (SRI), a movement now in its fourth decade. To date, SRI mutual funds have emphasized a two-pronged approach: negative screens, which avoid certain companies, such as those connected to tobacco or weapons manufacturing; and shareholder activism, which pushes for policy changes inside companies that have questionable practices.

According to certain measures, such conventional SRI methods have been struggling. Having largely avoided market-leading petroleum and defense industries, the benchmark Domini 400 Social Index trails the Standard & Poor's 500 in returns over one-, three-, and five-year periods.

So some ethically minded investors are seeking a new way to link investments with personal values by exploring what positive screening has to offer. A few new mutual funds in the United States and Canada have popped up to satisfy that demand.

But investors should use caution before they plunge into positive-screened funds, says Christopher Geczy, an assistant professor of finance at the University of Pennsylvania's Wharton Business School. In an updated study of mutual-fund performance over the past 40 years, he found that investors who put limitations, including positive screens, on the funds they considered tended to receive lower annual returns. In fact, their returns were three to four percentage points less than their counterparts who put no restrictions on their portfolios. The reason: inadequate diversity to buoy lackluster performers in down markets.

But some money managers are hopeful that positive screening will yield more profitable harvests. Risks have diminished over the past five years, they say, because more public companies measure up to ethical standards.

One fund generating some excellent results lately is the Winslow Green Growth Fund. Portfolio manager Matthew Patsky hunts for small "environmentally proactive" companies, meaning those whose primary products somehow enhance the environment, such as solar energy or natural foods.

To strike a balance across industries, Mr. Patsky chooses some firms that are either environmentally "responsible" (e.g., a paperless travel agency) or "benign" (e.g., software). Unlike many SRI funds, Winslow Green Growth avoids "best in class" performers from what Patsky terms "dirty" industries, such as petroleum. And the fund doesn't agitate for social change inside the firms it owns.

Results tell Patsky he's onto a winning, albeit sometimes volatile, formula. Up 31.6 percent over the past year, the fund's average returns over the past three, five, and 10 years have been 35.3, -2.5 and 20.0 percent, respectively. Still, the dangers of trusting primarily in "proactive" firms delivered a painful lesson in 2002 and 2003 when renewable-energy stocks tumbled.

"It was a major bet that was wrong," Patsky says. "What we were betting was a rational outcome to an analysis of what happened on 9/11," but investors didn't flock to oil alternatives as he'd expected. As a consequence of that experience, proactive stocks now make up just 25 percent of the portfolio, as opposed to the 50 percent they represented in 2002.

Amoeba Records

Business Week has a nice article on my favorite record store:

More than selection distinguishes Amoeba. The company doesn't take retail display allowances from record labels, so the CDs that get displayed are the ones staffers enjoy. Those 520 staffers know their stuff: Before being hired, each one must listen to a random box of CDs, then brief Weinstein on the artists. Employees make between $9 and $20 an hour, with Amoeba paying half their health insurance premiums after six months. After two years Amoeba foots the entire bill.

I can spend hours in their stores, the used CD collection is unbelievable. Here is a 3-store chain that employs knowledgeable and passionate people, and pays them better than their national chain counterparts. Best part of it is, they are making loads of money doing it.

Article on St. Anthony Farm

In a recent post, I raved about St. Anthony farm in Sonoma County: Common Ground magazine has an excellent profile in their January 2006 issue.

Health Care Discussion

Washington Post columnist Steve Pearlstein, took questions from all comers: the resulting transcript is here. I encourage you to read through the discussion, it's a good primer on Healthcare and the politics of reforming it.

He admits that if the US were starting from scratch, a National Healthcare system would receive a lot of consideration -- but current political reality dictates that we concentrate on reforming our current private-insurance system. Some interesting tidbits:


Steven Pearlstein: ... The problem is that this "market" isn't really a market since drug prices overseas are dictated on a take-it-or-leave-it basis by foreign governments and their national health plans. What we need is for drugs to be priced in every country according to that country's ability to pay, which would be the cost of materials an dproduction in the case of poor African countries and the highest in the US -- but still below where they are today. The folks who are getting a free ride on drugs these days are the Japanese, the Europeans and some mid-income countries.


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Boston, MA: I haven't heard much discussion of actual health -outcomes-, where the US lags most of the developed world -- e.g. on life expectancy and infant mortality.

Your suggestions are focused on fixing some of the financial aspects of the current system, but the experience of Japan, Canada, Britain, and Europe is that national coverage produces much better outcomes at lower cost.

Steven Pearlstein: Yes, it has. But if you read the literature further, you'll find that some of that has do with factors other than whether the health system is nationalized or not. And there is some unhappiness most of those countries you mention, along with Canada, with the system right now, which is bumping up against some of the same problems ours is. As I say, if you were devising a system from scratch today, you'd probably do some version of a national health plan. But that's not where we are, and we can waste a whole lot of energy and political capital trying to get there, only to discover that this country just won't do it. So why not deal with the world as it is, not as we'd like it to be.

Green MBA Programs

The SF Bay Guardian has an article on three new MBA programs who collectively have less than 300 students:

"It's part of our philosophy that you can't separate the environmental, social, and economic impacts of a company," Stayton says. Applied in all aspects of the program, this concept, called the triple bottom line, sets the alternative business school apart from the likes of Berkeley's Haas School and other top-rated MBAs. The triple bottom line appeals to students with strong social values who still believe corporations can be used to advance progressive causes. Not surprisingly, most Green MBA students say they had not been planning to apply to traditional business schools before they discovered the Green MBA.

It will be interesting to track what the Alumni of these programs end up doing. If they are successful in starting new companies who care about the triple bottom line, the Top MBA programs will probably start incorporating these ideas. We consumers can play a role in getting these new (triple bottom line) companies off the ground.

Outsourcing => Import Innovation

So says, management professor and guru C.K. Prahalad. Conventional thinking equates outsourcing with exporting white-collar and other professional jobs. Prahalad believes companies need to start importing innovative ideas to remain competitive. He sites many examples, including the IndiaOne Hotel:

... Indian Hotels dubs its new room format "smart basic." To free up space in the very compact rooms, TVs are mounted on the wall. The furniture, flooring, and bathroom fixtures are made of easy-to-clean materials. Even so, guests are asked to eat only in the cafeteria, which offers cheap meals. "This is a great hotel if you know how to use it," says one regular, a Silicon Valley venture capitalist.

Indian Hotels got one lucky break: It bought the site before land prices in Bangalore and other Indian cities skyrocketed. But the company has an innovative strategy for coping with expensive real estate: It hopes to find one-acre lots by offering landowners a share of the hotels' profits. Indian Hotels is modifying the format to cater to families, rather than business-people, in tourist cities. Krishna Kumar believes the company can also adapt the concept in nations such as Pakistan, China, and Brazil.

What about America? Not yet. Pricing a room at a U.S. business hotel at $22 would be a stretch, concedes Prahalad. But he believes strategies pioneered at indiOne could one day lower the price of a room in many big U.S. cities to around $40.

How about importing some ideas from one of India's best healthcare providers:

Prahalad thinks globalization also can help rein in America's soaring health-care costs. That's one reason he is studying Indian hospitals such as Narayana Hrudayalaya, founded by cardiac surgeon Dr. Devi Shetty. Some reasons for its low costs can't be easily replicated elsewhere. The land was owned by Shetty's family. The hospital's 25 foreign-trained surgeons earn half what they could in the U.S. Outsize malpractice awards are rare in India, so insurance costs are low. But the hospital also operates for free on anyone who cannot pay and on any infant younger than one month. For the rural poor, it runs 39 remote clinics and mobile-testing labs with satellite links that so far have treated 17,000 patients.

Some the of the biggest savings come from its business model. In the U.S., the chief surgeon manages the entire patient process, from testing and diagnosis to supervising the operating room, recuperation, and billing. Narayana works more like an assembly line: The surgeons perform only surgery.

That may seem like a recipe for shoddy care. But Shetty asserts it actually translates into fewer mistakes because specialists focus on what they do best. The 1.35% mortality rate for coronary bypasses and 2.7% rate for aortic valve replacements reported by Narayana are roughly half the average of U.S. hospitals, according to federal statistics, though those aren't the only measures of quality care. "The importance of volume isn't well understood in our industry," Shetty says. "A surgeon doing three or four operations a day does much better work than one doing three or four in a week." The factory approach also leads to economies of scale. The hospital uses all of its expensive CAT scanners and X-ray and magnetic-resonance machines to the max. "In the U.S., a lot of this infrastructure is used five days a week," says Shetty. "We use ours 14 hours a day, 7 days a week."

This raises intriguing questions. If Indian doctors can effectively diagnose and treat heart conditions in farmers in distant villages, why can't American consumers use videoconferencing to consult offshore specialists 24/7? Why can't an enterprising hospital chain bring Narayana's model to the U.S., or at least set up hospitals in Mexico or the Caribbean charging a fraction of U.S. prices? There are plenty of reasons this seems unlikely: Few Americans would tolerate the inability to collect big damages for mistakes, and it seems far-fetched that the U.S. medical Establishment would back sweeping liberalization to license offshore doctors to prescribe treatments. Or does such change seem impossible only because we are blinded by our "dominant logic"? Prahalad is confident that superior business models will eventually prevail. Just gaze into the kaleidoscope, give it a twist, and the implausible in the 21st century global economy becomes more realistic than you might ever imagine.

Living Green, but Allowing for Shades of Gray

NYTimes has a short article on Wendy Gordon, the founder and director of the Green Guide Institute. The article portrays her as performing " ... a balancing act between greenness and practicality".
I think that people should be encouraged to make small changes, and collectively, those small changes do add up:

Ms. Gordon is a realist. Sure, she would love it if people stuck to containers made from corn-based materials instead of petroleum-based plastics, and if they used only packages that were reusable, recyclable or at least biodegradable. But she knows that few people are ready to spurn cheap plastic packages. So the Green Guide settles for listing the best of the lot - for example, polyethylene terephthalate, commonly used in soda bottles, is relatively O.K. - and cautioning cooks not to reuse plastic containers that seem old, stained or worn.

She is equally realistic about eating habits. Yes, the Green Guide rails against the possible carcinogens unleashed by deep-fat frying - but it stops short of asking Americans to abandon French fries. Instead, the guide offers a recipe for "fake fries" that are baked in oil, a process that it says generates fewer cancer-causing agents.

By being more realistic, one is able to engage people and dialogue can take place. I've always thought that the hardcore environmental/vegetarian types, tend to undermine their cause: they turn people off.

Math Will Rock Your World

Business Week has a cover article on the growing importance of Math/Stat and other quantitative techniques in a variety of industries:

The world is moving into a new age of numbers. Partnerships between mathematicians and computer scientists are bulling into whole new domains of business and imposing the efficiencies of math. This has happened before. In past decades, the marriage of higher math and computer modeling transformed science and engineering. Quants turned finance upside down a generation ago. And data miners plucked useful nuggets from vast consumer and business databases. But just look at where the mathematicians are now. They're helping to map out advertising campaigns, they're changing the nature of research in newsrooms and in biology labs, and they're enabling marketers to forge new one-on-one relationships with customers. As this occurs, more of the economy falls into the realm of numbers. Says James R. Schatz, chief of the mathematics research group at the National Security Agency: "There has never been a better time to be a mathematician."

From fledglings like Inform to tech powerhouses such as IBM, companies are hitching mathematics to business in ways that would have seemed fanciful even a few years ago. In the past decade, a sizable chunk of humanity has moved its work, play, chat, and shopping online. We feed networks gobs of digital data that once would have languished on scraps of paper -- or vanished as forgotten conversations. These slices of our lives now sit in databases, many of them in the public domain. From a business point of view, they're just begging to be analyzed. But even with the most powerful computers and abundant, cheap storage, companies can't sort out their swelling oceans of data, much less build businesses on them, without enlisting skilled mathematicians and computer scientists.

The rise of mathematics is heating up the job market for luminary quants, especially at the Internet powerhouses where new math grads land with six-figure salaries and rich stock deals. Tom Leighton, an entrepreneur and applied math professor at Massachusetts Institute of Technology, says: "All of my students have standing offers at Yahoo! and Google ." Top mathematicians are becoming a new global elite. It's a force of barely 5,000, by some guesstimates, but every bit as powerful as the armies of Harvard University MBAs who shook up corner suites a generation ago.

Is US Technological Leadership at Risk?

A new NBER working paper confirms what we've been reading in the mainstream media:

The prospects for the American leadership in technology are grim. The number of American graduates in science and engineering is stagnating, while that of the European Union and of China is increasing. Their lifetime earnings are lower than those of other high-level occupations, and this discourages young Americans to choose science-related careers. At the same time, populous low-income countries, who are increasing the number of their scientists, are successfully competing with the United States in technically advanced sectors. This trend will create adjustment problems for US workers, beyond the current off-shoring of certain activities and the decline in the net export of technology.
Two widely held beliefs are that even in the age of globalization advanced countries will retain their supremacy in high-tech industries, and that there is a worldwide shortage of scientists and engineers. This original and rigorous paper points out that these statements are - or will soon be - wrong.

Maryland Sets a Health Cost for Wal-Mart

I hope other states, especially California, follow suit:

The Maryland legislature passed a law Thursday that would require Wal-Mart Stores to increase spending on employee health insurance, a measure that is expected to be a model for other states.

The legislature's move, which overrode a veto by Gov. Robert L. Ehrlich, was a response to growing criticism that Wal-Mart, the nation's largest private employer, has skimped on benefits and shifted health costs to state governments.

The vote came after a furious lobbying battle by Wal-Mart and by labor and liberal groups, and is likely to encourage lawmakers in dozens of other states who are considering similar legislation.

Many state legislatures have looked to Maryland as a test case, as they face fast-rising Medicaid costs, and Wal-Mart's critics say that too many of its employees have been forced to turn to Medicaid.

Under the Maryland law, employers with 10,000 or more workers in the state must spend at least 8 percent of their payrolls on health insurance, or else pay the difference into a state Medicaid fund.

You can't give your workers crappy insurance and expect them to be loyal and productive. Wal-Mart, end all your problems and follow Costco's lead. Better yet, get a CEO just like Costco's.

Country Boys

Frontline has done it again! This is an amazing series, can't say enough about it. Set in the Appalachian region of Kentucky, it follows two young men in their last three years of high school. You get a snapshot of rural white America, and the incredible challenges facing these young kids. An important part of the documentary is David School, the alternative school attended by both of the young men.

Here is an interview with the founder and director of David School.

The filmmaker, David Sutherland, took part in an online chat hosted by the Washington Post.

I recommend it highly. Buy it from PBS, or rent it from Netflix.

Young dream-seekers strapped by debt

The sad thing, is that things could get worse: like the dollar falling , and other things that can beset the US economy this year.

Straitened circumstances are becoming more familiar to those in their 20s and 30s as they try to get a foothold on the American Dream. Student loans, depressed wages, rising healthcare costs, and soaring housing prices are creating new economic realities. Sixty percent of young adults between 18 and 34 are struggling for financial independence, says Draut, now the director of the economic opportunity program at Demos, a think tank in New York. She is also the author of a new book, "Strapped: Why America's 20- and 30-Somethings Can't Get Ahead."

"What made the transition to adulthood somewhat less bumpy 30 years ago was that we had an economy that lifted all boats," she says. "When productivity was increasing, so were wages. We don't have that today. Wages certainly aren't keeping up with the cost of things like healthcare and housing."

Then there is the high cost of college. A bachelor's degree has become the equivalent of a high school diploma - essential for basic status in the middle class.

Michelle Wingate, who is in her mid-20s, holds an entry-level position at a public relations firm in Raleigh, N.C. She is paying off student loans. "When you graduate from college, you think, 'This is great. I'm going to be able to pay off all my debts,' " she says. "That's just not the case. My salary looks good from afar, but once I get my money I'm sending it directly to the people I owe it to. That creates a whole other problem. When you owe money, you can't save it."

Ms. Wingate's goal this year is to pay off credit cards. "After that I can knock down a big chunk of my student loans. Maybe three years from now I'll try to purchase a house."

Check out the rest of the article here.

George Packer on IRAQ

I just finished reading George Packer's new book on Iraq, and was very impressed with it. Packer is longtime correspondent for the New Yorker, and his book chronicles his extensive travels through Iraq over a 2-3 year period. The book is a rare combination of extensive conversations with average Iraqis, (in some cases) years of conversations with key members of the Iraqi exile movement, members of the neo-conservative faction in Washington, and American civilian and military personnel in Iraq and Washington. The book also chronicles the decision-making which led to the rise of the neo-cons and their incompetence at almost every key stage: from the decision to invade, to the bungled occupation of Iraq. George Packer is an excellent story-teller, just what you might expect from a New Yorker writer.

While I am looking forward to reading Robert Fisk's recently released book on the Middle East, I think "The Assassins Gate" is also a must-read for those who are interested in Iraq and the Middle East. Whereas Robert Fisk can sometimes come across (at least in interviews and speeches) as a supremely self-confident type who never doubts the correctness of his views, Packer admits to having doubts about his interpretations and recognizes the complexity of the region and the events that are taking place. Packer also interviews both people on the streets and those in the corridors of power -- a dual perspective that is lacking in Fisk's writings.

Read "The Assassins Gate"!

United Farm Workers

The LATimes has a comprehensive article on the union headed by the late Cesar Chavez. For those of us who care about Fair Trade and working conditions EVERYWHERE, this article paints a grim picture of a union that was once one of the most closely watched social groups in the country.

The second article in the series reveals how Cesar's family has taken advantage of the UFW's name and reputation, to benefit from the complex web of charities that depend on the union.

UPDATE: This particular article in the series, reviews the decisions in the late 70's which continue to haunt the UFW today. This might be the best article in the series. I have to say, Dolores Huerta comes across as a power-hungry member of Cesar's inner circle.

Fair Trade Towns

Towns that meet a set of conditions can be certified as Fair Trade towns? I was not aware a group actually makes such a designation, then I saw this. What's the criteria you ask:

To become a Fairtrade Town (or any other populated area), 5 goals must be met:

* The local council must pass a resolution supporting Fairtrade, and serve Fairtrade coffee and tea at its meetings and in offices and canteens.

* A range of Fairtrade products must be readily available in the area’s shops and served in local cafés and catering establishments (targets are set in relation to population)

* Fairtrade products must be used by a number of local work places (estate agents, hairdressers etc) and community organisations (churches, schools etc)

* The council must attract popular support for the campaign.

* A local Fairtrade steering group must be convened to ensure continued commitment to Fairtrade Town status.

It seems somewhat subjective, but its a start.

Socially Responsible Investors -- A New Approach

Rather than boycotting, or screening out potential investment opportunities:

A new class of social investor doesn't believe in boycotting problem companies -- it's opting to reform them from within

Socially responsible investment managers are known for avoiding shares of companies that pollute the environment, deny health benefits to employees, or violate other ethical or environmental criteria. Yet Green Century Capital Management, which specializes in social investing, owns shares of ConocoPhilips and ExxonMobil. The Walden Social Equity Fund holds two oil companies, BP and Apache . And MMA Praxis Core Stock, a fund that follows Mennonite teachings, holds Wal-Mart Stores shares.

These stocks may not meet the typical screening criteria used by socially responsible funds. But for these managers, being shareholders allows them to lobby management to make changes. That's better, they say, than simply avoiding undesirable businesses or whole industries. "Our interest is not just in keeping our hands clean but [also] in making the world a better place," says Mark Regier, who oversees shareholder activism at MMA in Goshen, Ind.

Socially responsible funds are just a blip on the mutual fund radar, but they have a robust growth rate. Some 200 funds boasts assets of $37.4 billion, up 21% from a year ago, according to Lipper. The sort that invest in once-taboo companies make up just a small part of the social investing sector.

Investors don't necessarily surrender anything in performance to pursue nobler goals, but individual fund returns do vary. The Green Century Balanced Fund has a 24% a year average annual return for the three years ended Oct. 10, beating the Standard & Poor's 500-stock index by eight percentage points, according to Morningstar. Walden's fund, on the other hand, has been a laggard, with a 13% average annual return. By contrast, the Vanguard Calvert Social Index Fund -- a more traditional fund that screens out offenders -- is up an average 15% a year.

Managers of activist funds say sticking with problem companies allows investors to start a dialogue, bring resolutions before shareholders at annual meetings, and press management for improvements. MMA Praxis, for example, held on to Wal-Mart after the retailer was booted from the Domini 400 Social Index in 2001 over labor and human-rights conditions at some suppliers. "If you are concerned about the people who are hurt by Wal-Mart's policies, you will be doing absolutely nothing for them if you are not a shareholder," says Regier. Social funds, along with allies at pension funds and religious groups, filed almost 300 shareholder resolutions in the 2004-05 annual meeting cycle, according to the Interfaith Center on Corporate Responsibility.

... The Mennonite funds have also been active trying to raise coffee bean prices for individual farmers who produce a great deal of the world's coffee crop. Big coffee buyers such as Procter & Gamble have long relied on huge commercial outfits that paid the growers little. In a November, 2002 letter, MMA and others sought to persuade P&G to buy directly from small farmers. Less than a year later the company agreed to buy "fair trade" beans -- the term for coffee sold by farmers' nonprofit cooperatives -- for its specialty Millstone label.

Looking for potential 2005/2006 IRA investments? Check out the rest of the article.

Multinationals are more Innovative

Access to workers, suppliers, and universities outside their home countries is key:

Multinational firms are more innovative than domestic firms. This can only be partly explained by multinationals’ greater investments in R&D. A more important reason for their being more innovative is their higher propensity to learn from sources such as suppliers, customers, and universities. Multinational firms are also able to benefit from a worldwide pool of knowledge between firms. The importance of these knowledge sources varies systematically with the type of innovation: the interaction with suppliers and customers is more important for new products, whereas the interaction with universities is prominent for patents.

We still need to make sure they adhere to reasonable environmental and labor standards across the planet.

States Adopt California's Greenhouse Gas Limits

The Golden State is by far the largest and most important automobile market in the U.S -- it accounts for about 10% of all vehicles sold nationally. The standards California adopts usually propagate to the rest of the country, I just was not expecting it to happen this fast:

... The confrontation over the California rules is one of the biggest air-quality fights in years. Environmentalists consider the regulations a landmark in their campaign against global warming. The conflict has brought together a number of players. State regulators have banded together and are closely monitoring developments in Washington. Environmental organizations have been building coalitions with health-focused and faith-based groups. Activists have initiated protest campaigns against Toyota Motor Corp. and Ford Motor Co., two automakers that have heavily promoted themselves as being environment-friendly and are parties to the suit.

Vehicle emissions are the No. 2 -- and fastest-growing -- source of greenhouse gases, after power plants, a number of scientists and regulators say.

"For greenhouse gases, the federal government hasn't taken any action at all, and California has," said Andrew Ginsburg, Oregon's air quality administrator. "It's clear the federal government won't do it unless California paves the way and enough other states opt in."

Oregon's decision to adopt the California rules is temporary. Ginsburg said he expected permanent approval to come by summer.

... California, once again, is leading the charge. The state began regulating air quality in the 1960s. Since then, the state has steadily pushed ahead with tougher clean-car regulations, angering the auto industry along the way. In the 1960s and 1970s, California advocated adoption of the catalytic converter, a now-ubiquitous device bolted underneath vehicles that breaks down most toxins before they hit the air. In the 1990s, the state's regulations sparked engineering and technical innovations that led to the development of today's gas-electric hybrid cars.

We may have to start having California represent us in future climate change conventions .

Recent Movie Recommendations

Here are the movies recommended in my recent (Nov/Dec 2005) postings:

• Caterina in the Big City
• McLibel
• Wine for the Confused
• Mondovino
• The Edukators
• The Wheel of Time
• The Girl in the Cafe
• WAL-MART: The High Cost of Low Price

Here are some 2005 films we've enjoyed on DVD:

• Cronicas
• Happy Endings
• Me and You and Everyone We Know
• Fear and Trembling
  

As usual, go with your locally-owned video rental store or public library, when you can! If not, Netflix works.

Happy Viewing.

Bait And Switch

Bait and Switch is the follow-up to the best-selling Nickel and Dimed. In Nickel and Dimed the author went "undercover" and worked a series of low-wage jobs (including a stint with Wal-Mart), Bait and Switch sees her venturing into the Corporate World.

I enjoyed both books, but I thought that Nickel and Dimed was more compelling. In Bait and Switch, the author was never able to land a corporate gig, so the books explores the world of online job searching, resume and career coaches, and networking. The author gives a great snapshot of the unemployed, middle aged corporate workers, whom she encountered in the nine months of her job search. I found myself getting depressed as I read about their plight, and frustrated by how the "system" undervalues their experience. Unless you have a profession with built-in barriers and supply limits (think CPA's, lawyers and the bar exam, or MD's and the medical boards), you need to stay on top of your field, and hope your skills stay relevant. In an earlier post, I highlighted the growing problem of asymmetry in this globalized economy.

Definitely worth reading, if only to find out how "career coaching" actually works. Plus the author is an exceptional story-teller.

French anti-Americanism

The Economist has a new article on the history and state of French views of the U.S.

... France is changing. Slowly, its way of life is beginning to resemble that of the country it loves to hate. Over four-fifths of the French now live in towns or suburbs—more than in America. Less than 4% of the French workforce is in farming. French intellectuals and editorialists may still philosophise in smoke-filled cafés, but their countrymen flock to Hollywood films and devour American brands. American culinary sins—fast food, TV-dinners—are on the rise in the land of gastronomy, and with them child obesity. Yet the more that ordinary French people embrace such American ways, the more the elite seems fixated with an anti-Americanism that runs far deeper than just differences over Iraq. What is it about the French and America?

... French anti-Americanism is unlike other European varieties, because it prevails not only on the political left but on the right too. Anti-Americanism in Spain used to be a largely right-wing phenomenon, and the tradition is venerable among right-wing writers in Britain.

... Scratch the surface of the denunciations from on high, however, and French anti-Americanism is not quite what it seems. First, because it is an elite doctrine that is often not shared by ordinary people. Second, because it is used by the political class more as a scapegoat for its own troubles than as a reasoned response to real threats. And, third, because it implies that the French clash with America out of antipathy. The real reason is rivalry, tinged with jealousy.