The WordPress.com stats helper monkeys prepared a 2013 annual report for this blog.

Here’s an excerpt:

A San Francisco cable car holds 60 people. This blog was viewed about 800 times in 2013. If it were a cable car, it would take about 13 trips to carry that many people.

Click here to see the complete report.

The purpose of this post is to point out the different levels of service success in hopes that all can learn from these episodes… Visits to three Infiniti dealerships resulted in very different results for the same issue. I had plugged in an old charger into the cigarette lighter and blown the fuse for the center stack of the dashboard lighting (all the radio, cabin heating/cooling, and clock illumination failed to illuminate when I turned on the lights…

  1. I ran it by my local independent service technician when I was having some basic work done (about April 1, 2013)… He was unable to find a blown fuse… I believed the next step was to visit a dealership who would know where the two fuse boxes were hidden…
  2. I took it to Beshoff Infiniti in San Jose (not my regular dealer, but far closer, so I just dropped in one afternoon). After two hours, I had a freshly washed FX35, but the problem was unresolved. They suggested that I bring it in at a later date to do some electical diagnostics… Being a troubleshooter for computer systems and networking problems, the suggestion of unqualified ‘diagnostics’ is in the same category as giving them a signed, blank check…
  3. As I prepped for my impending move to the east coast, I put what seemed to be a small issue on the back burner. As I was making my coast to coast trip through New Mexico, I was stopped by one of New Mexico’s finest who suggested that I had no tail lights. Sure enough, the rear brake and turn signals lights we fine, but without them illuminated, my tail was completely dark. Not good. The Officer suggested that I use my emergency flashers until I got to my evening’s destination: Albuquerque. I did a quick search and located a motel near the local Garcia Infiniti and was the first Infiniti into the service department at 7:30am Thursday May 9. Tony greeted me and asked if I had an appointment. I told him that I had called and left a message the previous night, but did not have an appointment. I told him of the urgency of my cross country trip and suggested that I just wanted a quick check of the fuse that powers the tail lights. He told me that I could leave my FX, and stated that although the dealership normally had Saturday hours, that *this* Saturday the service department would be closed. That sounded like this ‘quick check’ was going to take the weekend… (and an unscheduled weekend in Albuquerque was not high on my list). I asked if a call from my Dealer (Bob Ricks at Frontier Infiniti) to his dealer would free up a little emergency triage. Tony looked at me like I had threatened him and suggested that a call between dealers would not change anything. Seeing that I was restricted to daylight driving because of my lack of tail lights, I left and headed to Dallas (my next stop).
  4. During the drive to Dallas I called Bob who suggested that the GM at Sewell Infiniti was a personal friend and that he would send an email to have Sewell expect me first thing the following morning. Indeed I was second in line at 8:00am on May 10th. When I asked the service advisor, Joseph, if he was aware of the email, he stated that he was not, but assured me that he would take care of my needs even without an appointment. Indeed, he listened and understood the urgency. He stated that they would do an $80 diagnostic and report back the findings. Shortly before 10:00am we spoke again and he had included the technician, Rusty who explained that they had indeed found and replaced the offending fuse, and had tested the fuse and found no immediate problem. He also stated that both the power for the center stack *and* for the tail lights *and running lights* were all powered by the same fuse… Damn, I had been driving around for weeks with no tail lights! By 10:30am I was already on the road headed east with my fuse problem behind me.

Having an automotive industry background, I really appreciate the focus, the precision, the sense of urgency and the impeccable customer service at Sewell Infiniti… Thank you Joseph and Rusty for getting me in and out successfully and in a hurry… and thank you Bob for suggesting I go to Sewell in Dallas and sending Rick an email announcing my arrival.

As for the experience at Beshoff and Garcia Infiniti, your service looks poor by comparison… being either unable or unwilling to service a customer with a burnt out fuse. You failed where others shined…

Please let me know what you think…  J

This outline is from a proposal to the Rotary Club of San Jose Program Committee on topics for an Education Series of speakers for our Club. It is intended to suggest that the series start with a high level assessment of the education system in general and then have further presentations on other relevant educational issues.

1)       Introduction to Revolution in Education

a)       “Fix it up or trade it in” story

b)       Always been a systems type of guy (GST, MIS, ChaosTheory…)

c)       Been educating at University level and seen the product of our secondary schools

d)       Read through the 479 pages of the California Department of Education Draft CTE Model Curriculum Standards… [zzzz]

e)       The best, most effective education happens when the student asks the question

2)       Education in Santa Clara County, California, USA is Institutionalized

a)       Lots of infrastructure built and bought with specific class size and instructional objectives in mind

b)       Lots of large organizations with their own agendas and objectives attempting to hammer out some type of compromise

i)         Federal, State, County “offices of education” [administration]

(1)     Metrics that don’t reflect success, just progress

ii)       Teachers’ unions [teachers’ representatives]

iii)      An educational “military industrial complex” text book publishers et al

iv)      Lobbying groups of every size and description

c)       Lots of small stakeholders squeezed out of the process

i)         Students

ii)       Parents

iii)      Neighborhoods

d)       Structure/institutionalization of education results:

i)         literally beats the spontaneity, creativity and innovation out of our children [‘sit still and be quiet’]

ii)       rewards mediocrity [how does a teacher teach to a class of 25?]

iii)      targets college for everybody [and then suggests that we need to have a more robust manufacturing economy]

iv)      fails to teach in ways the student will retain the knowledge [forgetting curve]

v)       passes students who spend the time but don’t learn the material

vi)      attempts to teach as if every student learns the same way and at the same rate

vii)    squeezes the fun out of school

viii)   results in an educational option continuum with institutional education on one end and home school at the other

ix)      costs the taxpayer about $10,000 per student per year

x)       permanence which prevents any meaningful change in the process [punctuated equilibrium]

xi)      lots of meaningful improvement suggestions that take almost an act of Congress to become reality

xii)    lots of marginal improvements that have very little impact on the overall education of our children

3)       An increasing expectation/mandate that parents should drop off their child at 5 and pick them up at 18 ready for Harvard or Stanford

4)       Matriculating about half that are unprepared for college

5)       …What would education look like if:

a)       a neighborhood started with

b)       a clean sheet of paper [as if the entire educational institution had disappeared over night]

c)       and included *only* students, parents and a few local teachers as participants [isn’t this what all of education is about?]

d)       and funded it with, say, only $5,000 per student per year…?

e)       …what design and plan and objectives and metrics would they come up with?

f)         …is there any possibility that we could morph our existing educational institution to even come close [yeah, right]?

6)       Time for a revolution in education? Should we trade our existing education system for a new one?

…To quote a great work:

“That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed, That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness. Prudence, indeed, will dictate that Governments long established should not be changed for light and transient causes; and accordingly all experience hath shewn, that mankind are more disposed to suffer, while evils are sufferable, than to right themselves by abolishing the forms to which they are accustomed. But when a long train of abuses and usurpations, pursuing invariably the same Object evinces a design to reduce them under absolute Despotism, it is their right, it is their duty, to throw off such Government, and to provide new Guards for their future security.”

…who can tell me where this quote comes from???

7)       I suggest that the Education Program Series start with revolution and then see if solving evolutionary issues will correct the educational institution

Comments/reviews on Delta Airlines, Hotels.com, and Comfort Inns

…Update 8/2/2012: After sending feedback via the best web feedback link to each of the offending parties about two weeks ago, I have only one response from *any* of them… the standard form response… I will include it in the comments.

The purpose of this post is to document the failures of Delta, of Hotels.com and of Comfort Inns in sufficient detail that an executive in these companies can begin to address the systemic flaws in their customer handling… I don’t waste my time with this type of detail without the hope that someone at these companies is sophisticated enough to have Google Alerts collect all the comments about their company and actually do something with them (because there is no obvious way to provide feedback to the company about these issues)

My trip from Savannah to San Jose July 13-14, 2012 was quite the disaster. I spent approximately 30 hours in or around aircraft and airports. I will first state that while I was *on* aircraft, Delta did a great job… it was just while I was not *on* the aircraft that the wheels came off… on many dimensions…

  1. was scheduled for United flight  to San Jose, CA through Houston (with 3 hour layover in Houston)
    • aircraft was late getting into Savannah from Houston due to thunderstorms
  2. rescheduled to Delta through Atlanta (with approximately two hour layover)
    • ground hold on Savannah taxiway for approximately two+ hours
    • reduced speed transit to Atlanta because of congestion
    • flight from Atlanta to San Jose was boarding when I checked as I was waiting to get off the Savannah flight
    • Missed my San Jose connection by minutes
    • Upset because Delta released aircraft to take off without waiting for the passengers that had been delayed by ATL’s two hour ground hold. If you send your departures before your transfers arrive, then you will strand *all* the transferring passengers. In these days of very high fill rates, there is no slack to “catch up” if you get behind. In my opinion, if you send outbound aircraft before inbound aircraft have landed and passengers have had a chance to get to their connections, this is *not* a weather issue, this is a company call to strand their passengers. Doing a quick calculation of the 92 million passengers that went through ATL in 2011, that means: 14,000 passengers per hour, 10,000 of which are Delta’s, 5,000 of which are changing planes.  Soooo, a two hour ground hold stacks up 10,000 Delta customers that will miss their connection. I was one of those 10,000

      Just one of the hundreds of gates where passengers spent the night

      Atlanta’s Hotel Delta

    • Upset because I waited hours in line to get rebooked onto a flight for the next morning (I have pictures)
    • Upset because Delta (agent and supervisor) were unwilling to do *anything* to help me during this inconvenience. The agent was unable to give me a seat assignment for my morning flight (which suggests that the flight was already oversold). Would not pay for a room because delay was a “weather related” issue (with which I disagree). Would not provide any assistance or documents to help with finding a room on my own. How about a little handout entitled: “what to do when you are stranded overnight in Hartsfield?” That would have been really helpful… A list of twenty+ hotels with shuttle service to and from the airport with phone numbers? A discount code arranged by Delta to reduce the $$ impact for these 10,000 stranded passengers.  Maybe even free wifi internet access so I could make arrangements without having to battle for phones at the hotel courtesy counter which was stacked 4-5 deep. Agent only provided a toiletries kit after I suggested that Delta “I didn’t even have a toothbrush”
  3. At the Airport Hotel courtesy counter
    • It was quickly apparent that there were hundreds of people that were in the same predicament as I…
    • The ones that were waiting were talking about hotels not having any vacancy
    • I started calling the listed phone numbers on my cellphone to find that the two that I called did not have any vacancy
    • I called hotels.com and booked a prepaid reservation at the Comfort Inn and Suites Atlanta Airport North. I was charged for the room, given a confirmation number, sent an confirmation email, and the hotel’s phone number to make arrangements for the shuttle  . I called the hotel, the phone rang for 40-50 rings before someone answered. They stated that the shuttle was in transit and to wait in the designated pickup spot (shuttle gates 25-29) which I did for about an hour and a half.
  4. Trip to the Comfort Inn and Suites
    • When the shuttle arrived, it was apparent that there were about 30 people waiting, many had been waiting much longer than I had…
    • The driver announced that he was going to the *other* Comfort Inn and that there were no rooms available at the Airport North Comfort Inn. I had my paid Hotels.com reservation as did the man next to me… we assumed that we were OK and requested to be taken to the North Airport location.
    • Driver dropped us off at the NorthAirport location and all the passengers queued up at the check in counter (an noticed the *booming* music coming from the entertainment… and hoped that any rooms available would not be close to the lobby).
    • The man that I sat next to was in front of me in line. He was told that they did not have his reservation, that his confirmation number was “invalid” and that the hotel was full. I received exactly the same message, and was refused. The checkin person had no alternate instructions or directions to any other hotel in the area that might have space.
    • I asked for some sort of documentation that I had been refused, and the agent said ‘no.’
    • I called Hotels.com and spoke to an agent who stated that she would call the hotel to confirm that I had been refused. In her three attempts to call the Comfort Inn, no one answered the Comfort Inn telephone.
    • The Hotels.com agent said she would follow up on the refusal (she referred to it as a cancellation)… but offered no rebooking or alternative lodging.
    • It was now approaching 1am, I reboarded the shuttle and asked to be taken to the airport.
    • On the way to the airport the shuttle drive picked up an airline crew at a nearby Motel 6 (?) that had also been having problems with reservations and we all returned to the airport.
    • Hotels.com and Comfort Inns, this is FAILURE. None of these seasoned travelers will risk doing business with you again… and some will suggest in a public forum that you did not support your customer even as the process failed.
  5. At Hartsfield airport (now about 1am),
    • I asked the agent (the nicest Delta person all day) if there were any flights available any earlier than the 8:25am flight to Salt Lake City/San Jose. I was told there was not.
    • Rather than struggle to find a room and repeat the hotel process just for a shower and two or three hours sleep, I decided to find a power plug in the airport and work/read until the gate agent showed up for my morning flight
    • I was very surprised to see how many people were sleeping at the gates… my best guess (199 gates time 15-20/gate) is about 3,000 stranded passengers *in* the airport (I have pictures). You probably have a much more accurate count (most people had your tiny red blankets… how many did you hand out on the evening of July 13?)
    • I was able to get a seat on the 8:25a flight when the gate opened, but the gentleman that I spoke with at the gate had spent the previous three days attempting to get to another city… Does anybody at Delta listen to these stories of your disasters? Does anybody care?
    • I will bet your executives don’t know that the McDonalds in terminal E opens at 5:00am… A chit for a McDonald’s breakfast would have been nice…
    • Delta: 3,000 stranded passengers in the airport and 7,000 somewhere scattered around Atlanta is FAILURE on a huge scale. None of these people have a good impression of Delta, and you will spend hundreds of thousands winning new customers to replace the ones you have just p****d away.
  6. Balance of the trip
    • The legs from Atlanta to Salt Lake City and then to San Jose went flawlessly
    • My bag (I still am irritated by your silly $25 bag fee… it encourages people to carry-on more stuff which slows boarding…) which went through Houston on my original United flights, arrived in San Jose about two hours before I did… so, next time I will stick with United…
  7. Post trip Hotels.com
    • After arriving home, I checked my bank debit card and found that there was still a hold for the refused reservation amount of the Comfort Inn and Hotels.com.
    • On Monday July 16th, I called Hotels.com and restated that I had been refused at the Comfort Inn. Nothing had been done since I called immediately after I was refused. She then called the Comfort Inn Atlanta Airport North and confirmed that I had indeed been refused at the Comfort Inn, and stated that the charges would be reversed and would be reflected on my account in 3-7 days and sent a very un-official looking email with the bare minimum of facts. I was still not confident that I would indeed be refunded the money for my refused reservation.
    • On July 19, my account was credited with the amount charged earlier…
  8. My Expectations
    • Delta and Hartfield:
    • You have a sophisticated revenue maximization system for ticket prices and dates/times… so you can squeeze more revenue out of every seat sold. Please factor in stranding your passengers overnight! For the courtesy of: Providing instructions on what to do if you are stranded: pre-arranging a list of hotels that will give favorable attention to stranded Delta passengers: sending an apology letter to all of us passengers that you threw out into the street: buy us breakfast.
    • generate a model for when to restart flights after a ground hold that does not strand 10,000 of you own customers at an airport for flights that have no slack (open seats)… I will bet you $10 that my seat from Atlanta to San Jose was empty when my flight left without me… and that my seats the next day displaced other, much higher revenue paying passengers… you lost me as a future customer and the revenue of others with the stupidity of pushing out flights before connecting flights had arrived…
    • give your poor agents some leeway to accommodate stranded passengers… I actually felt sorry for the agent doling out the bad news… She could not do anything… You hire and train smart people and then handcuff them with bad policies… a bad way to run an airline.
    • Have a feedback system for passengers that encourages passengers to record both good and bad. Every Delta employee that I had any discussion with was excellent, but the policies that they were strapped with were short sited and uninformed.
    • Hotels.com
    • Become the champion of your customer (that would be ME if you are unsure)…
    • Reward customer service that actually completes the issue. I should not have to call twice after my prepaid reservation is refused.
    • Keep me informed of the status of my refund… it is *MY* money, not yours
    • Let me know that you have penalized Comfort Inns for this violation of their contracts and their insult of *your* customer.
    • I now have little confidence that any future Hotels.com reservation will be honored… What can you do to recapture my confidence?
    • Comfort Inns and Suites
    • What can I say? At a minimum, if someone shows up with what is a reservation that you cannot honor, then find them another place to stay…
    • I have never been treated so poorly. I was treated like I had presented the Comfort Inn clerk with a bad counterfeit $100 bill.
    • There are far too many quality choices in the hospitality space for me to ever consider trying your brand again (in the previous week we spent two nights at different Hampton Inns).
    • You will need to offer me free lodging to get me to even consider Comfort Inns again…
    • Develop some way of feeding back issues and suggestions that your customers can find and complete… otherwise they have a tendency to go public
  9. You are building a reputation… and only *you* can determine if it is a good one or a bad one.

AT&T has just insulted me again

the bandwidth start and stop (failure and restart) of DSL connection

The regular pattern of DSLfailure and restart in a harmonic pattern

Trace route of the hops to an outside website where hop 4 is problematic

It looks like hop 4 is the device that is having problems keeping the connection

  1. Issue: DSL starting and stopping (mostly stopping) on a very regular basis (repeatable and capturable with Task Manager and tracert)
  2. Evidence: started with browser and email “timeouts” (taking too much time to send/receive to completion), videos of any resolution stopping for 15-25 seconds then starting for 5-10 seconds then stopping again, Task Manager showing 5-10 seconds of full bandwidth data followed by 15-25 seconds of absolute 0 bits transmission repeated forever
  3. What I know: I work with computer systems and do frequent diagnostics of system related problems… I do know quite a bit about DSL, but not nearly enough to do a complete diagnosis but here is what I do know (much of this was after the initial contact while I was collecting data)
    • Problem is captured visually with Task Manager and tracert and ping tests
    • Problem is repeatable across multiple DSL modems, computers, internal networks
    • Problem is not intermittent, it is persistent
    • Problem does not happen at neighbor’s AT&T phone line (with my equipment) about 1 mile away (same complex so I would assume same end office)… so it is *not* my equipment problem
    • Pattern is regular between on and off, and there is virtually no ‘in between’ (which, in my opinion rules out any line issues which are more chaotic and sporadic)
    • Pattern shows distinct points of network failure and distinct points of re-connection (suggesting that some device inside AT&T is having problems keeping a connection with my modems for whatever reason which is the *real* issue that I want to remedy)
  4. Testing before and during communication with AT&T
    • Two DSL modems had the same issues with very similar patterns on my phone line: Motorola 2210 (backup), Netgear combination modem and wireless router (primary)
    • Three computers and a smartphone running three different Windows and Android operating systems: Windows 7, Windows Vista, Windows XP, Android 2.3.3
    • Both wired (100Mb) and Wireless (WiFi G and N)
    • Went to my neighbor’s (about 1 mile away who is arguable on the same end office) and tested my Vista notebook on his network… it worked fine, replaced his DSL modem with my Motorola 2210… my computer worked fine… so the issue was not this computer and this modem
    • Collected 20+ window screen shots of:  Task Manager networking tab (throughput over time) showing the pattern with different combinations of modems, computers and network media; Tracert to different outside IP addresses that showed one AT&T router that consistently timed out; Ping tests to gateway and other routers showing some packet loss
  5. Put the issue up on my blog (a previous entry here), and DSLreports forum where one forum participant suggested the solution that AT&T finally came to realize and Twitter and Facebook and others
  6. AT&T Handling of the matter:
    • Standard progression without knowing the expertise of the customer
    • Chat w/ Shane on AT&T website: basic test and escalation
    • Phone call to discuss network issues escalated to manager Brittany
    • Phone call Brittany to advise me of scheduling of tech #1
    • Phone call Brittany to me to check to see if tech had arrived
    • Tech #1 visit to premises
    • Phone call from Brittany on results and schedule tech #2
    • Phone call from Brittany on progress
    • Tech #2 on premises: Jorge focused on the line quality (an issue but not the pattern problem)
    • Phone call to check on progress, found that the case had been closed even after telling Jorge that the pattern still existed and he stated that he would report it to the office. Ted was fixated on my modem being the problem (irrespective of the fact that I had two very different modems and both reproduced virtually the same pattern), and Dave (the manager who had been a network tech) did not want to see what images I had to show.
    • Phone call from Dave reporting the scheduling of tech#3
    • Tech #3 on premises Ray
  7. No AT&T person ever qualified me nor asked me if what evidence I had until Ray (who fixed the problem) looked at my data, watched me reproduce the phenomenon, did a ping test, called his office and reconfigured an AT&T router in their network (something that I suggested with *every* AT&T person that I spoke with).
    • I estimate that the time involved was: AT&T- 470 minutes (almost 8 hours of actual conversation/time on site… not including any admin or other resources); Customer- probably 16 hours of initial diagnostics, interface with AT&T service, hold, reconnections, data collection, reconfigurations, testing
    • at $100/hour for all the AT&T support, that is $783… divided by the $20/mo I spend for AT&T’s Elite DSL service, AT&T will recuperate the cost of this one issue in 40 years (that is 2052), not to mention *my* time and effort
  8. Suggestions for AT&T:
    • Qualify your customer: Neophyte (probably 97% of all customers), Know it all (probably 2%), Helpful (1%) —give us a code where we can bypass all the bozo (‘is modem plugged in? is the computer turned on? we are very sorry for your inconvenience.’)… those that really test and can accurately describe and provide evidence of the phenomenon when asked, those that have technical background and can begin the diagnosis and compartmentalization process.
    • Look and listen to what we have to offer… nobody ever asked (until the very last person) what evidence I had, could I repeat the issue
    • Use remote access software to view issue from the customer’s perspective (if the network is functioning). Even I use LogMeIn for work on my parents’ computers
    • Provide contact information to customer: I never had any way of re-contacting people like Dave with images and data to put in the file (an email would have been very helpful) [calling AT&T always results in 15-30 minutes before actually talking to a person who can do anything… and they are never the same person, so it takes time just to have them read through the file and time to brief them on the important parts that are not in the file].
    • Assign one person to champion the customer’s issue through to *resolution*. Most that I spoke with were good, but there was very little continuity and Ted even said ‘we will have to start from scratch’… that’s  when I asked to speak to his supervisor.
    • Have an internal escalation procedure to get to a real diagnostician earlier in the process if the customer can be helpful [it would save you and me a lot of time]
    • Check back after initial resolution to see if the problem is really *fixed*
    • Thank helpful customers and even reward helpful customers for their valuable contribution… without any thanks or rewards, customers become irritated… make them part of the “team” … Customers can be a much greater asset if they are not blogging about the non-performing side of AT&T
    • Capture information and reward the AT&T employees who actually *fix* the problem with some way of weighting the fixes for their difficulty… and pay/bonus them according to their fixes

Thank you for reading this post to the end…

PS for some reason this blog’s text editor replaces the outline second level bullets with a second level of numbers… quite confusing… my apologies.

My AT&T DSL fluctuates from full throttle to zero in a very regular pattern (using different modems, using different computers with different operating systems)… and having tested one computer and modem at one of my neighbors that is far enough to be on a different path but most probably to the same end office (where it functioned flawlessly)…

DSL Data Pattern for Suspected Network Failure

Pattern while downloading a large file (is typical of all downloads)… What is the problem and how can AT&T fix it?

Trace routes with 4th hop timing out frequently

Trace routes with 4th hop timing out frequently

Have a look and tell me what you see to be the issue and the resolution… Thanks, J

AT&T technician Ray looked at the data, ran some tests, called the ‘office’, had an AT&T router reconfigured (one in the EastBay) and all is right with the internet world (WoooHooo)…

three separate DSL downloads without any interruptions

Three separate file downloads without interruption… what a DSL data plot should look like

Formula1 represents the pinnacle of automotive performance… a balance between incredible automotive effectiveness (adhesion, acceleration, braking, aerodynamics…) and system life (long enough to take the checkered flag and live within the rules for multiple races). Why would Pirelli supply tires that quickly lose performance, degrade, shred, and go flat? I do understand that as a “sponsor” they want to have their name mentioned during the races. I would think, however, that most the mentions of the brand are in very negative contexts. Would I really go out and buy a tire whose primary advertising centered on short life and quality degradation? I think not…. Personally, Pirelli tires are at the absolute bottom of my list for replacement tires.

I also understand that Bernie wants more changes of lead and passing during these contests. Well the F1 field seems to be doing that quite well without Bernie’s meddling with Pirelli’s tires… So, Bernie and Pirelli, let’s make some tires that are truly worthy of both of your brands… then let the drivers and constructors battle it out on the circuit…

I am much more concerned with the legislative gridlock than I am afraid of the results of any Congressional agreement.

The US Congress, however, needs a housecleaning… Either the President or the People need to insist that there needs to be forceful deadlines that have some teeth. If a ‘super committee’ cannot come to an agreement, then they should not be allowed to continue in Congress. We have moved for term limits, let’s go for expulsion or for a penalty censures committee members with a black mark that *ends* their political career.

The pain of legislative failure must outweigh the political reward of legislative failure… At this point I am more afraid of ‘no decision’ than I am of any compromise between them… If they cannot agree, fire them all and start again…

Imagine, if you will, that our economy is not 300,000,000+ people, but just 300 people… where you pretty much know everybody, and everybody knows you. This exercise converts the huge, imprecise, impersonal, economy into a local, specific, personal economy with all the macro and microeconomic functions still in tact, just on a smaller scale. Reducing the scale of our community makes the impact of events more personal and more immediate. It reduces the logical distance between micro and macro economics, between government and the citizens, between businesses and customers. If unemployment is at 12%, you know the 36 people who are out of work, and if some group of people decide to start or expand a business and hire six people, you can literally see the effect of a reduction of the unemployment rate from 12% to 10%. If taxes go up, you can more readily see both the impact of the loss of spendable income in families in the community and you can see the impact of fiscal and monetary policy on the people of Microville. Additionally, economic phenomena like inflation, money supply and velocity of money are more apparent.

MicrovilleUSA has all the businesses, organizations, government, schools, concerned citizens and aspiring people of a larger nation. It has a financial system with currency and banks, and a government entity (but rather than having many layers of government: City, County, State, Federal; we only have the local MicrovilleUSA government).

To simplify the model even further, initially MicrovilleUSA will be a closed economy/society. If you want to sell stock in a new business, then the stock must be sold to the other 299 residents of MicrovilleUSA. If you want to build a new road, the resources needed to build it will have to come from the people of MicrovilleUSA and the benefit will go to the people of MicrovilleUSA.

Eventually, MicrovilleUSA will become one community in a global economy, MicroWorld, where there are imports/exports, different currencies, conflicting policies, immigration issues… but for today we have just one community, one currency, one government, 300 people (bakers, bankers, burglers, bishops, bee-keepers, baseball players, busybodies and bums) that all live together and form one community…

…Welcome to MicrovilleUSA.

Copyright 2011 – John H. Lundin, PhD

All rights reserved

…as for the President’s suggestions last evening… I listened carefully and found nothing that will (in my humble opinion) be effective. This criticism is not just with the President’s proposals, it is with *everybody’s* proposals

  • he kept talking about how different government actions would put money back into the peoples pockets (except for the Warren Buffetts of the world)…. and that is not really the problem. Having the money *in* their pockets does not solve the economies problems… it needs to be *spent*, and spent quickly
  • in the economic universe there are a few “laws”… one is the “quantity theory of money” which reads:  M * V = P * Q
    • …or the supply of Money (actual dollars and demand deposits…) times the quickness that the money changes hands (Velocity) [this is the demand side of the monetary equation: let’s say that the money supply is $1,000 and everybody spends their share of it roughly every three days for a velocity of 100 times per year… you now have the purchasing power of $100,000]
    • = the Price of goods and services times the Quantity of  goods and services [this is the supply of dollar denominated stuff available to buy… let’s say we have 50 houses at $2,000 each which equals the $100,000 worth of goods in our little economy… everything is in equilibrium]
    • now comes the crisis and everybody (even rich people and working families) get spooked in a bad or uncertain economy… they postpone buying anything discretionary and those who are in fear of their jobs stop all spending and just hold onto their money… The ‘V’ in the equation drops from 100 to, say, 35… NOW we only have 35 * $1,000 or $35,000 chasing those $100,000 worth of houses, so the price of the same number of houses falls fast and far (that is where we are today… too many houses being chased by too few dollars)… the new equilibrium is $35,000/50 houses = $700/house down from the original $2,000 (ouch!)…

      Velocity of Money and Employment

      parallel graphs of velocity and employment

    • What the stimulus programs have done so far is add to the Money supply, have done *nothing* to improve the Velocity, little to the Price of housing, and nothing to the Quantity of houses (which nobody is building, so it is actually decreasing)… so now the supply of Money is $1250 times 35 = ?? * 45… so now the price of a house is $972… we are in a classic deflationary spiral (why buy a house today when it will be less expensive in 2 months?) [computers have been in this deflationary spiral because the power and features keep improving even if the price remains the same… like getting a bigger house for the same money if you just wait a few months]… *and* both the methods created by the stimulus are inherently “inflationary” [not bad if you can control it]… and they still don’t fix the problem
      • with lots more Money in the economy, if the Velocity comes back, then the economy quickly becomes overheated (too much money chasing the same amount of goods) and the problem with too much money is that you cannot take the money *out* of the economy nearly as easily as you put it *into* the economy [you have to sell bonds… only now there is a substantial inflation premium]
      • and all these “shovel ready infrastructure repair projects” do not increase the actual ‘output’ of the country so even though there are more people with more money, they are still chasing the same number of houses as before  (it is the same effect if you give everybody a 10% raise without any increase in output, now everything costs (surprisingly) 10% more… only here, with our government, that 10% ‘raise’ does not go to you, rather it extends unemployment or refinishes a bridge, so, surprise, if you have the same pay, your pay now buys 10% *less*…
    • two alternatives to really fix the economy:
      • you need to entice everybody with money in their pockets to spend it NOW, not later… in the retail business this is called a ‘sale’ and there needs to be real value associated with the ‘buy it now’ value proposition. Recently, I made one policy/economic suggestion where everybody could fully depreciate anything bought in 2011 and 2012 in the year that it was purchased (just like expensing your car or business building)… Here is the link to that suggestion
      • Something like this will increase the velocity, spend some of the money that is ‘sitting on the sidelines,’ reward successful businesses, hopefully get some additional people hired *and* add some output to the economy (more cars, houses…) so that when Velocity does increase, the economy will already have some additional Q in the economy to keep prices somewhat in check… something like   $1200 * 90 = ?? * 55 … now houses have risen back to $1963 each, prices are on the rise, Velocity is almost back to where it was (some of us think that it never will go back to where it was), the housing market is growing and stable…
  • …but nothing mentioned last night addresses velocity, and unless (perish the thought) we have an event like WWII, we will have the same lethargic non-recovery that the US had during the entire *decade* of the 1930s…
  • The only person in government that fully understands this is our Fed Chairman, and he does not seem to be saying much…
  • Net, net, I don’t like anybody’s proposals right now.
  • Can your mind wrap itself around the ‘quantity theory of money?’  This *will* be on the test!!

What did you think of all the proposals?  J

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