Sunday, August 9, 2009

The Problem with American Cars

I recently test drove a Chevrolet Corvette on a fluke. I found the car impressive and recommend it to anyone who is in the market for a sports car.

By way of comparison, I test drove an Audi S5 and a Porsche 911 4S. The Corvette I drove (3LT) had a nicer interior finish than the S5. Its performance was in the same ballpark as the 911 4S, although not as good. Its price is comparable to the Audi and nearly half of the Porsche. On top of it, Corvette had the most muscular feeling and sound - while delivering the best gas mileage!

But there is a problem: Its image. I have been told by multiple people that a Porsche is more "befitting" of my image than a Corvette. Basically, the wisdom is that if you are an overweight, middle-aged, white guy that sports a mullet, was twice married to a stripper (but the same girl), then the Corvette is for you. So, regardless of the collective impressive feats by GM to create a very good car, the "upper crust" wisdom is that the Corvette is designed for the armpit of the society.

This is a problem for GM; but, as a class, American cars have a bigger problem. To illustrate the point, I will name a few key product categories in the automotive space:
  • Most stylish
  • Highest performance
  • Most economical
  • Most reliable
  • Most luxurious
  • Most innovative
Like it or not, "American car" does not fit any of these attribute unless you die for breathing on NASCAR fumes or are red-white-and-blue-from-the-heartland-American. Revisiting those categories, here are the first product families that come to mind:
  • Most stylish = Italian
  • Highest performance = Italian; maybe German
  • Most economical = Japanese
  • Most reliable = Japanese
  • Most luxurious = German for most people; English and Lexus
  • Most innovative = German; Japanese
For American cars to have a chance of surviving, they need to own at least one of the categories above (hint to auto executives - given the times, it needs to start with most economical and most reliable, but good luck unseating the Japanese).

Consumers should be drawn to American cars because they fall in love with them, or because they think that American cars are emblematic of a key product category. GM and Ford will only get so much mileage out of the die-hard American who buys American out of his patriotic duty.

Addendum: GM's recent announcement of the Volt's 230 MPG rating has generated quite a bit of press, some of which has a skeptical tone. Per the emails that I am monitoring, I clearly get the picture that, no matter what GM's moves or announcements are, the American public (like those in Silicon Valley) will regard it with skepticism. If my GM's observations are also true for Ford, Americas car maker challenges are formidable when trying to acquire the public's confidence in efficiency (and perhaps reliability). On the flip side, Toyota's Prius and Honda's Insight are quite well accepted.

Saturday, July 4, 2009

Broken National Priorities

The tax code is quite revealing about the politics of a country.

Take these case studies:

Case 1: I want the best education for my child. I am willing to make sacrifices and pay for it. However, there are no tax incentives to encourage this behavior. It is left to my own initiative to spend the extra dollars so that my child, and by extension, the next generation, is better prepared.

Case 2: I create a lifestyle business. I decide that that lifestyle business needs a Porsche as a company car. I lease the car and I can write off the associated expenses against my income. Here, there is a clear tax benefit that encourages consumption for today and does nothing to encourage investment for building a stronger tomorrow.

In other words, the government says that ostentatious consumption is good, but education is not. This is a clear example of misplaced national priorities, priorities that encourage individuals to party it up today with no regard for building a stronger nation for the future.

America - we are in trouble.

Tuesday, June 23, 2009

Uh-Oh: History Is Repeating Itself

On 29 March 2009, I posted my first blog here with now an infamous chart:

From my initial blog: The horizontal axis in my homemade chart represents a monthly timeline, with 0 corresponding to market peaks in 1929 (blue line) and 2008 (red line). The vertical axis is a log scale with 1 being the market high.

Paul Krugman's recent posting uses another, more reliable metric for compating 1929 to 2008. It is scary that history is repeating itself:

Saturday, June 20, 2009

Confused Iranian Protests

Current events in Iran have invigorated Iranians internationally. Pro-Iranians-in-Iran-protesters protests in Palo Alto, California, are an example of this international invigoration.

To the untrained eye, these protests come across as pro-Western-values (thus pro-modernization of Iran) demonstrations. Be weary of what you see.

At one level, the English chants and placards were in support of democracy and free speech in Iran; this much is great. It plays well for the American media, most of whom do not speak Farsi and are not familiar with the more subtle signals.

Yet, the symbols and slogans - those only understood by Iranians - are anything but supportive of these English messages. In the Palo Alto event, one of the Farsi chants translates to "death upon those who cause the death of my brother." Umm, OK; radical and sort of Marxist sounding, but we can chalk this up to emotion letting. Then there were the Iranian flags, not the current-day ones with the "God" center and square and "God is Great" Arabic script in the decorations, but the one with the lion brandishing a sword over a rising sun.

This flag is that it represents Iran under the Pahlavi "dynasty," when Reza Shah (Shah's father) and Shah where in power. Given who this flag represents, it is a strange way of demonstrating support for democracy and free speech.

The real trouble is the combination of the symbol and the slogan. To me, it sounds like bloody revolutionary inclinations to take Iran back some 30 years at a time when things were not so great for the average Iranian. Of course, if you were pro-Shah and toted the party line, things were great for you. If you had a different opinion or political views, imprisonment without a trail (not even a sham trial) and torture were not out of the mainstream practice. The nostalgia for pre-revolution times is misplaced. The mullahs are the new Shahs; different beasts are in wolf clothing, but the wolves are still out.

If internationalized Iranians really want to change Iran, the best method is to migrate back, take their skills and values with them, and create change from within. Displays of emotion may feel good but creating good feelings does not create the type of change that Iran so desperately needs.

Saturday, June 13, 2009

Citizen: What is Your Worth?

Economists have a way of placing an economic value on everything. Free capitalist markets have a way of placing a monetary value on nearly everything. Notable exceptions are love, life, and citizenship. But are these really exceptions?

Love is the most complicated of these examples and deserves a deeper look within itself. For the time being, if we confine "love" to a definition that two people chose to maintain a (hopefully long-term) for some mutual gain and strip the emotional dimension, you can see where the argument goes.

Human life clearly has a value and its creation is becoming more and more a sell-able product. On the creation side, witness the availability of fertility clinics and surrogate mothers. On destruction side, witness life insurance, and hit men who charge a fee to end someone's life.

And, in a world where nothing is sacred, citizenship is also for sale. Per USCIS, EB-5 visas grant the right of immigration to alien entrepreneurs who invest either $500,000 or $1,000,000 (depending on conditions - see here for details). US is not alone is offering this type of immigration. Nearly all countries offer some sort of immigration rights by virtue of cash. In some cases, like the US, the cash has to be invested into a business activity. In other cases, cash could be offered as a bribe to a government official in exchange for citizenship rights.

So, after all, citizenship is for sale and its value is determined through some non-transparent national policy or government agent individual action. Given that this is the case, why not call a spade a spade and make citizenship a sell-able good on open markets?

Corporations sell ownership shares on stock exchanges. Market activity and (hopefully sound) financial analysis determines the value of those shares. A company that is succeeding in increasing its market share, profit margins, and future prospects is valued richly. A company that is seen on the decline is punished through a lower valuation of its shares.

The same analogy could apply to countries. Just as companies sell shares in the open market, countries could sell citizenship. The value of each citizenship share could be determined through market activity and the prospects of individuals in those countries. For example, if universal health care and very high social safety nets (through government handouts) are seen as highly desirable traits, those factors will drive up the value of citizenship in the open market. Or, if a favorable business environment and the possibility for individuals to "strike it rich" are seen as important traits of a country, then citizenship in that country will be valued more richly.

For a market to exist, there needs to be buyers as well as sellers. Identifying buyers is easy. Today, they are the immigrants that leave their home country for another in search of better prospects. But who are the sellers?

The sellers will be those who willingly sell their citizenship to immigrants on the open market for cash. They could then use the proceeds to buy citizenship in a "cheaper" country and use the residual cash to pursue whatever they please in that country in accordance to the new home country's laws.

In effect, the case is for making the value of citizenship more transparent, and its transfer through monetary means more facile. This will attract like-minded individuals into a common country where the perceived virtues can be accentuated through the injection of new participants into the political and policy making scene. And for those who do not like it, well, they could cash out and pursue their individual interest elsewhere.

The word citizenship, at some level, connotes patriotism and nationalism. Because of this baggage, citizenship has become a sort of an ephemeral and in some cases sacred concept that has made it difficult to acquire and impossible to transfer through financial means. Yet, citizenship is for sale.

So, why not call a spade a spade and make citizenship a trade-able good on open markets?

Sunday, June 7, 2009

Individual Liberties

The question is, to what extent should an individual have rights and at which point can the state restrict the rights of the individual.   The discussion has been centered on the topic of gay marriage and how allowing it is, in effect allowing other forms of non-traditional marriage.  The tension in the argument is whether individual rights allow alternative unions to be labeled as marriage or whether the state can be in charge of imposing a definition for marriage.  

In our case, let's define the state as the United States, in that there are democratically elected executive and legislative branches.  Coming back to the question, we ask to what degree can the legislative branch impose restrictions on individuals and enable the executive branch to enforce those restrictions.

Americans have an ingrained sense of individual liberty.  The rights of the individual are paramount.  To what extent, then, should and individual have rights?  Should the state act as a paternalistic figure and subjugate its citizens to the rules of some majority, or do individuals have rights that are unalienable despite the will of the majority?

Robert Nozik famously said that individuals have rights insofar as their rights do not violate upon the rights of others.  In the clearest case, we can agree that individuals have a right to not be murdered.  This right does not restrict the rights of others not to be murdered; conversely, if it were the case that individuals had the right to murder, the society would soon go down the path of disintegration. 

Examining the case of marriage, it is not clear why same sex or polygamous marriages between individuals who willingly partake in these unions violate the right of others.  One cannot reasonable argue that he has the right to live in a society where marriage is the union of a man and a woman as this "right is clearly restrictive of others rights.  

Looking beyond marriage, and if we accept the notion that individuals have rights insofar as their rights do not violate the rights of others, there are many other major implications.  These implications are as base as the right to education, therefore taxation to support education, to the right to have secure borders, therefore the existence of a military.  In each case, individual liberties of those who assert these rights should be assessed against the violation of rights of others who may have dissimilar interests.  The answers are not clear cut, and require intense and deep debate.

So, how does one motivate ongoing social discourse to examine these issues and is our existing political infrastructure sufficiently geared to allow this discourse between citizens in an open way?  One may argue that a free press and media are there to enable this discourse; however, with the recent proliferation of commentators and diminishing of strong journalistic standards, the nation is at the mercy of those who speak the loudest and have the best access to communication channels. 

The voice of the citizen engaged in a civil discourse is lost; the question is, how we can get it back.

Monday, May 25, 2009

State of the "Union:" Genders, Numbers, and the Taboo

The question of allowing same-sex marriage raises troubling points.  The trouble is the question of what freedoms Americans should be granted, and what the definition of marriage is.  As mentioned in my earlier posting, the Bill of Rights explicitly allows for the freedom of religion.  This is to say that the state will not sponsor or advantage any religion or faith above any other.

Those who argue that marriage is the union between a man and a women predicate their argument on religious grounds.  The trouble with this argument is twofold:  Over time, the religious definition of marriage has evolved and there is that bit in the Bill of Rights that grants freedom of religion. 

The Bible neither endorse nor condemns polygamy.  And, while it includes passages that describe a relationship between only a single man and woman, it does not specifically prescribe monogamy.  Likewise, it includes passages regarding Abraham, Jacob, David, and Solomon, all of whom had multiple wives. Moses has a sort of an odd warning to Solomon in Deuteronomy 17:17 regarding polygamy:  "He must not take many wives."  What is not clear is whether the meaning of "many" is "more than one" or "more than what Solomon could afford."  But these minutia are besides the point, the point being the lack of definitive rejection of polygamy in the Bible.  It should be noted that polygamy has been in common practice throughout the ages, and still is in many faiths around the world.  Therefore, one cannot claim monogamy as "God's way" by claiming residence or Biblical prescription.

That aside, the Bill of Rights does grant Americans freedom of religion.  This right prohibits the enforcement of an ideal justified through religious teachings of any sort.  In other words, it should not matter what the Bible - or any particular religious text - says when it comes to the creation of laws and granting of rights in the US.  The paramount issue is individual rights; namely, can individuals willingly join and leave unions without any coercion or credible threats?  If I, as an adult, am free to marry whomever I want and can leave that person by my free will, then that marriage should be allowed as I am ultimately exercising individual rights.

This is the crux of the argument for same-sex marriage:  It is the wish of two adults to marry in accordance to their free will.  Same-sex marriage is a question of individual rights; it is ultimately the American way.

But, when it comes to individual rights, namely the wish and ability of an adult to make a decision for his betterment without coercion or a credible use of force*, why should the American way only extend to monogamy (single man-woman, man-man, or woman-woman relationships)?  If it is the wish of multiple, freely willing adults to engage in polygamy, why should the American way stop that choice? One can imagine marriages where are the traditional polygamous type, the non-traditional polyandrous (one wife, many husbands) type, or the tribal kind where multiple men and women are in a marriage, with "multiple" defined as "as few as zero and with no upward bound," making it possible for exclusive groups of many men or many women to be in a tribal marriage together.  

Call this modern love or taboo.  Despite its moniker, polygamy, polyandry, and tribal marriage clearly extends beyond most Americans' sensibilities and comfort zones.  Which, of course, begets the question of whether the existence of something uncomfortable or unusual make it un-American.  Coming back to the central point, if we wish to respect individual rights and adults are free to make choices* without coercion or a credible threat, then adults should have that right.  

We, Americans, have a long way to go before we fully digest our constitution and understand its ramifications.  And we, Americans, have a long way to go before we grant individual rights as they should be granted.

* Examining the notion of individual rights will be the topic of the next blog.