Why Don't We Hang Pirates Anymore?

A few days ago, Wall Street Journal columnist, Bret Stephens, wrote an article entitled "why don't we hang pirates anymore?" - regarding the world's failed attempts to curb piracy in international waters in the 21st century.

"Year-to-date, Somalia-based pirates have attacked more than 90 ships, seized more than 35, and currently hold 17. Some 280 crew members are being held hostage, and two have been killed. Billions of dollars worth of cargo have been seized; millions have been paid in ransom. A multinational naval force has attempted to secure a corridor in the Gulf of Aden, through which 12% of the total volume of seaborne oil passes, and U.S., British and Indian naval ships have engaged the pirates by force. Yet the number of attacks keeps rising."

The underlying problem seems to be that there is no underlying legal authority over this horrible problem. United States law only refers to instances in which American vessels are attacked and International law has very confusing verbiage which has made many conflicts complicated.

"Piracy, of course, is hardly the only form of barbarism at work today...and our collective inability to deal with it says much about how far we've regressed in the pursuit of what is mistakenly thought of as a more humane policy." A society that erases the memory of how it overcame barbarism in the past inevitably loses sight of the meaning of civilization, and the means of sustaining it.

How Obama Got Elected

I consider myself a rational Republican - fiscally conservative and socially moderate. I do not scorn Democrats for our differences but instead look to build bridges and find common ground. This video however really demonstrates the problem with allowing anyone to vote. These people are so ill-informed that it disgusts me. The Founding Fathers would watch this video and vomit at the trash coming out their mouths.

"Let Detroit Go Bankrupt"

The United States is facing the most challenging economic climate in decades – the housing market is slumping, the credit market is nonexistent, and many of America’s largest businesses are suffering so much that they have asked both the American Government and Sovereign Wealth Funds for bailouts. In fact, the CEOs of General Motors, Ford, and Chrysler testified before Congress yesterday in an effort to convince U.S. Representatives to approve a $25 billion bailout of the Big Three car companies.

Yesterday morning, former Republican Presidential candidate and native Michigander Mitt Romney published an op-ed in the New York Times entitled “Let Detroit Go Bankrupt.” At a time when the American people and American businesses are looking for government handouts during a time of trouble, this op-ed is one of the few instances which paint reality instead of political correctness. Governor Romney kept his Republican nomination hopes alive by winning the Michigan Primary, so why would he make such a bold statement now against the main industry of his home state? As a private equity investor, Romney sought to build great companies and fix broken ones. The government should not write a check to postpone the demise of struggling companies – it should work to fix them, soften the current tax and fuel efficiency burdens placed upon American car companies, and invest in research so we can deliver products that customers want to buy at affordable prices.

Despite the controversial title, his piece outlines the basic faults of the American business climate – lack of innovation, short sidedness, and poor business practices – and proposes that the only way to truly get them running again is through a managed bankruptcy which would enable companies to streamline excess labor as well as pension and real estate costs.

America’s greatness has been derived by resilience in the face of adversity. American car companies need more than a facelift. “Management as is must go.” New leaders should be recruited from unrelated industries. The government should not simply write a check – there should be cross-industry collaboration. New leadership should excel in marketing, innovation, creativity and labor relations.

We also need new labor agreements. Our international counterparts are able to produce cars for lower wages and are winning market share from The Big Three. The former head of the United Automobile Workers, Walter Reuther, acknowledges that “getting more and more pay for less and less work is a dead-end street.” The U.A.W. needs to set a new course – designed around profit sharing and stock grants to employees. There can no longer be resentment between workers and management. As workers accept salary cuts, executives must also make sacrifices and get rid of planes and fancy dinners. People must agree to “sanity in salaries and perks.”

One of the biggest things holding American companies back is the focus on short-term stock price instead of long term growth. Investments must be made for the future. Management should receive bonuses for growing market share, increasing product quality and customer satisfaction in addition to standard profit measures, not quarterly stock price increases.

In the 2004 movie, Man on Fire, Christopher Walken’s character notes that “a man can be an artist at anything, food or whatever if you’re good enough at it. Creasy's art is death, and he's about to paint his masterpiece!” American car companies need help and they need it quickly. Governor Romney should swallow his pride about losing the nomination for President and take the helm of one of America’s struggling companies. Detroit needs a turnaround, not a check. It is time for America’s great turnaround artist to paint his masterpiece.

You Think College Applications Are Difficult...

For all of the negative comments I have made about our newly elected 44th President of the United States, no one can fault him for running an extraordinary campaign. President-elect Obama’s transition team issues a 63-question application to potential applicants for federal government positions. Their attention to detail and commitment to hiring the best, most qualified, and most ethical candidates assuages some of my concern for Obama’s lack of executive experience.

Good campaign transition teams are determined to protect their boss from the embarrassment and distraction of a bungled nomination to one of the country’s top jobs. “In this process, you're guilty until proven innocent," says Paul Light, a professor at New York University's Wagner Graduate School of Public Service. Obama's lawyers are asking candidates to dig deep and come forward with some of the most private details of their personal and professional lives — as well as those of their spouses. An e-mail that could be embarrassing? An old diary entry that makes you blush? A loan you're not proud of? A late tax payment? An arrest? These questions are all on Obama's 63-item background questionnaire, and the word to those competing for top jobs is that they better cough up the answers now because the information will surely come out later. You must ask these questions, because there should be no surprises in the White House.

Some political observers say Obama’s caution with respect to recruiting new administration officials and key high-level advisers may be turning away a string of qualified candidates wary of subjecting themselves and their families to the most rigid presidential vetting process on record. David Gergen, an adviser to four past presidents describes the questionnaire as “extremely invasive.” In the age of technology and at a time when many are skeptical of our nation’s leaders, this process must be transparent both to the new administration and the American people. People who want to serve 300 million Americans and the leader of the free world must prove that they are capable of handling this responsibly and ethically.

I applaud Obama for his thorough approach to this process, but am disheartened that his apparent commitment to “change” has thus far yielded little more than Clinton administration alumni. Obama is hiring people with more Washington experience and less far-left ideology – the opposite of what his supporters thought they would get. I have written many times about my view that our national leaders should be smarter, better qualified, more experienced, and more ethical than the average citizen. I believe that the American government should stay out of people’s day-to-day lives, but the President of the United States needs to know that his team is ready to lead and will not embarrass his administration. It is an honor and a privilege to serve your country. Those who are uncomfortable taking responsibility for their actions and disclosing details of their private lives need not apply.

"...whether you like it or not"

Gay couples were not the only losers in Tuesday’s passage of Proposition 8 which now forbids gay marriage in the state of California. San Francisco Mayor, Gavin Newsom, a frontrunner for Governor in 2010 bore the brunt of the anti-gay marriage movement. Newsom is widely seen as an up-and-comer in the California Democratic Party but his climb to prominence became that much more difficult this week as the California electorate proved it disagrees with his stance on gay marriage.



“…whether you like it not.” Those five words helped shore up his support in San Francisco but may prove to be his political Waterloo. On May 15, 2008, the California Supreme Court struck down a ban on gay marriage. In celebration, Newsom held a rally at which he exclaimed “as California goes, so goes the rest of the nation. It's inevitable. This door's wide open now. It's going to happen, whether you like it or not.”

Since May, he has not backed down from his steadfast support of gay rights and gay marriage but has tried fruitlessly to get out of the spotlight on this controversial issue. He presided over a lesbian wedding only to find out that school children were in attendance. And most recently and most importantly, Newsom became the punching bag for Yes on 8 campaign. They bought millions of dollars in advertisements which displayed his rally cry and used it to invigorate their supporters.

Despite California being considered a very liberal state, the vote on gay marriage was split instead on racial lines much more so than by political lines. African Americans and Hispanics voted for Barack Obama but then voted Yes on 8. In favorability polling conducted this week, Newsom has a very slim margin of favorability among Democrats and an abysmally negative favorability among Republicans. Despite his support in San Francisco and his support by the California Democratic elite, Newsom will have a very difficult time being elected. Over the next two years, the field of serious gubernatorial contenders will emerge. It will fascinating to see whether Newsom can play up his economic and healthcare revivals of San Francisco or whether people will see him as the steadfast supporter of an unfavorable issue.

Palin 2012?

Barack Obama will be elected the 44th President of the United States on Tuesday, and jockeying for inside position to become the Republican Party’s 2012 nominee will begin Wednesday morning. As a diehard Republican, I don’t understand why my party seems to be drawn to those who are common and folksy. Should we not instead be striving for greatness? Republicans talk about the horrible state of education in this country, yet vilify leaders who have achieved great things. Should we discourage parents from inspiring their children to attend Harvard or Princeton? I worry that as America faces bigger challenges and greater obstacles than at anytime in recent memory, the GOP will nominate another fruitless leader in four years.

At this time of impending difficulty, do you think that attending four colleges in five years to earn a journalism degree and being mayor of a city with the population of two average-sized California high schools prepares you to be President of the United States? I think not. Governor Sarah Palin brushes off her lack of intellect and plays up her desire to be seen as a common person and “hockey mom.” She claims that her experience as Governor of Alaska has proven her ‘instinct’ to make tough decisions. There are 300 million people in the United States. Shouldn’t we be able to elect someone who has both? I am not suggesting that the President needs a PhD, but we should elect people with gravitas. Unfortunately, Democrats know it when they see it and Republicans tend to mock it when they do.

Regardless of the outcome of Tuesday’s election, Palin will surely challenge Governors Mitt Romney and Bobby Jindal for the Republican nomination in four years. Let’s compare –Romney ran the most successful private equity firm of all time and delivered healthcare to every citizen in Massachusetts, Jindal helped lead the Department of Health and Human Services and was in charge of the Louisiana State School system, and our current Vice Presidential nominee shoots moose and spends $150,000 on wardrobe additions.

Palin is attractive, ambitious, and conservative, but completely inexperienced on the national and international stages. With President Obama running what is likely to be an enlarged government that spends more on social programs than ever, four years from now the GOP will likely turn to the most anti-government, anti-Washington candidate since Barry Goldwater. Palin is loved by talk radio and Fox News conservatives because of her pure conservative beliefs. As a former Vice Presidential nominee, she will be the best-financed candidate other than Romney and will be anointed by energy interests threatened by Obama’s green initiatives. She draws Obama-size crowds and will appeal to rural voters in the Iowa Caucuses and South Carolina Primary.

My party needs a reality check. We must strive for excellence – not mediocrity, and recognize leadership – not simply familiarity. America has some ominous years ahead, and if we are going to continue to be the last, best hope of the world, voters need to choose the smartest, most experienced, most capable, and outstanding leader they can find, not the person most like their coworker or next door neighbor. Voters may feel they can relate to Governor Palin, but would you want to elect your next door neighbor as Vice President of the United States? I surely would not.

BTW I'm Voting for McCain / Palin

The Audacity of Arrogance

And Barack said, “Let there be light,” and there was light. As a Republican, losing the White House is not my greatest concern – it is the tremendous arrogance of the leader that Americans appear ready to hand the reins of our government to. At a fundraiser last week, Senator Obama said, “contrary to rumors you may have heard, I was not born in a manger…I was actually born in Krypton and sent here by my father, Jor-el, to save planet Earth.” He may have been joking, but Superman? I think not.

Arrogance is a common vice in presidential politics. As Frank James noted in The Swamp, “anyone who runs for president of the U.S. must, by definition, have an ego that vastly outstrips that of most other mortals.” However, has there ever been a presidential nominee with a wider gap between his self-estimation and the sum total of his life achievement? Obama is a three-year senator without a single important legislative achievement to his name. As editor of the Harvard Law Review, a law professor, and an Illinois legislator, his most memorable work is a biography of his favorite subject, himself.

In displays of demonstrative arrogance, Obama created his own version of the Presidential seal, accepted his nomination in front of pillars as if to position him as immortal amongst sheer commoners, and crafted a campaign slogan that oozes arrogance. “We are the ones we’ve been waiting for” actually means, “I am the one we’ve been waiting for.” In his nomination acceptance speech, Obama declared it a great turning point in history – “generations from now we will be able to look back and tell our children that this was the moment…the rise of the oceans began to slow.” Economist Irwin Stelzer noted in his London Daily column, “Moses made the waters recede, but he had help.” Obama apparently works alone.

With the election 19 days away and the economy in recession, Senator Obama is poised for what some predict will be a blowout victory over Senator John McCain. America needs a leader to guide it through one of the darkest periods in recent history. Our relations with other countries are suffering, our housing market has collapsed, companies cannot borrow new loans and struggle to pay off existing ones, and overall Americans are worried about the future. Obama has had an extraordinary campaign strategy – use high-flying, optimistic rhetoric to appeal to an electorate disillusioned with our current administration. But we need someone to DO president, not just BE president. We need a leader, but none are running.

Winston Churchill famously said, “the best argument against democracy is five minutes with the average voter.” Ask the average American voter about Obama’s stance on various issues and they will not score very well. Ask them who will bring change, Obama scores off the charts. Obama claims he will change the world. But what has he done to bring change in his political career so far? He has a lackluster Illinois State Senate record and a blank U.S. Senate record (voting “present” nearly 130 times). Obama claims to be able to work with fellow Republicans, but he has never done so before. Why should we believe he would do so now? Obama claims to understand everybody’s views and positions himself as a moderate, but he has been ranked the #1 most liberal Senator for the last three years.

Unfortunately, I, along with many Americans, am not thoroughly excited by either choice, as evidenced by the fact that a geriatric Senator with no personality who is disliked by his own party is only a few points behind the most popular Senator and biggest celebrity in American politics today. I worry that Americans will overlook Obama’s extreme hubris, extremely liberal ideas and lack of accomplishments and be stuck for the next four years with a man who will spend more time boosting his own ego than our struggling economy.

Worst Debate Ever? A Long Way From 1858

Until the Seventeenth Amendment was passed in 1913, United States Senators were elected by their states’ legislatures. In 1858, the Illinois Legislature was up for reelection with the controlling party being able to fill the open Seat. Abraham Lincoln and Stephen Douglass represented their respective parties in a sequence of debates focused mainly on slavery which have come to be widely remembered as the greatest exhibitions of public debate in American history.

Tuesday night’s Presidential debate between Senators John McCain and Barack Obama was one of the dullest and most boring debates in American history. The headline on the DrudgeReport Wednesday morning read, “The Worst Debate Ever.” We are facing one of the most pivotal times in American history – we are fighting two wars in the Middle East, the housing market is in shambles, and the stock market has plunged. Now is not the time for political posturing and lackluster debate. It is the time for someone, anyone to lead.

In Lincoln’s day, they had to rely on newspapers to distribute their message. With technology today, millions of people can watch the candidates ducking, dodging, and making excuses live on television and the internet. The entire debate was reiterating stump speeches and avoiding mistakes instead of looking the American public in the eye and properly addressing how to fix the state of our great nation.

The framers of the Constitution never intended for lifetime politicians. They intended that outstanding lawyers, doctors, businessmen, and teachers would put their personal careers aside for a few years to serve their country and then return to private life. The American government has been locked in stagnancy because everyone is so damn worried about the political consequences and winning the next election – rather than actually about achieving anything.

Senator Obama has been running for President since he became Editor in Chief of the Harvard Law Review. He has been focused on doing and saying everything right for the past twenty years. When John McCain came back from Vietnam as a war hero, he found his wealthy bride and her father bought him his Congressional seat. Sitting at the USC Football game yesterday, many people discussed how much they dislike both candidates.

At a time when we need leadership more than ever to preserve American life as we know it, we need to ask more of our leaders not less. The time for a true debate – one which demonstrates the actual differences in how both leaders would rebuild our country and return the U.S. to greatness – is now. I won’t hold my breath as these two lifelong politicians, with ZERO real world experience ask us for our votes while making sure that they never say anything to offend anyone. One of the difficult aspects of leadership is that taking a stand on something means other people will disagree. We should expect our leaders to tell us what they believe and why instead of allowing them to dodge telling us anything at all.

Nipping at the Heals of the Great Red Dragon

The May 9, 2005 cover of Newsweek magazine boldly declared the 21st Century to be “China’s Century.” With so much focus on the massive buildup to the 2008 Beijing Olympics and the upcoming 2010 Shanghai World Expo, all eyes have been fixed on China and its recent unparalleled economic boom. The often cited 2003 Goldman Sachs report entitled, “Dreaming with BRICs: The Path to 2050,” demonstrates how Brazil, Russia, India, and China will continue their rapid expansions and overtake many of the current economic superpowers over the next few decades. With all eyes focused on the Wall Street bailout plan, people have begun to question how long the American economy will continue to reign supreme. As economists and political pundits begin to discuss and debate the demise of American economic superiority, venture capitalists and hedge fund managers have begun to take note of potential growth investments in India and China. The world’s two most populous nations now possess the world’s fastest growing economies. China successfully used the Olympics to demonstrate its technological advances, precision, and discipline to the world. This exposé successfully captured the hearts and minds of most onlookers – many of whom now could not imagine investing in any foreign nation other than China. China’s massive reservoir of cheap, unskilled labor has led to its manufacturing dominance in recent years. While we experience China’s rise today, India’s rise is still more a tale of the future. As the world’s largest democracy, India possesses demographic, democratic, and capitalistic factors which may ultimately make it a better place for investment due to their market-driven economy and well-educated, English speaking, entrepreneurial population.

In the age of the Internet, constant communication, and rapidly developing technology, globalization has been thrust upon the world – ready or not. Many middle-aged American workers have seen the downside of globalization having lost their jobs to outsourced, cheap foreign labor. What many fail to realize is that globalization is simply another word for global capitalism – with each nation producing goods and services that give them a competitive advantage. One reason the United States is the richest country in the world is because it has been open to competition from around the world. Over the past sixty years, manufacturing employment has plummeted in the United States as those industries went abroad – yet the average American incomes remain the highest in the world. As globalization has become more prevalent over the past twenty years, American incomes have risen faster than those of any other major industrial country. Globalization highlights the weaknesses in a country’s economy and demonstrates how it must adjust and adapt in order to stay competitive.

Most people think China is the country with the strongest economic future. For decades, China and India plodded along under economic ideologies that favored the visible hand of government over the invisible hand of markets. Their economic systems stifled growth and left both countries very poor. However, in 1979 China embarked on economic reforms thirteen years ahead of India, and today all of the macroeconomic factors point in China’s favor. China’s per capita income of $2,500 is more than twice that of India’s. It owns more than $1 trillion of foreign securities, produces more steel, and builds skyscrapers and highways faster than India. With all of the hype about the Chinese economy, it is not surprising that it currently attracts more than five times as much foreign investment as India. In the past twenty-five years, China has lifted over 300 million of its citizens out of poverty. Meanwhile forty percent of the world’s poor reside in India, as do the second largest number of people with HIV.

The significant differences between the Indian and Chinese political systems demonstrate how their economies have and will continue to develop. China has grown under the decree of the Communist Party. It has had very active central and local governments directing economic activity. These planned and directed investments have led to the impressive modernization of cities like Shanghai. The drivers of economic activity in China are state-owned enterprises, semi state-owned enterprises, and foreign enterprises. Showmanship and central planning are central pillars of traditional Communist ideology so it is not surprising that the Chinese would follow in the Soviet Union’s steps of impressive buildup through ineffective allocations of capital. History demonstrates that although the market driven capital allocation may be unpleasant and uncontrollable, it has done a much better job than any government has been able to do through regulation. When western businesspeople hear that India is on the rise and visit expecting it to be next China, they find it is not at all like China. India’s growth will be bottom-up, driven by entrepreneurs and small business owners , not top-down growth like that created by the government in China. India’s growth is messy, chaotic, and largely unplanned. China has failed to develop several institutional processes and structures that ensure continuity and sustainability. By contrast, democracy, rule of law, and freedom of the press are well-entrenched in the Indian political economy. The Chinese government would never empower its citizens with the ability to create purely China-based private companies due to fears of dissent and thus relies on foreign investment partners to achieve its goals. While the Indian democracy has inefficiencies, it has had sixty years of stabile government in one of the least stable regions in the world at the same time that China continually combats political instability throughout its country.

China’s economy has instituted itself as the world’s great manufacturing power. As China debated how to grow its economy, it followed in the footsteps of Japan and South Korea which both launched their economic transformations by using abundant, low-wage labor to establish huge manufacturing businesses. China’s growth is primarily due to state-owned and foreign businesses located along its eastern coast. While the Chinese are phenomenal entrepreneurs abroad, entrepreneurship goes mostly undeveloped at home. The Chinese understand physical assets and commodities. They do not give as much value to knowledge and intellectual capital – economic sectors which India dominates today. China does little to nurture innovation and is driven by the ability to cheaply replicate foreign research and development. Forty-five percent of China’s workforce remains in the countryside and has not seen the effects of China’s great growth. While China continues to be the poster child of economic growth, its population continues to age faster than that of any other nation which will make it difficult to sustain such growth. Due to its rule which forbade families from having more than one child, more people retire each year than enter the work force which is leading to a shrinking workforce and will make it difficult for China to continue its booming manufacturing growth. On the other hand, India has a very different work force primed for an economic boom of its own.

India knew it would not be able to compete head-to-head with Chinese manufacturing and instead decided that its global competitive advantage lay in the services business. India’s choice of a service economy had good timing – the Internet and rising global income increased both the supply and demand for services. Companies worldwide are exploiting new technology by moving services work abroad to low-wage economies and as the technology boom continues, India continues to reap the benefits. As China’s workforce declines, India’s is exploding – 25% of the world’s under-25 population lives in India. More importantly, due to its British influence, India possesses huge numbers of English-speaking workers who are very familiar with Western culture. India is driven by private-enterprise. The American economy has been the envy of the world for many years. In addition to bridging a potential language barrier, India has learned the lessons of the American Dream by the huge numbers of Indian-Americans who have returned to India with money, investment ideas, global standards, and most importantly – a sense that one could achieve anything. In fact today, India has the second-most entrepreneurs per capita, meaning the largest number of entrepreneurs in the world. China is working as hard as it can, but India has the definitive advantage in language and cultural compatibility. As much as China does not appreciate intellectual capital, India glorifies it. India has vibrant information technology, pharmaceutical, and engineering-based knowledge industries.

In all fairness, both India and China will both continue to rapidly grow over the next several decades despite their many flaws. Both countries will be successful and neither will be the leader in all industries. The essence of private equity is being able to take an idea, product, or service and use outside capital to enable the company to grow in ways it never before thought possible. The job of a successful investor is to find the gaps in developing industries which are under-funded and primed for growth. The healthcare industry in India is a prime example of where private equity investment could fill a void in society while simultaneously being a very lucrative investment. India has the healthcare infrastructure to benefit from Western medical technology and services that have never before filled its hospitals. The most successful ideas recognize a void or an opportunity before anyone else does. Service businesses are very attractive to private equity firms because they are often sustainable and high margin. Manufacturing businesses are more of a gamble because they rely on cheap labor which will continually be moved to the location which supplies the highest volume of labor at the cheapest wage. Right now, that country is China, but as their economy grows and their citizens desire a higher standard of living, it is very likely that Chinese manufacturing may be outsourced to other emerging economies like Vietnam and others. Today however, China’s workforce is the largest and cheapest in the world and so in the short run, they will prove to be a strong investment. Currently, references to private equity investment in these nations refer to the goods and services these countries can produce and export to the world. The true promise that India and China provide to investors is the rapid development of their internal markets and growth of their middle classes which will soon seek the same standard of living as everyone else in the world. Investments should be instead focused not on how much the country can export but how much can be consumed by the 2.5 billion people that live there. The great economic expansion has been the pride and joy of the Chinese government, but at some point their controlled growth policies will limit a seemingly limitless economy. China will need to be less involved in capital markets and take less authority over companies situated there in order for their country to extemd its phenomenal growth. India on the other hand must improve its secondary education, infrastructure, and water shortages. It has several Silicon Valleys already booming within its borders, but it also has several Nigerias. India also must get its poverty and HIV under control. If it is able to improve some of these negatives, the Indian population has the skills, understanding of Western culture, and entrepreneurial spirit to be a very successful 21st century economy. The debate over whether globalization will make China or India a better place to invest needs to not focus on which country is better, but instead be focused on how the individual strengths and weaknesses of each nation would impact specific investments.