Letting Automakers Go Bankrupt Not Simple as it Sounds

It's not hard to find lots of emotion on all sides surrounding the predicament our automakers face in the wake of the current credit meltdown. Certainly understandable given all the issues involved - labor, management, government, taxes, personal experiences, perhaps even a bit of nostalgia (first cars, first loves, old lemons and whatnot). Lord knows I have my own personal biases, given that my dad's a retired GM exec.

Anyway, here are my thoughts.

1) The current crisis is a direct result of the credit meltdown. That is not a problem of the automakers' making

2) The fact the credit meltdown became a crisis for the automakers IS a problem of their own making.

3) It became a problem because of cars, agreements and decisions made 10, 20, 30 and even 40 years ago (stretching back before the 1973 Arab oil embargo).

4) Current management and union leadership have made more progress in working toward fixing the problems in the past five years than was made in the previous thirty.

5) That progress is still nowhere near enough.

So where are we today from an operational/business model standpoint?

The cars are far superior to what was being turned out even a few years ago, and continue to improve with each passing year. The most recent UAW agreement promises to eliminate the cost differential between domestic and transplant automakers, putting them on a level competitive playing field. [sidenote - my dad, no fan of the union, was saying long before this mess that current UAW head Ron Goettelfinger is the first union leader who "gets it"]. Top management has agreed to aggressive pay cuts. The dividend was cut in half. Retired executive health insurance has been completely eliminated. Bondholders have been asked to exchange debt for equity.

In other words, all stakeholders, except perhaps retired UAW members who are contractually protected, have taken or been asked to take a hit.

But that's still not enough. As a result, GM and Chrysler face imminent bankruptcy. Ford has a bit more time, but they are leveraged to the hilt and will quite likely face a similar crisis in 12 to 18 months if sales do not turn around.

Now, I would clearly appear to have a bias in wanting to see GM survive for my dad's sake, but at this point I believe his fate is sealed, no matter what happens. His basic pension is secure even in bankruptcy, but his health insurance is gone for good, ditto the value of his stock holdings. The remaining dividend is as good as gone, as is his supplemental executive pension. So whatever happens from here on out really has no bearing on the personal situation.

That said, we first must decide if saving the domestic auto industry is not just a worthwhile goal, but an imperative one. First, we should keep in mind that despite all the talk of the domestics not making cars Americans want to buy, GM, Ford and Chrysler still rank 1, 3 and 4 respectively in total vehicles sales (and they retained those ranks in November). The prospect of their failure carries heavy economic, social, national security and global competitiveness implications.

The economic factors have been discussed at length - some 2.5 million jobs at risk, with all the attendant impact that would have on our precariously positioned economy. Simply from a timing standpoint, failure of one or more of the automakers could cause an economic tailspin that could take many, many years from which to recover.

But the intangible losses could be far worse. The auto industry, including ancillary industries, is the nation's largest R&D spender. Those dollars employ engineers and scientists of all stripes, researching and designing everything from power plant technologies that include electric, hydrogen fuel cell and biofuels to metal alloys, plastics, safety, navigation, pollution control and a range of technologies that have benefits that go far beyond the automotive world.

Beyond the fruits of that R&D, the demand for those scientists and engineers (automakers are the single largest employers of mechanical engineers) provides a market that encourages students to pursue studies in those fields. The industry is also a rich source for instructors in those fields. We must consider the impact the loss of such a vital skill set could have on our long-range ability to innovate and compete globally, not to mention what life-improving innovations may be lost to posterity.

That is a point that should not be taken lightly. Anecdotally, I own a business that helps source parts and components for companies. A while back we were asked to find a part for an old piece of equipment. I scoured the U.S. trying to find it, but was finally told I'd have to go to China. The reason was haunting. It wasn't just that it wasn't made in the U.S. anymore, but that - and I quote - "You won't find anyone here that knows how to make it." A skill we had lost forever, ceding it to our greatest upcoming competitor. How many more such stories will we encounter if we lose our domestic automakers? I'd rather not find out.

The loss of skills does not just pertain to college-educated professionals. Despite all the comments about bumper-hanging, hubcap-attaching autoworkers, the truth is that today's line workers have become highly skilled technicians. The equipment in today's auto plants are technical marvels that require a great deal of training and expertise to operate and maintain. Whether they are overpaid or not in today's environment may be a point of debate, but the value of those jobs and the skills they require are precious. We should not dismiss them quite so cavalierly.

Even more frightening might be the impact on our social fabric, especially in Midwestern states. The city of Detroit already provides a blueprint for what happens when good jobs leave. Crime, poverty and desperation are sure to rise. We've seen how intractable those problems are once they become a routine part of life. The financial and social cost of dealing with the fallout of failure is almost certain to far outweigh whatever cost we're considering today.

All that said, it still makes no sense to bail the automakers out if the business model remains broken. So can it be fixed? I believe it can. First, we have to separate current operations from legacy costs. A sizable, perhaps insurmountable, portion of their problems stem not from operations today, but the costs imposed by decisions made decades ago. If current operations can be freed from those costs, a thriving domestic industry can emerge. And if we believe a thriving domestic industry is important - which is what the argument above is all about - then finding a way to deal with those costs are the basis for a revival.

So how do we go about it?

To date, the argument has largely centered on one of two options: Give them the money or let them fail. Many believe Chapter 11 bankruptcy is the best option. In a way, I agree. But I don't believe a standard filing could work for several reasons. First, consumers are sure to be scared off from buying vehicles if they fear warranties won't be honored, parts and service may not be available and that resale values will plummet. That would make emerging from any Chapter 11 filing almost impossible. Second, the industry is extraordinarily dependent upon credit to finance operations, including dealer floor plans, parts and raw materials, finished inventories and capital investment. It's the nature of the business, whether we're talking GM or Toyota. Even if one wiped their current debt off the books, they'd need to secure new debt immediately to finance the business. This debt is not a bad thing, but it would be very difficult to secure it while in a Chapter 11 situation.

Therefore, I believe the best option is a pre-brokered, government-backed bankruptcy. The government would infuse cash in exchange for future consideration, whether it's in the form of warrants, preferred stock or some other form of temporary equity position. The government would then guarantee both the new debt needed to finance operations and customer warranties, thereby putting a floor to the downside of consumer expectations.

Meanwhile, the Chapter 11 filing would open the door to the draconian cuts that must take place. Current shareholders (which include my dad) would largely be wiped out. Bondholders would exchange debt for equity in the new shares. Management would take across-the-board pay cuts. The union would accelerate concessions scheduled to take effect in 2010 and accept health care plans that are more in line with what most working Americans have. They would also have to open the door to retiree concessions, particularly with regard to health insurance. It need not be eliminated, but it certainly needs to be restructured. Dealerships would be pared and product lines cut, thereby reducing overhead, redundancies and managerial jobs. No one would like it, but that's the point - everyone must sacrifice.

The result would be a far different, but very competitive, American auto industry. Analysts estimate that such cuts would make GM cash flow neutral at an industry sales volume of 13 million or fewer units annually. That's a level that has been exceeded every year since 1993 (including this year), and has been missed only twice since 1983 (12.3M in 1991, 12.9M in 1992). In other words, GM would be breaking even to slightly cash flow positive today and profitable in almost any other circumstance. That's a successful business model.

It would not be painless - not by a long shot. But it would be far better than what we're facing. I know it won't satisfy the visceral need some seem to have to see the union or management “get theirs.” But it would also mean we're not going to cut off our nose to spite our face. I've never been one to care what someone else is getting. It just doesn't matter. Nor do I have much stomach for government getting involved in private industry. Still, it happens all the time, from state and local tax breaks that encourage companies to relocate to publicly funded stadiums. None of those would appear to be nearly as important as a strong, competitive domestic auto industry.

I'll close with a well-known, though often misquoted, line from former GM president Charles Wilson, made during his 1953 confirmation hearing to become Secretary of Defense. In response to how he'd handle a situation where there was a conflict between what was in the nation's and GM's best interest, he replied "For years I thought that what was good for our country was good for General Motors, and vice versa."

I think that line captures today's situation perfectly. We're all part of one interwoven community. We should not look at this as helping the automakers - and we absolutely should not see it as helping them maintain the status quo. Instead, we should see this as helping us all. For what's good for the automakers, in this case, really is good for the country.

Lessons From Hurricane Ike

[Written three days after the Lehman Brothers collapse began the 2008 financial meltdown]

It's Wednesday night in Cincinnati, where about 1/3 of the city is still without electricity three days after a storm blew through on Sunday. I'm back online, though it's dial-up since Time Warner hasn't repaired the cable yet. At one time, 90% of the entire metropolitan areas was without electricity. Here are some of the strange things about the last 3-1/2 days or so:

1) The city was knocked out by a "storm" where it didn't rain, it didn't snow, it didn't freeze and it didn't flood. Heck, it wasn't even cloudy. All we had were sustained winds that reached 55 mph in places, with gusts as high as 86 mph, thanks to the remnants of Hurricane Ike. Trees and power lines are down everywhere. The two most precious commodities have been ice and gasoline (I waited an hour and 20 minutes for gas at 11 pm on Monday - when the lines were "short").

2) The kids have been off school for three days, but without electricity or cable - and with sunny, 75 degree weather - they've had to resort to playing football, riding bikes, throwing frisbees and walking dogs instead of watching TV and playing video games. It's amazing to see how many kids actually live around here when they're all outside.

3) I haven't been able to check my portfolio or watch CNBC, so...

4) I got to take my son fishing on a Wednesday morning in September.

You know what I've learned?

The sky is still blue, the fish still bite, the kids have lots of interesting things to say when they're not glued to an electronic device and it's nice to just sit with my wife. I've learned how neighbors will help with gas for a generator or share space in their refrigerator if they're lucky enough to have electricity. Food cooked on a grill is especially tasty when it's the only option you have.

The most important lesson? I've found I'm a lot richer than I thought I was last Friday, regardless of what's happened in the market the past few days.

So, no matter how stressed or worried or scared you might be because of what's happening in the market, take a moment and reflect on your family, friends and all the good things in life. Then ask if you'd trade them for all the money you might have lost since Monday.

My guess is you wouldn't. Be thankful.

Something Foul Is In The Air

Excuse me if this column seems to go over the line, but I promise it is in the interest of creating a more civilized world. My apologies in advance. 

 Have you ever let one rip in public, insulting the sensibilities of innocent bystanders with your foul emissions? Do you let ‘em roar at ballgames so everyone within ten rows can hear you? Or rattled one off at a fine restaurant, thinking those at nearby tables wouldn’t notice? Have you ever set one off just as you passed by someone sitting on a park bench or run into a casual acquaintance you haven’t seen in years, reintroduced yourself, then ripped three crisp ones in quick succession in front of your friend’s young son? 

Thought not. Yet you may be surprised to learn that I’ve witnessed every one of these situations in just the past few weeks. No, I’m not talking about flatulence. Instead, I’m talking about a different sort of f-bomb, one that originates somewhat further north in the anatomy. And it’s one whose use seems to be reaching epidemic proportions. 

 What’s surprising is how similar these two nasty releases are. Though neither cause permanent damage, both are foul. Either can slip out accidentally, yet can almost always be controlled with a little self-restraint. Neither is likely to ease an already tense situation. And the most striking similarity? If the setting isn’t appropriate for one, it probably isn’t for the other. In a job interview? No. Church? Certainly not. Alone with friends? Perhaps. Hunting trip? Practically required. Sitting with your spouse? Depends upon your spouse. With your boss? Ditto. Trying to set an example for young children? Hardly. In public among strangers? Never. 

But here’s one way in which they’re different. A person who lets go with a gaseous sort will act rightfully embarrassed. Question the verbal offender, however, and you'll often get the “Hey, it’s a free country” look. Yes, it’s a free country and I will defend to the death your right to be rude, thoughtless and disrespectful, but you are being rude, thoughtless and disrespectful nonetheless. 

And that’s the thing. I have no problem with a well-placed expletive. I don’t even mind if my kids hear them. In fact, it’s not the word itself I have a problem with, it’s the selfish nature of the act. It’s no different than cutting the grass at 6 AM, carrying on a conversation in a theater or blasting music into the wee hours. There are things some people just don’t want to hear. We should all respect that. Which is what it all comes down to – respect for others. An inappropriate f-bomb is about as welcome as an f-bomb from one’s backside. Put in that light, it’s odd that some believe spewing them makes them cool in a Sopranos sort of way. To our public f-bombers, I’d argue there’s a better word – one that rhymes with cool – to describe how you come across. Try to guess what letter that word starts with.

Hedges, Home Makovers and Small Acts of Kindness

When I finally reached the age where I could stay home while the rest of the family left town for the weekend, I decided I was going to surprise my mom by trimming the overgrown hedge that had become the bane of her existence. And it wasn’t going to be your typical teenager-style, bare-minimum job. I was going to trim, weed, edge and haul. I could envision both the finished job and the reaction when my parents returned. But then my mom uttered her final words of instruction as the old wood-grained Chevy wagon backed out of the driveway.

“You know, it wouldn’t hurt you to trim the hedge while we’re gone.”

Well, deflate me with a pitchfork. My labor of love now became a chore and my mom’s pleasant surprise was now an expectation. Ugh.

I was reminded of that when ABC’s Extreme Home Makeover visited our little corner of the world. I’ve often marveled at the enthusiasm that surrounds the Big Reveal, when the bus is moved and the new house is seen for the first time. Why are we so thrilled by the big gift and so willing to donate time, goods and cash to a family of strangers, yet so begrudging when it comes to food stamps, school lunch programs and other institutional charity directed at the masses?

Part of the answer may be found in my story of the hedge. It is in the difference between appreciation and expectation. We like our generosity greeted with sincere thanks, rather than a sense of entitlement. Furthermore, there’s always a greater sense of satisfaction when we act out of the goodness of our own hearts than when we’re told to do so, whether by mom or Congress.

I think it also reflects the rather schizophrenic nature of the American public. This is the group that can elect a George W. Bush twice (the dispute over that first election, notwithstanding), then go gaga over Barack Obama. Or choose Republican presidents for 20 of the 24 years from 1968 to 1992, while sending a Democratic majority to Congress that entire time.

What it comes down to is that we are a nation built upon conservative principles, but liberal ideals. We believe in hard work and personal responsibility, yet feel for those left behind. We’ll buy into Reaganesque calls to pull ourselves up by our own bootstraps, then reach out to those who haven’t got bootstraps to pull. And that dichotomy likely explains why so-called red states – the conservative ones – consistently rank higher in charitable giving than the supposedly more compassionate blue states. It’s not that conservatives don’t care, it’s just that they don’t believe in the blank check. It’s accountability, not accounting, that determines their generosity.

“Extreme” is the operative word in ABC’s makeover show. But we needn’t go to extremes when trying to make a difference in others’ lives. Small, personal acts can go a long way – and it doesn't require an act of Congress to do them.

A Conservative Argument for Single-Payer Health Care

Might a conservative argument exist in favor of a single-payer health insurance system? Yes, it’s a stretch, but our system is clearly failing many businesses and individuals, and taking such a sweeping reform off the table leaves us merely tweaking around the edges. The result is an ever more costly and complex problem that will only worsen as our population ages. A single-payer system might be the greatest boondoggle in the storied history of government boondoggle-ry, but the issue is too critical to too many not to consider every option.

So why might conservatives support a single payer system? For one, health costs are crippling our global competitiveness. Domestic automakers spend more on health insurance than they do for steel. Disputes over coverage have led to costly strikes and work stoppages in numerous industries. And finally, the cost of caring for the uninsured is built into healthcare prices, which are passed on to business in the form of higher premiums.

The problem is even worse for small business, the conservatives’ darling of economic growth. With limited ability to pool risk – and insurance companies cherry-picking low risk firms away from groups when small businesses do unite to form larger risk pools – a single unhealthy employee or family member can drive premiums up by tens of thousands of dollars (My premiums once increased $24,000/year thanks to the condition of one employee’s spouse). Furthermore, the fear of going without health insurance is one of the risks that prevent people from pursuing businesses of their own, driving yet another stake through America’s entrepreneurial heart.

One reason conservatives rightfully endorse free markets is that they are extremely adept at wringing out bureaucracy and inefficiency. But our current system does neither. Instead, it adds redundant sales and underwriting overhead, confusing billing practices that increase administrative costs for doctors and hospitals, and absorbs a not insignificant portion of our healthcare dollars in profits and executive salaries. Not that those are bad things, but when healthcare dollars are at a premium, we should be looking to maximize our bang for the buck – an elementary conservative tenet.

Philosophically, even limited government advocates such as yours truly would agree that some needs are so vital that a degree of government inefficiency is tolerable in exchange for universal availability. Highways, schools and mail service come to mind. Granted, none of these are perfect, but if left to free enterprise, we’d surely see large gaps in service, much like we see today with health insurance.

Finally, no one is safe from the expense of unforeseen medical bills. A 2005 Harvard University study showed that half of all bankruptcies were due to medical bills, though three of four filers had health insurance. We’re all at risk.

This is not a liberal or conservative issue, but a human one. I’d be the first to argue that healthcare is not a right, but I’m far less prepared to argue it’s not a responsibility – one that we owe to ourselves and each other. Let’s not dismiss any solution.

Burning Flags and Flying Bullets

Did anyone else notice the irony in the reaction to the U.S. Supreme Court’s decision that struck down Washington, D.C.’s 32-year-old gun ban? George W. Bush, John McCain and Orrin Hatch, among others, lauded the Court’s decision as a landmark victory for a basic American right. Nothing surprising in that. But these same people have spent nearly twenty years decrying and seeking to overturn another landmark decision upholding a basic American right – the right to free speech.

The court’s gun ruling came nearly nineteen years to the day after it ruled that flag-desecration was protected speech under the First Amendment. That earlier ruling did not evoke the howls of joy we’ve seen these past few days. Instead, it led to numerous attempts to legally and legislatively bypass a decision some saw as a trampling of our sensibilities. (In another irony, the court seems to like to announce these decisions just prior to the 4th of July, where we can reflect on our newly-affirmed liberty by flying flags and sending untold tons of flaming gunpowder screaming into the sky, but I digress).

What I’d like to know is why the fear of burning flags, but not flying bullets? Clearly, the statistics since the court’s 1989 flag ruling paint a pretty stark picture. U.S. gun-related deaths: 567,020 (CDC numbers through 2005). Flag burning-related deaths: 0. To put those numbers into perspective, that’s about 138 private citizens killed for every U.S. soldier killed thus far in Iraq. In fact, it’s almost 150,000 more than we lost in all of WWII. Whatever one's view on guns, it's hard to argue that they don't pose a more immediate threat to one's personal safety than a burning flag.

I’d like to think the dichotomy of opinion arises from an understanding that the power of ideas, however repulsive, is greater than the power of brute force and therefore, more in need of suppression. Unfortunately, I think it’s just the opposite. The argument in favor of permitting undesirable speech requires an intellectually nuanced consideration that the argument in favor of guns does not. It’s a lot easier to understand the power of a gun.

That lack of nuance can manifest itself in self-destructive ways. It’s been said that when your only tool is a hammer, you see every problem as a nail. Likewise, when your only weapon is a gun, every adversary becomes a target. We see it on the streets of our cities and in the halls of power. Instead of turning to violence only as a last resort, we seek the preemptive strike. Kids are shot down because they make the mistake of riding their bike into the wrong neighborhood. Bombs are launched in order to “get them before they get us” – even when we’re not quite sure they’re really trying to get us.

I’ve always subscribed to the adage that the pen is mightier than the sword, which is why the pen has always been my weapon of choice. Unfortunately, it appears the sword is not only easier to use, but easier to protect.

When Yes Means No

Whatever happened to common sense? Michael McKinney, a former teacher at Arlington Heights Academy outside of Cincinnati, recently pleaded guilty to gross sexual imposition for having a sexual relationship with a student last year. Under the plea agreement, he faces up to twelve months in jail and will be required to register as a sex offender for the next fifteen years. Under normal circumstances, I’d say he deserves all he gets. But these aren’t normal circumstances, and to be quite honest, I’m not sure where to begin.

First and foremost, this was not a case of having an affair with a fifteen, sixteen or even seventeen year-old student. The woman was eighteen, old enough to enlist in the armed forces and serve in Iraq if she so chose. But apparently not old enough to choose to be intimate with a fellow adult. Furthermore, she no longer attended the school, having begun classes at Cincinnati State University after accumulating enough credits to graduate from high school. She was only classified as a student because the rest of her class had not yet graduated and therefore, her name remained on the school enrollment – unbeknownst to both parties. Nor had she ever been a student in one of McKinney’s classes. Finally, the woman claimed the affair was consensual and had no desire to see McKinney prosecuted.

So what we have is a young man (McKinney was twenty-five at the time) having a relationship with an adult college student. Had the woman attended any high school other than Arlington Heights, there would be no crime. But because she once attended the same school where McKinney taught, he now faces the future as a convicted felon and sex offender.

Now, the first question that comes to mind is what purpose the sex offender registry is meant to serve. As the father of a pre-teen girl, I have every incentive to make sure my daughter is safe from the creeps who prey on women against their wishes and children under any circumstance. But when the list becomes populated with people such as McKinney it risks becoming as pointless and disregarded as the warnings that tell us our coffee is hot.

The second question is what this case says about our perception of women. Are we not saying that an adult woman is incapable of making an informed decision regarding the relationships she may have? It seems reminiscent of the kept woman culture of days gone by, where women were thought weak and in need of protection from their own impulses.

Katie Pridemore, the assistant prosecutor pursuing the case, argued that we must keep an eye on anyone who preys on those in a subordinate position. That is a broad and dangerous definition, especially in light of this case. Perhaps what we really need is protection from overzealous prosecutors who prey on headline-grabbing cases, with no regard for the lives they damage in the process.

The Definition of Success

I recently had an opportunity to consider the meaning of success when my dad came down from Michigan to watch my son play a basketball game at his elementary school. When I told him I hoped he’d get a chance to meet George Losh, the teacher responsible for the intramural program, he immediately wondered if George was related to Michael Losh, who my dad knew from his days at GM.

It turns out they are brothers. J. Michael Losh has a profile on Forbes.com that includes the following:

Chief Financial Officer of Cardinal Health, July 2004 to May 2005; Chairman of Metaldyne Corporation, October 2000 to April 2002; Chief Financial Officer of General Motors Corporation, 1994 to August 2000; director of AMB Property Corporation, Aon, H.B. Fuller Company, Masco Corp. and TRW Automotive Holdings Corp.

George Losh has no such Forbes profile, but if he did, it would read like this:

Teacher, Phys Ed., Union Elementary, 1973-2008.

If one were to judge success solely on the basis of resume, it would appear to be no contest. One has held senior executive positions at some of the world’s largest corporations. The other spent an entire career in a single gym at one of the state’s oldest schools (ninety-two years old and counting). Thanks to our unfortunate tendency to measure success in dollars and cents, for many the comparison would end there.

But that would do all involved – George, Michael and ourselves – a disservice. Because success should not be measured by the dollars we pocket, but the lives we touch. And by that measure, George Losh has enjoyed the type of success to which we should all aspire. His after-hours basketball, volleyball and gymnastics programs have attracted hundreds of children each year (some years saw up to 200 kids – more than 1 in 3 students – participate in gymnastics alone). My conservative calculation estimates that as many as 3,500 children left Union as better athletes and better people because of the countless hours George dedicated to his calling.

Now it has come to an end. Wednesday, June 4, marked George’s last day at Union. Reflecting on his career, he is proud of the good athletes he helped make better. But he positively lights up when it comes to those kids who arrived scared and unsure, but left excited and confident. Just as he lights up when talking of his brother – not about Michael’s money or power, but of his humility and unassailable integrity.

I can hear a basketball bouncing as I write this. That would be my daughter working on free throws and layups. She would not be out there were it not for George Losh. At one time, she preferred only sedentary pursuits like reading, writing, arts and crafts. That she wants to play ball is a measure of George’s success as a teacher. And if someday, someone speaks of her integrity the way George speaks of his brother’s, I will consider that a measure of hers as a person.

Time To Re-Think Nuclear

So our kids’ old babysitter stopped by for a visit while home on vacation and like most folks, we talked about her new job, her apartment, the thermal characteristics of nuclear fuel blends – you know, the same old, same old.

Ok, maybe that last topic isn’t so run-of-the-mill, but since she’s a recent Ph.D. researching nuclear fuels for the Department of Energy, it was only natural that we’d spend some time talking about nuclear energy. In the process, she confirmed some things I already knew and opened my eyes to a few I didn’t.

For example, I was aware the U.S. gets about twenty percent of its electricity from nuclear power, while in France it’s about seventy percent. That’s a huge difference, and one I’ll discuss in a moment. But I wasn’t aware the two countries have far different approaches to handling waste. Whereas we use the fuel once, then must dispose of a reactor core’s volume of spent fuel, France reprocesses its fuel, leaving waste about the size of a hockey puck.

Well, that sent me on a journey to learn more, which confirmed a second fact I already knew: I am no nuclear scientist. After wading through scientific papers on uranium isotopes, half-lives and alpha particles, I came to the conclusion that the answer is not quite so simple (imagine that – nuclear physics not simple).

Still, here’s what I learned. The U.S. has opposed fuel reprocessing because it leaves waste that could be used for nuclear weapons if it fell into the wrong hands, a reasonable concern. But new technologies (e.g. fast neutron fission) could greatly reduce the volume of waste and leave it of little value to terrorists.

So what would this mean for you and me? Consider that at France’s utilization rate we could eliminate all coal-fired plants, thus eliminating thirty-six percent of U.S. greenhouse gas emissions. Or we could eliminate half the coal and all natural gas-fired plants, leaving natural gas available for transportation and thereby reducing our need for imported oil.

Such a scenario is not that far-fetched. Not only does the U.S. have vast reserves of natural gas, the technology to use it in vehicles already exists. In fact, Honda’s natural gas vehicle recently won an award as the nation’s greenest car. Furthermore, we can tap into the infrastructure that brings NG to our homes and businesses. Imagine refueling in your own garage. We could help the environment while sticking it to OPEC and Big Oil.

No nuclear energy plants have been built in the U.S. since the scare raised by Three Mile Island and the simultaneous release of The China Syndrome (which included an eerily coincidental line that an accident could wipe out an area the size of Pennsylvania). But more people have died mining coal in the past year than have died in the entire history of the U.S. nuclear power industry. With an uncertain future for both oil supplies and our climate, it appears time we shake our fears.

Talking Race, Part II

Shortly after I moved out of my fraternity, our house became embroiled in a campus-wide racial uproar over an issue that was inflamed by a newspaper account that began “According to an unverified rumor…”

Unverified rumors are hardly the foundation upon which solid journalism is built, but no matter, the damage was done. We immediately became persona non grata on campus, the targets of verbal assaults, vandalism and physical threats from blacks and whites alike. The university took up the cause and ordered we undergo what today would be called diversity training, sending a series of African-American speakers to enlighten us. The first few did little more than point fingers and tell us how we represented all that was wrong with white America. Little enlightenment took place.

But the final speaker brought about an epiphany. Rather than rant, he asked three simple questions. Did we feel we were being treated unfairly? Yes. Did we feel people were saying things about us that weren’t true? Yes! And finally, the coup de grace – did we feel we were being prejudged? There was a collective gasp among the sixty-five or so young, white men gathered in that room.

Suddenly, if only in the smallest of ways, we understood what blacks must endure on a daily basis. How it feels when someone you don’t know shouts an epithet in your direction. When people eye you suspiciously for no apparent reason. How you begin to see malevolent intentions in even innocent gestures. It can start to make one wary, angry and more.

What this gentleman did so brilliantly was get us to understand his perspective by showing he understood ours. Rather than presume us guilty of racism, he allowed for the possibility that we weren’t, which in turn got us to lower our defenses and open our minds to how racism can manifest itself. That’s something too often missing on both sides of our discussion about race – an attempt at mutual understanding. Instead, there’s a tendency to stand on our respective soapboxes with fingers wagging and minds already made up. Ironically, that’s the definition of prejudice – deciding before the fact.

Whites tend to look at all the progress - anti-discrimination laws, affirmative action, blacks serving in the upper-echelons of government and business - and thus want to believe racism is a thing of the past. Blacks, on the other hand, see the results of the pernicious, systematic racism of the past and thus tend to see racism today in places where it doesn’t exist. The truth is that both sides are often mistaken. Racism exists more than most whites care to admit, but not as much as some blacks might believe.

If both sides can allow for the possibility that things are neither as rosy nor bleak as we might think, we may finally reach that middle ground where mutual understanding takes place. Then, the collective gasp will likely come not from sixty-five young men, but from all of us. That day cannot come too soon.

Payday Lending - The Best of Intentions, The Worst of Outcomes

Imagine a working-class couple with marginal credit living paycheck to paycheck. They can barely afford to make the minimum payment on a $1,500 credit card balance left over from an auto repair bill. At 18 percent, that debt will cost them $3,365 over sixteen years.

But then the husband is injured and can’t work for several weeks, meaning they’ll have to make do on the wife’s income. When it comes time to make the next credit card payment they haven’t got enough cash in their checking account to cover the amount due – and won’t until the following Friday’s paycheck. Which means they have a couple of options.

They can send the check, hoping it doesn’t clear until the funds are deposited. This would be the “wishful thinking” approach. If it works, all is fine. But if it doesn’t, they’ll get dinged for $29 by their bank, another $29 by the credit card company and likely see their credit card interest rate soar to 24.99 percent, meaning it will now take 33 years and $7,500 – or $4,100 more than before – to pay off their balance.

Of course, they can take the “head-in-the-sand” approach, withholding payment until they have the funds, in which case they’ll save the bounced check fee but suffer all the other expenses, including a damaged credit score.

Or, they can pay fifteen dollars for a $100 payday loan, make the credit card payment, then repay the loan when the next check comes in.

Now some might wonder why not ask family or friends for the cash, but for many, life is not that simple. Truth is, people in such situations are often surrounded by others who suffer similar financial difficulties and thus haven’t got money to lend. Or they feel embarrassed asking for cash, and therefore feel more comfortable taking it from strangers who ask few questions.

Unfortunately, because some fall into a payday lending trap, we want to limit that option for everyone, which is exactly what will happen if Ohio’s pending payday lending reform makes such lending unprofitable. The result will likely be even greater debt, worse credit scores and more frequent bankruptcy. In fact, a study by the New York Federal Reserve has shown that to be precisely what has happened in states where payday lending has been curtailed. And if you consider the all-too-familiar scenario outlined above, it becomes clear just how that happens.

I once owned a small business where employees regularly requested advances on their paychecks because they had rent, utility or car payments due. And by due, I mean “they’re turning my lights off tonight” due. When I asked other business owners how they handled such requests, they said they didn't. Which means their folks had to rely on faceless payday lenders. The pending reform will take that option away, effectively turning out their lights. That seems a strange way to show how much we care, but that’s what happens when we don’t consider all the ramifications of our good intentions.

When Fairness Trumps Common Sense

Democrats and Republicans had different takes when Congress passed legislation last September to reduce federal subsidies of private student loans. Democratic Senator Ted Kennedy claimed, “The reality is that our bill restores the balance to this grossly unfair student loan system by directing funds to the students, not to the banks.”

House Republican John Boehner disagreed, arguing the cuts would “cripple the private sector loan program.”

So who was right? Well, last week the New York Times ran a story about the difficulty high school seniors face in trying to secure loans for their upcoming freshman year. Which should come as no surprise, considering that more than fifty banks, including the nation’s largest private student lender, Bank of America, have pulled out of the market because subsidy cuts have made such lending unprofitable.

It’s reminiscent of what happened when Congress decided to place a luxury tax on the purchase of yachts back in the early nineties. The attempt to get the wealthy to pay their “fair share” backfired when wealthy folks chose not to buy such boats, resulting in large job losses for the working-class Americans who built them.

This is what we can expect when fairness replaces common sense as the operative value in crafting policy. Yet fairness drives proposals this election season on everything from tax policy and energy prices to free trade (never mind that the original North American free trade agreement – the Commerce Clause of the U.S. Constitution – helped make us the most prosperous nation on earth).

Truth is, the profit motive is a powerful tool in bringing goods and services to market. Punishing those who succeed at bringing us those goods and services in the name of fairness may make us feel better in a spiteful sort of way, but it only serves to hurt us all.

Talking Race, Part I

I’ve started this piece about a dozen times in a dozen different ways, but have come to the conclusion that 500 words are not enough to make my point without coming across as some kind of Neanderthal. So instead, I’ll break it into pieces and start with a story I’ve told countless times, just to point out why it’s been so difficult.

It’s a little slice-of-life tale I tell whenever I want to demonstrate how unprepared I was for Houston’s heat, humidity and traffic when I moved there in 1983. If you’ve been there, you know that “ninety-five” refers to both the temperature and the humidity. You also know it’s not unusual to wait three or four cycles through a traffic signal to get through an intersection. So coming home from work one day, while sweating though the third red light in my non-air conditioned, Michigan-plated Toyota, I hear someone shout, “I see you didn’t know what to expect either!” I look over and see this big guy in the same boat as me – tiny, blue, non-air conditioned, Illinois-plated Plymouth Horizon, sweating in his white shirt and tie. We two displaced Northerners just looked at each other and laughed at the joke fate had played on us.

But there’s one detail I’ve left out that I’ve often struggled with - whether I should point out that the other driver was black. I always mention the color of his car and the color of his shirt. Why not the color of his skin? Mentioning his skin color isn’t an editorial, it’s just a fact, just one more detail to help paint the scene. Would I hesitate to say it was a freckle-faced kid, a big farm boy, an attractive blonde? Probably not.

But I hesitate to point out skin color for fear of appearing too aware, too concerned about such a detail in a racially sensitive world. Perhaps I’m afraid of sounding as though I felt his skin color mattered. But the truth is I feel I should be able to mention it precisely because it doesn’t matter.

Which is why I found the column I intended to write so difficult. I want to talk about race relations in America, but how to do so openly and honestly when I’m afraid to mention race under even the most innocuous of circumstances. And how can we, as a nation, have the dialog so many say we need to have when we’re afraid to ruffle feathers in the slightest, or when feathers are ruffled so easily?

Well, we’ve got to start. And people of goodwill on all sides must be willing to share thoughts, hopes, fears and concerns without fear of reprisal. Perhaps if we understand that the dialog is undertaken with good intentions, we can get somewhere. Of course, we know where the road paved with good intentions often leads. So be it. I’m ready to take my first tentative steps.

Let's Lighten Up On Young Athletes

I once calculated that my daughter fell about once a minute when she was learning to walk. Step, step, kerplunk. Using advanced math, I figured she was falling sixty times an hour, or about 720 times during her twelve waking hours each day. Sometimes she’d look at us with a proud gleam in her eye that asked, “How am I doing?” And like every other parent in the known universe, we’d reassure her that she was doing great. Eventually she stopped falling.

But I’ve often wondered if we could have sped up the process by being a little harder on her: “Come on, you know how to walk! We’ve shown you a thousand times! Just get up you crybaby! Billy can walk, why can’t you!?!”

Alright, maybe not such a good idea. Not only would we be poster children for world’s worst parents, but she’d have probably developed some strange aversion to walking and come to despise my wife and me.

Which is why I wonder why it is that the latter approach – the yell and berate approach – is so often the one we choose when it comes to youth sports. I’m not talking about the tough coach with high expectations. I’m talking about the tyrants. The ones who offer not encouragement and instruction but insult and embarrassment. And when coach and parent are one and the same, the result can be downright painful for child and onlookers alike.

In just this past month I’ve witnessed dads yelling at sons, moms yelling at sons, dads yelling at moms, sons yelling at dads (should we be surprised?), parents calling their kids names (including the aforementioned "crybaby") and even watched a dad turn his back on his son for the unforgivable sin of striking out.

What’s sad is that these kids turn to their parents for feedback just like my daughter did when she was learning to walk, but instead of a look that says “tell me how proud you are of me” or “tell me it’s alright,” it’s one that asks “have I let you down again?” That’s a horrible burden for a kid of eight, nine or ten to carry, believing their worth in the eyes of their parents is determined by how well they shoot a free throw or field a groundball. It’s enough to make one cry.

And in fact, it does. Over this same period I’ve seen kids cry, hyperventilate and vomit on the field of play because of the pressure we put them under. And for what? So we can brag about them to our friends? So they can be stars in high school, college or beyond?

The irony is that the best way for a kid to improve – and at this age there’s plenty of time to improve – is to love playing the game. Otherwise, it’s a chore and kids despise chores. Not only will they never realize their full potential, they’re likely to come to despise something else. I’ll let you guess who that might be.

Rev. Wright's Counterproductive Anger

If what Rev. Jeremiah Wright preaches really is mainstream thought in black churches and the black community, as Adam Clark (April 8, 2008) and Nicholas Kristoff have suggested, then perhaps it would be wiser to change those thoughts than try to justify them.  Letting them simmer would seems to be counterproductive.

The rage reflected in Reverend Wright’s preaching reminds me of an interview with an elderly veteran in Ken Burns’ WWII documentary The War.  The vet recounts how it took thirty years to realize the hatred he had for what the Japanese had done to him in a prison camp was hurting no one but himself.  The Japanese he so despised certainly weren’t being hurt by it, but it had ruined his career, relationships and life.  Only when he realized that truth was he was able to retake control of his own life.

Is it possible that the same dynamic is taking place in parts of the African-American community?  Whatever injustices blacks have faced past (many) and present (far fewer), is it possible that the fury that boils within some is more damaging than the injustices themselves?  That would appear to be especially true when it comes to the false injustices regarding the origins of AIDS and crack cocaine espoused by the Rev. Wright.

Rather than justify such claims as conventional wisdom, wouldn’t it be better to repudiate them, lest a large swath of the black population find their lives consumed with pointless rage like the WWII vet?

The Upside of Rising Fuel Prices

To paraphrase an old quote about the weather, everyone complains about gasoline prices, but no one does anything about it. Which is exactly how it ought to be. As painful as filling up might be today, it is nothing compared to the pain we’ll feel when the pump runs dry.

Granted, that won’t happen for decades or longer, but rising demand in the developing world will certainly put further pressure on worldwide oil supplies. As any Economics 101 student can tell you, when demand rises faster than supply, higher prices always follow. Since we are dealing with a finite resource, today’s higher prices are like the proverbial canary in a coal mine. Eventually demand will outstrip supply and when there’s no longer enough oil to go around – unless we’ve come up with alternative energy sources – the price countries are willing to pay to fuel their economies will likely be measured not in dollars, but blood.

But therein lies the solution because there is no shortage of energy, only petroleum. Wind, solar, geothermal, hydroelectric and nuclear, as well as biofuels, can provide all the energy we’ll ever need. The problem is that these are neither user-friendly nor cost-efficient on the scale needed to replace oil. Getting them up to speed will require vast investments in time, technology and infrastructure – investments no one will make if they have to compete against lower cost petroleum.

Which is why we should not tamper with escalating prices at the pump. They are the single best way to spur the investment that will bring new, more environmentally-friendly energy sources to market, while encouraging the conservation that will bridge the gap until they arrive. By paying the price today, we can start developing those alternatives now and avoid a steeper and far more traumatic price tomorrow.

Who's Really in Charge of Climate

Bloggers and talk radio have had a field day with recent reports that Earth’s average temperature has fallen to its lowest level in twenty years, representing perhaps the biggest decline in nearly a century.  But don’t pull out the thermal underwear just yet.

This report should be viewed the way we look at the daily weather this time of year - we know in March that it's going to be warmer next month than it was last month.  But we also understand that tomorrow may be far colder than yesterday, so we know better than to take one day's worth of data and proclaim that summer will not arrive.  Variations occur, and a single data point does not a trend make.  We might still be cooking our own goose.

On the other hand, assumptions that the recent cooling is due to reduced solar activity should serve as a reminder that we have a 27 million degree furnace burning at our sun's core.  It doesn't take much of a change in the sun's thermostat to have potentially profound effects on Earth's climate.  We can pump all the CO2 insulation into the atmosphere we want and it will be of little consequence if the sun decides to turn down the heat.

But perhaps there’s a larger force behind all of this.  It wasn’t that long ago that we ascribed all manner of natural disaster - flood, drought, hurricanes - to the power of God.  Today we ascribe them to the power of man.  I don't know if that says more about changes in how we view God’s power or how we view our own..  Either way, the change in solar activity could just be the man upstairs' way of having a little fun and reminding us all who’s really in charge.

Mythbusters - The Most Important Show on TV

It’s been nearly three years since I graced these pages on a regular basis (some may question whether “grace” is the appropriate word).  But now I’m back and here’s what I’ve decided in the time I’ve been away:  Mythbusters may be the most important show on television.

Before I explain, let’s look at how things were when my last column appeared in June of 2005.  Back then, the general consensus was that the $2 we were paying for a gallon of gas was outrageous, the surest way to financial security was to invest in Florida real estate and that Katrina was the name of someone who sang of walking on sunshine.

Political pundits were certain the Democrats were toast after falling further into minority status following Congressional losses the previous November and Hillary Clinton was a shoo-in to become their next presidential nominee.

Banks were convinced that interest-only and adjustable rate mortgages were a way to make homes affordable to people of modest means, McMansions affordable to almost everyone else and profits a certainty for themselves.

And who among us would have predicted an Oscar was in Al Gore’s future.

Which brings us back to Mythbusters.  There’s a tendency to make blanket statements – the Democrats are dead, you can’t go wrong investing in real estate – which often turn out to be misguided.  Such statements may be based upon something we’ve read or heard.  They might be part of the conventional wisdom, where an opinion is repeated so often that it crosses the chasm from mere opinion to accepted fact.  Or they might just be things we think to be common sense.  In any case, they tend to be ideas we accept at face value without question and without considering alternate possibilities.

But that doesn’t fly on Mythbusters.  We should be forever grateful that they have reintroduced the scientific method to an over-opinionated society.  Rather than accept conventional wisdom or what appears to be common sense – i.e., a truck filled with birds weighs less if those birds are in flight than if they’re standing on the truck’s floor – they will test it.  And testing those myths – those opinions – requires an open mind and the ability to think outside the box.  Moreover, it requires an emotional detachment from the outcome.  They don’t care what the answer is, just that they get it right.

Contrast that with the way so many issues are discussed today.  Rather than asking what’s the best way to achieve an objective, we ask how we can best prove ours is the only way.  Too often, that requires us to disregard any argument or evidence that might prove us wrong.  It’s the equivalent of sticking our fingers in our ears and chanting, “I can’t hear you.”

We’ll never solve the issues facing us, from healthcare to Social Security, from school funding to soaring energy costs, if we don’t listen to each other and openly consider viewpoints contrary to our own.  My objective with this column will be to encourage an open dialog.  I’ll offer opinions, but I’ll consider them also.  And if I leave you wondering on which side of the political fence I stand, so much the better.  I look forward to the discussion.

Oh, and if you were wondering, the Mythbusters say the truck weighs the same whether the birds are flying or not.  Of course, they could be wrong.

Count All the Votes (Except in Florida & Michigan)

It seems irony is not limited to one side of the political ledger. Last week saw conservative national talk show hosts doing their best Al Sharpton impersonations, using principle as pretense while defending one of their own in a flap with Senator John McCain, when in fact, they were concerned only with proving their own relevance.

This week finds the Democratic party performing principle-challenged gymnastics, as they struggle over what do about the Michigan and Florida non-primaries now that this past Tuesday’s results have left them without a clear nomination frontrunner. This wouldn’t be an issue if the Michigan and Florida votes counted, but alas, the party has determined the voters there have no right to choose their party’s nominee.

Let’s get this straight. Aren’t these the same people who argued so vociferously that every vote must be counted during the 2000 presidential election? The same party that claims to be for the working man and woman? Yet they’ve decided to punish rank-and-file voters in two of the most important swing states simply because each state’s party elders decided to hold their primaries earlier than the national leadership desired.

Hillary Clinton now wants those votes to count. Not surprising, given that she won both states. Never mind that both she and Barack Obama agreed not to campaign in either (Obama wasn’t even on the Michigan ballot). Wanting to claim the delegates now is akin to accepting your playing partner’s wager after you’ve already made the 40 foot putt.

Whatever the party decides, it should be noted that Democrats hold no moral advantage when it comes to enfranchising voters. It’s clear they want all votes to count, so long as they are the votes they want to count. Not unlike in 2000. Maybe it’s not so ironic after all.

Bill Buckley, A Lonely Nation Turns It's Eyes to You

Where have you gone, Bill Buckley? A day after the death of the man who made it possible to use the words “conservative” and “intellectual” in the same sentence without provoking howls of laughter, we find local Cincinnati talk show host Bill Cunningham feigning shock at reaction to his use of Barack Obama’s middle name, Hussein, at a John McCain rally. I can imagine Buckley uttering one of his many memorable quotes.

“I would like to take you seriously, but to do so would affront your intelligence.”

Cunningham is disingenuous when he says he doesn’t understand the uproar over his remarks. To believe him – to take him seriously – one must accept him as rather dim. To assume he knows better is to expose him for what he really is – a self-promoting huckster more concerned about publicity than principle, conservative or otherwise.

Before Bill Buckley came along, few questioned essayist Lionel Trilling’s 1949 assertion that conservatives do not express ideas so much as they share “irritable mental gestures which seek to resemble ideas.” Nearly sixty years later, Bill Cunningham has returned conservatism to the realm of those irritable mental gestures.

Which is a shame, because it means Bill Buckley’s legacy – transforming conservatism, and in turn the Republican party, from a reactionary backwater into a movement of ideas and intellectual rigor – outlived him by less than twenty-four hours. Whereas conservatism was once powered by concepts of limited government and self-reliance, thanks to talk radio it now risks becoming the domain of limited thought and self-aggrandizing.

Meanwhile, it’s Barack Obama, the man in Cunningham’s crosshairs, who has noted the power of ideas inherent in Ronald Reagan’s ascendancy. For Bill Buckley, a man with a keen sense of irony, such a turnabout would have been rich fodder for his acerbic wit.

Too bad the wits are getting dim.

My Son the Gun

Time out for a little fun. I coach a 3rd grade youth basketball team and this past Saturday my son provided the highlight of the week.