Thursday, November 7, 2013

The power of diversity

I was at a conference recently where one of the speakers showed a startling chart that showed that Fortune 500 companies that had more diversity on their boards of directors were likely to be more profitable than the rest.

I was curious and skeptical. I started researching the matter.  Here are some of the more interesting studies I found:

  • This study by Deloitte suggests a very strong correlation between diversity and performance.
  • This one suggests a U shaped relationship between diversity and financial performance.
  • While this one in Wiley publications suggests that the relationship is much more complex and depends on circumstances.
The summary seems to be that there is insufficient evidence for a causal link between diversity and financial performance of companies. Overall, it would be hard to make a simple case that more diversity is always good, especially when its just gender or racial diversity and not thought diversity.

On the other hand, there seems to be directional evidence that there is some correlation between diversity and financial performance.  My hunch is that companies having diversity above a certain threshold are likely selecting talent from a larger and more diverse pool and are likely encouraging more thought diversity.  So, higher than a threshold diversity in upper management may be indicative of better human resource management practices in other areas, which in turn may be what is driving financial performance differences.

What is Obamacare?

The website healthcare.gov still only works intermittently.  Admittedly, its better, but it was down last night when I tried. 

Meanwhile, as the demonization of the law continues, I thought it might be useful to recap what exactly Obamacare does:
  • It prevents insurance companies from discriminating based on age, gender or preexisting conditions
  • It makes it illegal for insurance companies from cancelling your insurance because you are sick
  • It mandates that you must be able to pick your primary care physician and Ob Gyn
  • It mandates that kids can stay in their parents' plans till age 26
  • It guarantees emergency care coverage
  • It guarantees that there is no lifetime cap on your coverage - i.e. you can't be denied just because your treatment is too expensive
  • It guarantees free preventive care - i.e. vaccinations, wellness visits, etc.
  • It forces insurance companies to cap costs - only 20% of the total cost of insurance can be for non medical expenses
  • It standardizes disclosures to make it easy for insurance plans can be compared
  • It guarantees your right to appeal
  • It standardizes plans ensuring that every plan covers:
    • Ambulance
    • Emergencies
    • Hospital care
    • Maternity and newborn care
    • Mental health and substance abuse
    • Prescription drugs
    • Rehabilitation services
    • Laboratory services
    • Preventive, wellness and chronic disease management
    • Pediatric services
  • It creates health exchanges where you can compare and buy plans.
  • It says, if you don't buy insurance, you have to pay $96 in taxes every year to cover the government's costs.
  • It provides Medicare assistance based on income for poor people who can't afford the plan (but the Supreme Court has given states the right to opt out of this relief program)
  • It mandates that employers with more than 50 employees should pay for their employees' healthcare (i.e. it says that if you can afford to have 50 employees, you have a responsibility to pay the employee enough to be able to afford insurance).
I listed these because in my limited experience, I have been unable to find anyone who has a major objection to any of these.  In fact, most people are surprised that these would need to be in a law.

Tuesday, October 29, 2013

Relationship between debt and interest rates

Paul Krugman has a very interesting chart in his blog that shows the relationship between interest rates and debt over the last 300 years in the UK.



The actual site has a fascinating analysis of what history has to tell us about financial crises.

Worth a read.

Wednesday, October 23, 2013

Why Obamacare failed?

OK ... I am being needlessly provocative.

The fact is that there are some really serious issues with the technology at rollout.  As Wonkblog is reporting, the website issues may actually be the least of the problems and that more serious issues lurk.  The story is that there is something called an "834 EDI transmission" which is what insurers use to communicate status about the insured.  For whatever reason, the Obacare website is messing this up.  It's misreporting information.  Unlike the website, which merely causes a delay, this mess could have really serious consequences like messing up people's insurance, so needs to be fixed quickly.

In, what appears to be abysmal planning, they didn't start integrated usability and functionality testing till as late as September 26, four days before launch.  The sum total is that it seems the coders were woefully behind schedule, unable to push back the launch date, they or the leadership made the call to launch without adequate testing.  This was highly unprofessional and ill advised.  Heads should roll.

One interesting factoid that I have not independently verified caught my eye - just how complex the Healthcare.gov site is.  The chart below shows the complexity as measured by lines of code.  I was astonished.  It's very badly written or much more complex than I imagined or both.  The point then is that when new versions are released, what is the likelihood of an error free release in any of the cases mentioned? Especially when all that code is being written from scratch, as is the case with Obamacare.

Healthcare.gov Lines of Code Comparison

LINES OF CODE FOR POPULAR SOFTWARE (IN MILLIONS)



SOURCES

Saturday, October 19, 2013

Are we all pop stars in the rough?

I came across this incredible post in the Huffington Post and couldn't resist sharing it.  The post is about a Youtube video of Britney Spears' isolated voice, i.e. without the music or Auto-tune.  Here is the video:
  


I knew, of course, that many pop singers are pretty bad singers who make it only because of Auto-Tune and suchlike software.  I also understand that this video takes Britney's voice from concerts where she has been dancing, is out of breath and likely not making much of an effort to sing.  Even with those caveats, it is pretty astonishing how few correct notes Britney hits.

Most of us struggle to sing well and most of us therefore harbor few illusions of being a pop star.  This video, apart from being a paean to Auto-Tune etc, suggests that may be we have been selling ourselves short.  May be we too have futures as pop stars!

In case you think this is the norm, here are some other popular singers of yesteryears who clearly don't suffer from the same shortcoming as evidenced by their isolated voice recordings:

Whitiney Houston:




The Beatles:




Freddie Mercury and David Bowie:




Nirvana / Kurt Cobain:




Amazing, right?

Friday, October 18, 2013

What the Tea Party believes

There is much being made about the debacle that was the Tea Party stand against Obamacare and the futile shutdown of government that they led.  However, while many are prognosticating the demise of the Tea Party, it hardly seems likely.  In the final vote to avert the debt default, 18 Senators (all Republicans) voted against the deal on debt and to reopen the government, and in the House a staggering 144 Congressmen (all Republican) voted against it.  Let's put that in perspective: 40% of the GOP in the Senate and 61.5% of the GOP in the House voted against a deal to avert the US defaulting on its debt.  Does that seem like a walk back from their core beliefs?

The power of the Tea Party to paralyze government made me wonder what does the Tea Party really believe in?

To answer that question, I started with what the Tea Party's own website says.  A lot of the language on the site is very inspirational.  The call to action on the site says: "We stand by the Constitution as inherently conservative. We serve as a beacon to the masses that have lost their way, a light illuminating the path to the original intentions of our Founding Fathers. We must raise a choir of voices declaring America must stand on the values which made us great. Only then will the politically blind see and deaf hear!"

The site lists 15 "non negotiable core beliefs." Here's a verbatim reproduction of the list:
  1. Illegal aliens are here illegally. 
  2. Pro-domestic employment is indispensable. 
  3. A strong military is essential.
  4. Special interests must be eliminated. 
  5. Gun ownership is sacred. 
  6. Government must be downsized. 
  7. The national budget must be balanced. 
  8. Deficit spending must end. 
  9. Bailout and stimulus plans are illegal. 
  10. Reducing personal income taxes is a must. 
  11. Reducing business income taxes is mandatory. 
  12. Political offices must be available to average citizens. 
  13. Intrusive government must be stopped. 
  14. English as our core language is required. 
  15. Traditional family values are encouraged.
The website goes on to say: "The Tea Party includes those who possess a strong belief in the foundational Judeo-Christian values embedded in our great founding documents.  ...  Yes, we are a Christian nation. However, you do not have to be a Christian to enjoy freedom. The Tea Party welcomes all red-blooded U.S. Citizens."  

The statement about Christian nation didn't surprise me.  It isn't so vastly different from views held by most of the GOP.  It's a little misleading given the fact that when setting up the Republic the framers were very deliberate in not making the nation a theocratic state.  That is why, the US is not governed by the Bible but the Constitution.  

The idea of a Christian nation taken together with the Tea Party's core belief that "Intrusive government must be stopped" and that "Traditional values are encouraged" does seemingly create a problem.  The issue is that "traditional values" are a matter of personal choice as is one's religion. State religion or state imposed values are inherently intrusive.  So, how does the Tea Party reconcile these seemingly conflicting views?

It seems not very well.

You may remember that Tea Party darling and Virginia's gubernatorial candidate, Ken Cuccinelli had come out in support of a law that would require women seeking abortions to have medically unnecessary vaginal probe ultrasounds.  Public outcry had caused the measure to be dropped.  During the gubernatorial campaign, slammed by his Democratic opponent McAuliffe and others for his war on women, he has backed off his views.  He currently trails McAuliffe in the polls which pollsters attribute to his close association with Tea Party and the government shut down.  However, if you think the Tea Party is backing off its stances, you'd be mistaken.  In this article, Maggie Gallagher argues that the lesson is that Cuccinelli and others are erring by offering a truce on abortion etc. and that they would win if they only stood firm.

In other Tea Party news, a Tea Party leader and Sean Hannity are seriously contemplating filing a class action suit against homosexuals on the basis that homosexuals are more likely to contract AIDS.

Non interference by government it seems only applies to things they don't like.  When it suits them, the Tea Party is perfectly sanguine with government interference.

Another serious proposal by the Tea Party is that they should abolish the 17th Amendment, which allowed for the direct election of Senators.  This took my by surprise.  Why in the world would they be demanding this?  Let me reproduce some of the more notable arguments by eminent supporters of the Tea Party.  Here is Judge Andrew Napolitano on the subject:
I would repeal the 17th Amendment [which provides for the popular election of U.S. senators]. Can an amendment to the Constitution itself be unconstitutional? Yes, that one. If you read Madison’s notes from the constitutional convention, they spent more time arguing over the make-up of the federal government and they came up with the federal table. There would be three entities at the federal table. There would be the nation as a nation, there would be the people, and there would be the states. The nation as a nation is the president, the people is the House of Representatives, and the states is the Senate, because states sent senators. Not the people in the states, but the state government. When the progressives, in the Theodore Roosevelt/Woodrow Wilson era, abolished this it abolished bicameralism, the notion of two houses. It effectively just gave us another house like the House of Representatives where they didn’t have to run as frequently, and the states lost their place at the federal table. 
That was an assault, an invasion on the infrastructure of constitutional government. Even kings in Europe had to satisfy the princes and barons around them. And that’s how they lost their power, or that’s how their power was tempered. Congress believes it doesn’t have to satisfy anybody. Its only recognized restraint is whatever it can get away with.
Note, Judge Andrew Napolitano is arguing that the feudal power of barons and noblemen was necessary to temper the excesses of the King, therefore a less democratic Senate would temper the excesses of the President.  In another articulation of this view in the National Review, Charles Cooke is even more explicit in his condemnation of democracy.  He explains: 
... the United States is not in fact a democracy but a constitutional republic, and her virtues lie as much in her undemocratic institutions as in her ample provisions for self-rule — more, perhaps. ...
As Madison makes clear in the Federalist Papers, in order to defend the vertical checks and balances that allow America’s federal system to function, senators would be “elected absolutely and exclusively by state legislatures.” The Senate was not intended to be the people’s representative body, but that of the states. Lest the federal government “swallow up the state legislatures,” (if you are interested, here is Salon's counterargument)
How seriously are they about this?  Well, in the recent Texas Senate primaries, all but one of the GOP contenders agreed that they'd repeal the 17th amendment.  
I could go on with many more interesting points of view expressed by the Tea Party, but let me stop here and focus instead on two interesting themes that emerged for me.  
  • Much of the Tea Party's rhetoric seems to be about an abridgement of liberties.  None of the leaders really explain what this means.  I have searched in vain for a cogent explanation.  What I have surmised from the articles, blogs and comments though is that much of this abridgement of liberties has to do with a paranoia about freeloaders and minorities, which they appear to use interchangeably. 
You see this paranoia in the list of core beliefs.  Three of the 15 core beliefs listed overtly deal with immigrants, one is a tautology about illegal immigrants, a second deals with pro-domestic employment (which is protectionist) and a third is about English being the language in the US and seems a direct jab at Hispanics.   
You can observe this paranoia in public statements by Tea Party representatives where they openly rail against freeloaders and minorities in lamenting the size of government, redistribution of wealth and government handouts, never mind that most of the Tea Party dominant states are the biggest net recipients of Federal handouts (i.e. they receive much more in benefits than they pay in).   
Even proposals that deal with more esoteric points of law, like their obsession with the repeal of the 17th amendment on closer examination appear to be designed to shift power from urbanized minority dominated urban areas to more homogenous and sparsely populated rural areas.  Tea Party supporters' comments in the blogs frequently reference "illiterate, ill informed, basement dwelling freeloaders and minorities who are stealing elections" as being the primary target of the repeal.
  • To explain the second theme let me recount a recent conversation I had with a Tea Party supporter.  I was discussing climate change with a Tea Party supporter.  During the course of the conversation the person explained that the obsession with climate change was silly.  "If climate change is true and sea levels rise, hundreds of millions of people will be displaced or will die," he said, "So what? Stuff happens! Humans won't go extinct.  Some people will die and suffer, but most will just move. Things will be fine."  
In one respect, he's correct.  Global warming does not necessarily mean human extinction. In the worst case it means massive, destructive and very costly readjustments that would include wars, famines and mass migrations.  However, he is correct that humans as a specie, will likely survive.
What took me aback was the values underpinning his assessment.  His point was that bad stuff happens to people all the time.  As long as he isn't likely to be badly affected himself, he sees no reason why he should be inconvenienced to prevent a poor outcome for others, however likely or devastating that outcome may be.  The question he was asking himself is "what's in it for me?" In the case of solving climate change, his answer was resoundingly not much. So, he didn't see the point of panicking.   
Stepping back and glancing through the blogs and articles by Tea Party supporters, I can't help feeling that this value judgment is exactly what underpins all of the Tea Party.  The question the Tea Party always seems to be asking "What's in it for me?" 
If you take the two themes together, what you might conclude is that much of the Tea Party's platform can be explained by the thesis that: (a) they are always driven by "what's in it for me?" and (b) they do not include minorities, underprivileged, LGBT, feminists, non Christians, etc. in their version of "me" and so, they balk at anything that disproportionately benefits anyone not like them.  
Taken together this explains why the Tea Party is so sanguine about state governments, so vehemently for protecting liberties while using government's powers to restrict personal freedoms, how they can reconcile their opposition to some government spending while advocating profligate spending in other areas (witness the hundreds of billions in farm subsidies in the Tea Party inspired Farm Bill).  It is why some who support them suggest democracy as an ideal in other nations but lament the democratic Senate at home.
The Obama coalition is about a social compact where our rights are coupled with a responsibility to one another.  Its inclusive message has been incredibly successful in attracting women, LGBT, minorities, educated urban elite and the underprivileged.  This group is more diverse and faster growing than the traditional WASP demographic that has been the bastion of the GOP, leading many in the GOP to worry about the GOP's future.
Unsurprisingly, the Tea Party's target audience is the exact opposite - mostly WASP more predominantly rural, white and staunchly conservative Christian.  
The Tea Party's appeal to their target is very lofty.  As the Tea Party site puts it: "By joining the Tea Party, you are taking a stand for our nation. You will be upholding the grand principles set forth in the U.S. Constitution and Bill of Rights. ... Many of America’s dilemmas lay squarely on the shoulders of We The People. Meanwhile, economic issues burden small businesses. However, we must not define ourselves by the calamities in our lives, but by our resolve to pick up the pieces and move on. The power of a few can change a nation, save a people and illuminate a generation. Commonsense, Conservative, Constitutional Self-Governance Is Our Mode Of Operation.  ..."
Yet, under the veneer of lofty ideals, a closer examination suggests that the Tea Party platform is driven by Darwinistic groupism and survival instincts that draw their strength from a combination of self interest and a disregard or even antipathy to everyone not like them. 

Saturday, October 12, 2013

Is the current Hyperbole and vitriol unique?

We are still in the midst of a shut down.  So, I'd like to take a moment to discuss some of the hyperbole coming out of the Right. Obamacare has been compared to the holocaust, end of days, etc. and in an interesting move, Ben Carson said that its the worst thing since slavery.

It seems surprising to say the least that this should be the reaction to a law that was passed by both Houses and signed into law by the President, upheld by the Supreme Court and which was the subject of a Presidential election, which the President and his party won - winning more than 50% of the Presidential vote, and more votes in both the Senate and the House.

The pundits have a lot of explanations, including personal animus to the President.  The fact though is that every social program in the US has met with similar animus.  Don't believe me?  Here is Bernie Sanders explaining it better than I could:


The staggering disregard for the country and the breathtaking political ineptitude of Ted Cruz and others is something new.  However, lest we forget, Clinton faced a barrage of continuous attacks and every major social legislation has been met with vitriolic hostility from the right.  So, we should have seen this coming.

Sunday, October 6, 2013

A discussion on political frameworks

Recently, I was in a discussion with someone, a staunch GOP supporter who was arguing against climate change.  There were three arguments proffered by him:

  • First, our observations are over too small a period to conclude anything about climate change.
  • Secondly, normal fluctuations in climate are so large that its foolish to ascribe the current heating to humans.
  • Thirdly, even if climate change is real, its hardly as calamitous as people make it out to be.

Tuesday, October 1, 2013

Is it time to panic yet?

So, as analysts expected, government has shut down.  Here are some interesting points to note:


  • Government shut downs are not that unusual.  While this is the first since the mid 1990s, between the 1970s and 1990s, there had been 17 government shut downs.  Here is a complete list.  
  • Since 1980, there was only one shut down that lasted for more than a week - the 1995 shutdown engineered by Newt Gingrich, which lasted 21 days.  During the shut down, the public had largely blamed Clinton but afterwards, Clinton's popularity soared.
  • During the last 21 day shut down, more than 7 million tourists were turned away from National Parks, museums and monuments, there was a massive pall in tourism related industries and significant adverse impact on small businesses. The 1996 shut down probably cost $2B according to some estimates, which is actually not all that much in the grand scheme of things.  
  • An agency by agency breakdown of impact of the government shut down suggests that a lot of the departments being shut down won't have much impact if this lasts a week, however, as time goes by, the absence of the departments is going to have an increasingly significant impact.  This means that the cost is not linear.  A three month shutdown for instance, could have exponentially more impact than a three week one.
  • The biggest issue is that there is another deadline looming - the debt ceiling.  The debt ceiling has to be raised before October 17.  The general assumption is that the fight will be over before then, but what if it is not?  The doomsday scenario is that the GOP ups the ante and adds the debt ceiling to the mix.
Short story here is that the costs are likely low and while an inconvenience and while a few billion dollars is nothing to scoff at, the long run impact will be minimal at best as long as its resolved in the next month or so.

The doomsday scenario is that the GOP adds the debt ceiling to the mix.  We are 17 days away from that. The two longest shutdowns since the 1970s were both longer than 17 days.  If the debt ceiling is added to the mix, then the impact could be devastating.  


Saturday, September 28, 2013

Impact of a government shut down

This is an excellent post by the Washington Post explaining the impact of a government shut down. Well over 800,000 people will be furloughed over the course of the next two weeks.  As the Post explains, a government shutdown would likely be expensive, costing at least $2 billion a month.

The government shutdown debate is distracting from the astonishing point.  Remember how the sequester was considered stupid and unthinkable less than a year ago? The continuing resolution being debated, essentially makes the sequester permanent.

Unfortunately, the continuation of the sequester likely cuts investment in science, research, technology and infrastructure in a way that might ultimately degrade the US superiority.  Also, Obama's decision to opt for furloughs rather than layoffs is going to mean that there will be a brain drain from government, essentially eroding the public sector's effectiveness for decades to come.  It might make sense for Obama to stop pretending the sequester is temporary and that sense will dawn, and instead actually cut services and lay-off people.  Obama's current approach punishes loyal employees and minimizes the impact on voters, thereby vindicating the GOP.