Needed Wake-up Call?

After The Air Force’s decision last week to go with a Northrop Grumman-Airbus tanker, sparks are flying. Maybe this is a much needed wake-up call.

Some key points about the situation:

• The Air Force followed the rules for awarding contracts as dictated through the Buy American Act
• Congress granted exceptions to France, Spain, Germany and other European nations for the Buy American Act, which essentially considers those countries as American
• Boeing lost the contract because, according to the Air Force, they were outperformed on 9 critical measures
• Some members of Congress believe the Air Force should have considered the number of American jobs involved before awarding a significant portion of the contract to Europe’s Airbus, which is not allowed in the Buy American Act

In addition, some have complained that Europe subsidizes Airbus’s operations too much, and that should have been considered. There are two things wrong with that stance.

First, assuming they are being honest in their assessment, the Air Force based the decision on performance measures not price.

Second, if the U.S. government were to subsidize government contractors, they would be paying those corporations to lower their costs for government contracts. It’s like me going to the grocery and paying them $10 so that I can pay $10 less at checkout. It is a ridiculous concept. Also, Boeing lost to the partnership led by Northrop Grumman, a U.S. company. So, there would have been little if any benefit to any subsidizing scheme.

Besides, with the current value of the dollar, I’d be surprised if Boeing weren’t less expensive.

Some things we can do:

• Invest more in education, making us more competitive
• Invest in developing new technologies, even if that means raiding the world’s best and brightest and bringing them here
• Avoid re-writing the Buy American Act such that we are no longer able to acquire the very best; if we want the very best to be made in America, then see the two bullet points above
• Instead of fighting what appears to be a fair process, try negotiating with Airbus to manufacture more, if not all, of the tanker here, not just the assembly

I am all for more American jobs. Just read some of my other posts. But I don’t believe we should put ourselves in the position of potentially making inferior products simply so we can say it was made here. We have to be smart about how we go about making it happen.

And if we don’t have the expertise here (which I doubt), then let’s go get it and make it our own.

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Can We Save Our Economy?

I’m starting to think that I need to spend a lot more time on my iPod. A few weeks ago, I wrote a post on this blog called “Arrogance Kills”. In there, I reference Parag Khanna’s essay “Waving Goodbye to Hegemony”, in which he argues that America is losing its superpower dominance to the European Union and China. In particular, referring to China, he writes:

“In America’s own hemisphere, from Canada to Cuba to Chavez’s Venezuela, China is cutting massive resource and investment deals. Across the globe, it is deploying tens of thousands of its own engineers, aid workers, dam-builders and covert military personnel. In Africa, China is not only securing energy supplies; it is also making major strategic investments in the financial sector. The whole world is abetting China’s spectacular rise as evidenced by the ballooning share of trade in its gross domestic product.”

Then, on February 7, NPR runs this story, saying, “As major U.S. financial firms stagger under problems caused by the mortgage crisis, foreign governments, from the Middle East to China, are stepping in to invest billions in the faltering banking giants.”

Yes, that is billions with a b, not a typo.

And China is playing a larger role in this than most of us realize. To the tune of (again, not a typo) $1 billion per day.

James Fallows wrote an excellent piece for the January/February 2008 The Atlantic titled “The $1.4 Trillion Question”. Here are some key points from his piece:

• China’s foreign reserves are now the largest in the world, estimated at $1.4 trillion
• 70% of those reserves are in U.S. dollar assets
• Most of China’s U.S. investments are in Treasury notes and federal-agency bonds
• The annual interest payments on those investments have equaled or lagged the decline in value of the U.S. dollar to the RMB (in other words, their U.S. investments are breaking even or losing money)

The reason for this is three-fold. First, we have become overly reliant on overseas production, particularly from China. Outsourcing is not a bad thing, in and of itself, when done in moderation.

Second, we have not put the proper monetary policies in place to keep the dollar from its continued decline in value.

Third, as the federal government accumulates more and more debt, we end up borrowing from foreign nations, namely China, who is awash in cash from their production of our goods.

We cannot stay on this path. We need to boost the value of the dollar for the long-term. We need policies allowing smaller companies to compete with stateside production against multi-nationals relying on cheap labor in developing nations. And we need to realize that our ability to survive as the United States of America means that we will have to learn to consume less or pay significantly more.

Or, we can all start learning to speak Mardarin.

By the way, after a quick review of their campaign websites, only Barack Obama and John McCain (of the major candidates) begin to address these issues, though neither mentions China by name.

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Admit when You’re Wrong

The week before Christmas, a New Orleans man implicated in an armed robbery from October, was released from prison. This in and of itself is not entirely uncommon, particularly in New Orleans (although, it is getting better).

This time it was different. You see, this particular gentleman ran to the then District Attorney’s home following the alleged robbery. That’s where things went wrong.

According to the spokespeople from the DA’s and the Orleans Parish Sheriff’s offices, a prosecutor indicated at the top of the paperwork that the case had been “referred”, since the DA’s office recused itself from the case. Further down on the same form, under the heading “Charges Refused or Diverted”, the same prosecutor wrote “armed robbery”.

The DA’s office says the form is correctly filled out, for this situation.

The Sheriff’s office on the other hand, thought “recused” was “refused” and released him. The spokesperson said that the prosecutor didn’t tell them that the prisoner should not be released.

Essentially, because there was a perceived discrepancy on the form, the Sheriff felt a release was in order.

Let me offer a different take. The Sheriff’s office processes a large number of prisoners and forms on a regular basis. The clerks responsible look for certain things, which works fine for everyday, run-of-the-mill activity. That will not work when there are special circumstances.

Both sides are at fault, to varying degrees. Instead of finger-pointing, which is the knee-jerk reaction, look at what each side can do to fix it. Here are some ideas:

1. Review the procedures for processing forms
2. Review the forms themselves looking for needed revisions to the layout, requested/required information, etc.
3. When there is a special circumstance, such as this, give the Sheriff’s office a courtesy call so that everyone is aware of what it expected to happen
4. If there appears to be a discrepancy on a form, reach out to the prosecutor for clarification
5. When another mistake like this occurs, do not attempt to elude blame by saying, “We can only go by the paperwork they give us,” especially when the paperwork indicates your office screwed up

Imagine, instead of the media circus and inane comments blaming a piece of paper, the Sheriff’s office could have scored a public victory by taking the high ground, admitted an error occurred and offered possible solutions (most of which would be simple) to avoid the same mistake in the future.

Here is a link to the original story: Man who fled to home of DA released in error.

I’d like to hear you weigh in.

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