The Long View 2003-06-13: Rough Justice

Did I mention that John predicted that there would be no major changes in the intellectual movements of the twenty-first century? Who is on top of the struggle at a particular time keeps changing, but the argument never changes. Everything in this post from 2003 is still current, even though the technology supposedly driving it has advanced.

Probably because I read too much science fiction, I tend to think that there are better ways to reduce atmospheric CO2 than the ones we have been pursuing. Many of these means are technological, and grand in scope, which gives many in the environmental movement hives. I don't particularly care, because most of them don't know anything.

That being said, there is tremendous risk in most posited geoengineering schemes. It isn't crazy to feel uneasy about this kind of thing [although I think many vocal advocates and opponents are, in fact, crazy]. There is also tremendous benefit, which is why people keep talking about it. Risk management and compliance is what I do for a living, and I think complex risks can be successfully managed, and I am not the only one to think so. This is the sort of thing that should be run by accountants, instead of activists.

GMOs are similar. Most of the popular panic about genetically modified organisms is based on a complete lack of knowledge about how agricultural science works. All of the crops we grow today are genetically modified from the source, the primary difference in modern techniques is that you have much better control in what you change. Although, to give credit where credit is due, there are some who think Norman Borlaug is a great villain for using conventional breeding techniques to create the plants that feed the world, instead of allowing people to starve to death in the manner predicted by Paul Ehrlich.


Rough Justice
Scientists at the California Institute of Technology have suggested that a hydrogen power economy could damage the ozone layer. They don't exactly say this will happen if people start using fuel cells. Rather, they posit a complicated process involving water-vapor formation at the poles that might decrease ozone production. Though I have not seen a report from the researchers themselves, this effect is unlikely on its face; hydrogen is so reactive that it's pretty certain to bond close to the point of production. Of course, we have no experience of mass production of hydrogen, so it is conceivable that there will be enough leakage to affect the composition of the atmosphere. In other words, this is yet more environmental "science" that concludes "unforeseeable effects cannot be experimentally precluded." Well, yes.
This is just the kind of rhetorical device that the activist Jeremy Rifkin has been using these many years to close down the genetically modified food industry. There is no evidence at all that genetically modified foods present special health hazards. There isn't even a theoretical reason to think that they might. His argument, taken up by the protectionist agricultural lobby in the European Union, has been that such foods should not be used until it is proved they have no adverse effects. Unfortunately for him, he has also been a great promoter of fuel cells, perhaps under the misapprehension that fuel cells are a power source and not just very good batteries. What is his reaction to this new set of concerns?
"[W]hen you move into a new energy source you have to assume there's going to be some environmental impact...[Hydrogen] is our hope for the future...We know we can't continue to burn fossil fuels because the planet is warming up. And we know hydrogen is where we have to head."
That is also the argument for nuclear power, but that's another issue. The interesting thing to note now is the coincidence of the hydrogen story with the growing campaign against wind power. Not so long ago, the word "windmill" was a trump card for environmental activists when they came out to oppose the construction of conventional power plants. Silent, smokeless, beautiful: windmills were the Platonic ideal of electricity- generation technology. Unfortunately, a combination of improved technology and government subsidies made wind power economical in some regions, and the power-generating utility companies took the environmentalists at their word. The actual windmill generators turned out to be huge, noisy, industrial installations. They are usually strung along the ridges of windy landscapes like the towers for high-tension powerlines. These installations have also displayed a gratifying tendency to go up in the backyards of the country houses of environmentalists. The planned windmills for Nantucket have the Kennedy family incensed: unless their lawyers can stop it, they might find themselves looking at something as tacky as heavy industry from the patios of their summer homes.
* * *
Speaking of litigation, part of the package of reforms that President Bush wants to lower the cost of drugs involves caps on punitive damages in malpractice suits. There is a lot to be said for this, but the president insists on casting the question in terms of restraining frivolous lawsuits. "No one was ever healed by a frivolous lawsuit," he said as he introduced the most recent version of his plan.
This misstates the problem. The courts are actually pretty good at throwing out frivolous suits. Defendants (or their insurance companies) often do just buy off nuisance plaintiffs, but those are not the payments that have driven malpractice insurance premiums through the roof. The real trouble has, for the most part, come from perfectly valid suits that occasioned arbitrarily high awards. The moral here is that the ability of the tort system to compensate real injuries has limits. When the president casts the question in terms of frivolous suits, he leaves himself open to true horror stories about duplicitous drug companies and drunken doctors.
* * *
And what about the judges in the federal system who are supposed to decide these issues? Although it seems at this writing that there will not be any Supreme Court vacancies this summer after all, the Bush Administration's judicial appointments are still largely tied up in knots in the Senate. The current victim of the Judiciary Committee is Bill Pryor, who has been nominated for the 11th Circuit. His problem is that he was impolitic enough to tell the committee that he thinks the Supreme Court's reproductive rights decisions are gibberish. That is true, but it misses the point. All but the dimmest judges and law professors know that those decisions are gibberish. They can support the results because, like Bertrand Russell in his long silly period of political activism, they have accepted the philosophical position that political questions are inherently non-logical.
What we have here is the spectacle of the Senate try to fix the canons of construction of the Constitution by intuiting the canons favored by the nominees that come before it. Since the Senate is unable or unwilling to discuss the canons openly, the senators often do a very poor job of mind reading.
What are the canons of construction? They are the law before the law, the set of rules that tell judges how to interpret a text of a statute, including the Constitution. The rules can be common sense, even trivial, such as the principle when two statutes are in conflict, the later governs. Some are less obvious, such as the rule that when a law repealing an earlier law is itself repealed, the first law does not come back into effect unless the legislature says so explicitly. The canons of construction are often informal, but they can also be codified: that is what Title I of the United States Code does. State codes have their own canons.
Might I suggest that it is not obvious that canons of constitutional construction are themselves part of the Constitution? Obviously, a canon might be introduced by amendment. Barring that, however, they could be codified by legislation. That would at least compel a judge to state when he was ignoring a canon.
* * *
Readers will be relieved to know that Secretary of Defense Donald Rumsfeld seems to have turned back the Belgian menace. While traveling in Europe, he said that if Belgium did not stop using its law against human-right violations to indict American officials, then the US would not put up the 22% it promised for the cost of a new NATO headquarters in Brussels. The issue is that the law claims universal jurisdiction for Belgian courts, whether or not the violations in question had anything to do with Belgium or its citizens. The statute has been used to file complaints for political reasons. These cases are nuisance prosecutions, but they do make it just possible that US officials in Europe might be detained. Belgium officials have said that amendments to the law are likely.
That is all well and good, but the US did start the decline of jurisdictional restraint. The Helms-Burton Amendment famously penalizes foreigners living a broad, who do business with other foreigners living abroad, if they did business involving property expropriated by the Cuban government from Cuban exiles now living in the United States. Civil suits can be filed in US courts against governments alleged to promote terrorism, which makes it hard to deal diplomatically with those countries. Some of the Holocaust suits brought against German corporations and Swiss banks were little more than shakedown operations.
Some canons of construction at the international level might be in order, too.
Copyright © 2003 by John J. Reilly

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A Cautionary Tale

I was engaged in a discussion over at the PhysicsForums regarding the relative merits of academic versus industrial jobs for science and engineering types, and one of the regular members posted a link to an article in the Pittsburgh Post-Gazette about the rise and fall of Westinghouse. It was a sad tale. Also an instructive one.

I had not known the story of Westinghouse before, being more familiar with its arch rival General Electric. George Westinghouse was a true Victorian, full of energy, inventive, eccentric, no sense of his own limits. He was also apparently not much of a businessman, despite his 361 patents. He was thrown off the board of his own company in 1909, never to return. He never looked back, either.

His corporation became very successful, and by 1963 it had a 135 divisions, making electrical power generators, appliances, and desalinization plants. The company was renowned for its technical expertise, and had created several engineering firsts, including the first commercial nuclear power plant. Westinghouse was also actively practicing a philosophy of doing well by doing good, building teaching labs and affordable housing. They even tried to develop an electric car.

By the 1970s, things began to get difficult for Westinghouse. Among the problems cited in the article were an increase in the cost of enriched uranium, poor acquisitions and divestitures, and corporate intrigue. They experimented with different solutions, but nothing really seemed to work.

By the 1980s, all of the industrial divisions were not doing well. By not doing well, I actually mean many of them were stable businesses, but because of the pernicious influence of Dewey and Dakin, by this time, the business world assumed that any business not experiencing 10% annual growth was dying. I suspect, but do not know, that the industrial divisions could have benefited from the kind of quality improvement that W. Edwards Deming had spurred in Japan after being rejected in America. However, since these were stable businesses, and no longer capable of the expected growth, Westinghouse began to look for alternative businesses to invest in.

This era of Westinghouse is one of unrestrained greed. This was probably typical of the time but the executives were enjoying ever increasing bonuses while the company was very obviously declining, not the way to encourage employee loyalty. This also contributed to their final mistake, placing so much money into obviously dubious corporate loans because of their high short term return. This would prove to be their doom, because the company was destroyed by the market's inevitable return to sanity.

All of the parts of the company that actually made things were sold to pay the bills, and all that was left was the broadcasting business they had bought, with the result that Westinghouse abandoned its name along with its factories, becoming CBS.

The reason this is so interesting to me is that my current employer is also an engineer-centered company, founded and largely run by engineers. My company is also known for technical expertise and innovative products. When I read an article like the one above I usually ask myself: what would I have done if I were there? Not with the benefit of hindsight, but in the middle of the crisis with limited time and limited information. What would I have done? 

I do not know. Westinghouse's problems ran very deep. But deepest of all it seems that they had become far too comfortable, and did not trouble to keep their organization quick and responsive. Reading between the lines of the article, it seems that Westinghouse's corporate culture had become deeply flawed over time, and the company was simply unable to respond effectively to its problems. No matter how smart or experienced their leadership was, I think the company was fundamentally unable to respond to change. Back in the 1960s, they had much less market share in appliances than their rival, GE, even though they had better technology. Westinghouse was making the front loading washers that are all the rage now.  However, it seems that they suffered from a lack of manufacturing efficiency. Westinghouse decided to sell their appliance business rather than upgrade it to the then current standards. I think this is a good example of what happened to them. Westinghouse should have upgraded its factories five or ten years earlier. They were stuck reacting to problems that they had long ignored.

The description of Westinghouse's corporate culture is very Dilberty. There seemed to be an immense amount of bureaucracy and forms, with everyone keeping their head down and hoping for the best. People would keep doing what they had been doing even when it was obviously the wrong thing to do. This kind of thing is exactly what prompted Bill Gore to start his own company, and I can see now that his company has so far done a better job of avoiding these kind of mistakes.

What mistakes am I referring to? Ignoring inevitable market downturns. Not improving efficiency and quality all the time. Not focusing on your core competency.  Westinghouse probably could have kept going like GE did if they focused on making stuff, which they were actually really good at, and improving efficiency, which they were bad at. Instead, they diversified into TV and loans, and sold profitable manufacturing and heavy industries. This was rewarded in the stock market in the short term, but destroyed the company in only 20 years. And probably dis-served the American public [and the rest of the world too], which benefited much from Westinghouse technology, but far less so from having another TV network.

I have often talked smack about business-people, but there is real value in good business acumen. Westinghouse [founder and company] seemed to lack this, even though they had successfully preserved their technical expertise. I still think engineers can make contributions to the business world, but not all engineers are well suited for this role. A good example of this is John Walker, one of the founders of Autodesk. He was both involved in shaping his company, and man enough to step down from direct leadership when it was in the best interest of the company. Even someone as smart as Walker doesn't necessarily have the business skills to make a really good corporate president or CEO. However, some engineers can go on to learn these things. I think they are well-prepared to do so, but you have to be careful. Technical expertise does not guarantee business success.