When I read Damien Cave’s article in the paper today, I was  shocked to learn that until recently people in Florida haven’t been required to have a fishing license if they fish from the shore.  I have lived most of my life in the state of Washington and fishing licenses have been required here since I was little.  So just because Florida is different from Washington, why does that make it shocking?

Because in addition to many populations of fish being at risk, fish and wildlife budgets are getting cut, when more money is needed for enforcement and oversight or some of these populations will be unrecoverable.

In Washington, for a long time we have even had to buy catch record cards for key species such as salmon and Dungeness crab and be specific about what we caught, where we were, and the date.  Statistics like this are vital to the management of the overall ecosystem and it has to get funded by the people who participate. Sure fishing is a national past time, but too much is at risk to not have licenses and catch records if we have any hope of really knowing what’s going on in ecosystems in the water.

Two years ago there was a front page story on the New York Times about how the Northeastern lobster population was unexpectedly large and the fact that people were celebrating.   That’s all well and good if we know why it happened, but we don’t.  What that means is that there was a dramatic shift in food supply or threats to the lobster and that’s why it was such a strong year, but not knowing is very scary.

Here’s where it gets nasty.

Enforcement of these laws is really hard because of the sheer amount of places where people can fish.  In Washington, for a couple of years you needed to have something pinned to a hat or a shirt so someone could see from far away that you were licensed, but that was ineffective. Clearly people are not going to do this just because it’s the right thing to do, so I would love to hear suggestions of people for how we solve this problem.

-Ric

Talk about a great fit for rethinking!

In the Rethink book I talk through separating what you do from how you do it, so you can assess the value and perfomance of the “what” before embarking on a decision about whether it makes sense to focus on that particular area.  What turns out is that in most cases, it doesn’t matter “how” something gets done as long as it gets done as well or better than you expect.

Howcast has all sorts of “how” videos for people who either don’t know how to do something, like bake a certain something, or who aren’t doing as well at something as they would like, such as the clip here about how to look great in photographs.  I posted it on Facebook because I think it’s a perfect little video for users of that site.

So in most cases Howcast either gets you out of a “how” trap, in cases where you aren’t getting the results you want, or it prevents you from getting into one in those areas where you haven’t done something before.

Send me your favorite Howcast video links to ric at ricmerrifield dot com.  Thanks!

-Ric

Floyd Norris recently wrote the article It May Be Outrageous, but Wall Street Pay Didn’t Cause This Crisis.  Once again I am shaking my head.

While it is true that the amount people were paid did not cause the crisis many are calling the recession, and I also agree with the thesis of the article that CEOs have many incentives to make the company perform well (though the golden parachutes are hard to believe from the outside looking in), I was sorry Mr. Norris didn’t offer a better solution to the problem.

This situation reminds me of an old story my father used to tell me of a scientist testing how far a frog can jump after he blows a whistle.  The first time he blows the whistle, the frog jumps four feet (and that’s what he writes in his journal), then he ties one of its legs (preventing movement), blows the whistle and the frog jumps two feet.  This time the entry in his journal reads “frog with three legs jumps two feet”, and the experiment continued.  After tying three legs and blowing the whistle, the scientist observed “frog with three legs jumps six inches” and then he proceeded to tie the fourth leg and blow the whistle.  Nothing.  Once again he blew his whistle and again, nothing.  What conclusion did the scientist draw from this final stage of his experiment?  “Frog with no legs can’t hear.”

What’s that got to do with executive compensation on Wall Street?  A lot in my opinion because the conclusions people are coming to are just plain wacky and there’s a line of evidence and history a mile long that points to the real issue.  OK, issues.

First of all, I am all for good old fashioned capitalism.  Someone earns a big profit, they should be able to get a big fat paycheck.  That simple math has worked for a long time.  Earning a big profit in sales is one thing, $100 of real money comes in, and you will probably pay them about $20 for that.  $100 million comes in, they get about $20 million.  Simple math.  And if I go to Las Vegas and bet that the Green Bay Packers are going to win every game in their football season, on a $50 bet, if I am right, I stand to win millions of dollars, but it’s a really risky bet, so there’s a good chance I will lose my $50.  The issue, as I see it, is that Wall Street is encouraging traders to take huge risks (hard to compare with an undefeated Packer season, which would be priceless in my opinion, but stay with me), they win in the short term – say $100 million, get their $20 million bonus, and then months later the $100 million in winnings vanish – or worse turn into a huge loss, but the trader gets to keep the $20 million.

That’s the part of the structure that needs to be overhauled.  Encouraging and rewarding risky behavior with no accountability for failure.

It’s unrealistic for Wall Street to ask for bonus money back, so they need to change the upstream rules and processes that drive the behavior.  The specific action that’s needed is far better risk oversight, from home loan debt risk, to the insurance industry risk of not being able to cover claims.  This is knowable math, and people who take outrageous risks should be terminated or risk jail time (and not jail camp, real jail).

Who is going to reign in these off-leash traders?  Well, that’s where it gets a little more interesting.  Ideally, the CEO and the board should be able to review the risk of their portfolios and give team feedback about how well their risk aligns with the goals of the organization.  This isn’t hard, everyone has Excel, run the report and manage against it.  But the CEOs and the boards are not doing this.  Even after all of the public shaming of AIG, we are again seeing kooky profits and bonuses at big banks, and it looks like “deja vu all over again” (as Yogi Berra would say).

So how do we control this?  I hesitate to suggest regulation and oversight, and I am not sure the consumer protection agency is the right answer, but I do think forced transparency of risk is a good idea because it’s knowable and they should have a handle on it at this point anyway.

Rrrribbit.

-Ric

The first time this happened I thought I was missing something, but then my friend Sam told me she had the same experience, and we both wonder if it’s legal.  I would love to hear your thoughts.

The company in question is Wells Fargo bank, but I haven’t done any research to know if they are the only ones doing this.  They have an online bill pay service that I used once earlier in the year.  I started by enter all of my bill information, ranging from Seattle City Light to my credit card bills, and as I entered the names of the companies and addresses, the forms would pre-populate with a lot of the correct information so it seemed the bank had a clear and easy way to pay the bills, and I figured it would be instantaneous from the moment I set the date I wanted the bills to be paid.   Well that month all of my bills were late because I was wrong to assume they were wiring the money, even though that technology exists and it’s no big deal.

I went into the bank to ask them about it and what they said was that if I entered Monday March 2nd as the date they should pay the bill, Wells Fargo says it will take up to three days for the check to actually get mailed (so it would go out as late as Thursday the 5th, and then to allow up to ten more days for it to be received and cashed (so now we are up to March 15th).  So if my bill is due on March 15th, I need to ask Wells Fargo to send it 13 days before that.  That part is incredibly stupid to me, so I don’t know why anyone would ever use the service.  So I felt dumb, and I got hit with some late fees, but I lived to tell about it.  That’s a “how” I won’t ever use again when it comes to how I pay bills.

But just because it’s stupid doesn’t make it illegal.

The part where I wonder if it’s legal is the fact that if I have a $1,000 credit card bill, and I ask Wells Fargo to pay my credit card company on March 2nd, I expect my credit card company will get the money on or before March 15th and that’s when they cash the check, that’s when the $1,000 leaves my account.  Nope.  Wells Fargo takes it out on March 2nd and they hold it until my credit card company cashes the check.  That’s up to 13 days of float they get.  Unreal.

Is that legal?

-Ric

There was an article about this in the paper recently, and I liked it as an example for a couple of reasons.

Of course first and foremost this is a fun example of getting out of a “how” trap.  The outcome, the what, that is needed is a dry field, and in the absence of a roof or tarps to prevent the field from getting wet, they then had to dry the field, and the “how” that is ordinarily used there is various forms of rollers or squeegees with lots of people on the grounds crew pushing the water off the field.

Here, someone decided to do some rethinking and figured that a helicopter in some senses is a giant blower and that might get the job done.  Judging from the articles, it looks like it didn’t work, but it’s an innovative way to get to the outcome needed.

The other piece that I like about this is the financial side.  When I showed the picture to my friend Don, he said “that’s a pretty expensive way to dry a baseball field.”

True.

However, the people were already at the stadium, and while the concession stands were probably doing a great business selling peanuts and candy and cracker jacks, the cost of rescheduling a game of this size is very high.  So I like that someone took a chance at something that seems outrageously expensive, in an effort to avoid a much higher cost.  Again, it’s a shame it failed, but in the scheme of things, a $5,000 helicopter fee is peanuts in the overall scheme of things.

-Ric

This morning I was reading the paper and at the bottom of the front page was an ad for ExxonMobil, with the heading “fuel for thought” and a clever picture of a circle that was a tire, but the top portion of the circle was what looked like a gas gauge on “full” but it read “1 Billion” and the lead copy on the ad read “How can we save up to a billion gallons of gasoline?” and points out that proper tire inflation is a way to save a lot of money on gas.  I will add that I tried to find the ad on the ExxonMobil site and the New York Times site, and I couldn’t find it anywhere (if any of you reading this can find it, I will update the post and thank you in the post), otherwise there would be an image of the ad itself.

Anyway, the simple observation here is that this is a classic “how” trap where we think about “how” to save money on gas, we think about

1) driving less

2) buying cheaper gas, or

3) buying a more fuel efficient vehicle

Tire inflation is just something most of us never think about, and we don’t think about how much it really impacts our driving.  It is hard to measure how much you save with properly inflated tires, but it makes a huge difference and I will give you two examples of why I know this.

Many years ago I was on a business trip in Montreal and it was forty degrees below zero, not including the wind chill which took it under 80, and there was a lot of snow on the ground, but my cab driver didn’t have chains on his tires.  I asked him about it and he said that all you have to do in those specific conditions is let some air out of your tires and that provides enough grip on the road (which is resistance – which burns more gas) to not need tires.  I thought that was pretty interesting.  I didn’t think of the fuel consumption point until today when I read this ad, but it makes sense.

The other example is something that I learned over 20 years ago when I was doing a lot of biking on the streets of Seattle (after co9llege I was saving money for grad school).  I had a mountain bike, my trusty Fuji Cadenza (which I still ride) and I used to ride it everywhere.  When I bought it, with it’s big knobby tires, the bike shop owner pointed out that bikes have to be able to support very large people, and they are tested to support a 300 pound person, and at the time I weighed 150 pounds, he told me I could inflate the tires to double the recommended pressure which was about 120 PSI.  You should try it.  It was like walking in soft sand compared to walking on a sidewalk.   I can go so much faster than any other mountain biker, still, because my tires have so much less resistance.  It is really amazing.

So that’s why I am not surprised that we can save a billion gallons of gasoline (and not just ExxonMobil gasoline . . .) with proper tire inflation.  If we want to get really serious about it, we should suggest that people in drier cities drive with smooth tires in the Summer, because all of those ridges in tires are for rain and they add a lot of resistance.

-Ric