The Chicken and the Egg Conundrum of Capitalism and Startups

On whether the heart of capitalism is greed or the desire to solve great problems (TechFlash):

I feel like every time I see people who are trying to come up with a business that they can monetize, instead of trying to think of a problem that they really want to solve, that they really care about solving, they just get it ass-backward, and they don't build a good product - Glenn Kelman, the founder of RedFin

Redfin's changing the way real estate is and will be sold. A pretty cool company, I should add, that just turned profitable (TechCrunch).

Personally, I've thought for quite some time that it's trust that bridges the gap. Customers have to believe that you'll solve their problems before they'll fork over the money. How big of a problem they feel it is and how well they think you'll solve it becomes directly related to the amount they'll pay.

Asia's Rise? Maybe not so much.

I wonder if I'm a contrarian to gravitate to stories like this and whether my skepticism for the faddish is what makes me conservative. Either way, "Think Again: Asia's Rise" from Foreign Policy, (via Paul Kedrosky) makes the cut:

Don't believe the hype about the decline of America and the dawn of a new Asian age. It will be many decades before China, India, and the rest of the region take over the world, if they ever do.

First and foremost, while I think there are some fears in the US over China's rise, the reality is that even if they're able to overcome the small problem with its demographics, China's neighbours will end up keeping it in check.

China's Aging Dependents Problem

The unintended consequences of prematurely curtailing population growth are often not obviously apparent at the beginning. Normally a developing society begins with larger families to smaller ones as the cost of having and raising kids moves higher.

China, on the other hand, has had an aggressive one child policy that it has only relatively recently relaxed. Whether the relaxation is a recognition of the crisis that's building or simply political pressure, this graph says it all (the Economist via Paul Kedrosky):


It's useful to remember that China's fears of population growth are a direct result of the belief that more people consume resources. The contrarian, cornucopian view of those like the late economist Julian Simon, is that people are the only finite resource. People create resources by innovating which in turn literally creates wealth where none existed before. If India finally gets its act together I get the sense that they will end up pulling well ahead of China on the development tables in the future. It's also why short term protectionism against China, brought on in part by a bad recession, are rather silly given what's to come.

Update - as one of the commenters notes at Paul Kedrosky's blog, is it little wonder that they have such a high savings rate? Personally, the theory I like best is that people in China save because they have to plan for the unexpected particularly as they may not trust insurers or that insurance products may not exist.

Update #2 - also via Paul Kedrosky, Foreign Policy makes the argument that population control is necessary for development to happen using such stunningly great examples of governance like Pakistan and the booming mecca of Iran. Sorry, I just don't buy it.

Africa Isn't Poor Because of a Lack of Resources

Africa can feed the world according to the (New Scientist via Instapundit). But as Glenn Reynolds notes - "But it never will, so long as it’s run by inept kleptocrats." Of course this isn't earth shattering. Uganda has one of the most fertile lands in the world because of its volcanic soil. Zimbabwe used to be the breadbasket to Africa until Mugabe and his enablers ran it into the ground and where millions now live in hunger.

I had an interesting meeting, albeit a bit too brief, with folks at an international microfinance agency last week. I think I came away with the reminder that it's tough for those in development not to gravitate to places in the world with the greatest suffering. It's a difficult line in the sand to draw but I think the line between aid and development must first be drawn by donors recognizing that without cooperative governments, the choice must be made to abandon or substantially curtail programs with resources focused where a greater difference (measured in several orders of magnitude) can be made.

Update: Foreign Policy has an interesting overview of its Failed States Index and attempts to explore some of the reasons that lead to what they call failed states. Interestingly, China is considered "borderline" with most of the African continent and Asia fluctuating between "borderline" and "critical". It'd be interesting to overlay this with development indices as this almost seems like a guide to regional development where the more developed you are, the less risk that you'll fail.

You Mean They Didn't Just Surrender?

Yeah, yeah, low blow, but still, a fantastic marketing story for those of us who are interested in that sort of thing about one of my favoritest restaurants in the whole wide world (Slate): How McDonald's Conquered France.

Update (7/3/09): Ha. Eating in France, dying inside (Macho Response via Instapundit)

The Problem with Regulations that Rely on "Smart" Regulators

I'm worried about the new interventions being placed on markets in the US. The genius of American growth has been its ability to match innovation with markets - but the growth of government means that barriers are rising - barriers similar to those of chronically stagnant Europe.

What makes it more irritating is the demagoguery blaming the crash on supposed "laissez-faire" and to top it all off, these new regulatory and tax interventions may end up making the situation worse (or create yet new bubbles that will burst even more spectacularly). It's almost inevitable at this point that there will be higher taxes necessary to pay for the plethora of spending and on top of that, politicians are starting to roll out "smart" regulations that will supposedly moderate the excesses of the market (ignoring the bad regulation and interventions that got us into this mess in the first place).

In centralizing power, for the current batch of new regulations to work relies on the discretion of regulators who are hardly infallible. As pulled by the WSJ's Deal Journal:

We regulate because financial systems are fragile, prone to booms and busts that can have harmful effects on the real economy. But regulators aren’t immune to the boom-bust cycle. They have an understandable habit of easing up when times are good and cracking down when they’re not. In doing so, they often amplify the ups and downs of markets rather than modulate them.

Instapundit: "Like Alien vs Predator, Only Different"

Why should the Transformers get all the fun? (Amazon.com via Instapundit):

Ever wonder what would happen if Care Bears and My Little Ponies clashed? If the Smurfs rose up and fought Gargamel? If Teddy Ruxpin had his own Wes Anderson movie?

Funny Videos | Funny Cartoons | More Video Clips

Airport Olympics

My return to Canada has been more frazzling than usual. I suppose someone who travels as many miles as I do should have things figured out by now but my past travels have typically been more prolonged versus the quick day trips from one venue to another. My current trip back has been so short that I have barely recovered from jetlag as I'm about to return to China again. Anyway, this is to say that I'm sorry I haven't had a chance to post more lately.

My sister says that I need to make my blog more personal, fun and readable and I'm sure I'll take that under advisement - but realistically, she's my sister and won't be unsubscribing to me anytime soon either.

One of the brief trips while I've been back has reminded me of my resigned dislike of both United and O'Hare but also the benefits of having priority boarding given the lack of on-board compartment space on regional aircraft, and the benefits that intense interval training provides particularly when you realize you only have 15 minutes to make a connection before they close a gate that's two terminals over. I've been fairly productive and having finally landed a large, rather hard fought client, I'm going back to monitor production progress which is on a fairly tight schedule so I'm not exactly sure how much I'll be posting over the next week.

A Lesson Oft Forgotten

Politicians and pundits often like to target profitable firms but the reality is this - as an article on airline pilot pay notes (WSJ):

A profitable company, whether FedEx or Southwest, can pay its workers more.

Differentiating between Aid and Development

Easterly's blog is quickly becoming a favorite of mine because of the excellent back and forth debates but also because of his views that challenge development orthodoxy. Whether or not one differentiates between aid and development marks is a basic acid test for me in terms of how someone would approach development. Easterly considers the blurring distinctions at USAID - which to be frank, I found to be one of the better agencies while I was in Uganda (but this was a number of years ago).

WWF: Accountability vs Sustainability

As a matter of disclosure - it's been quite a while since I've been a fan of organizations like World Wildlife Fund (WWF). When it comes to priorities, I believe human life and development takes precedence over some mythical idea of what the world was like / should be like - a preference that often involves doing away with humans. One of the hazards of following design and trend blogs is that you run into drivel like this from Trendhunter:

Step by step we (the world) continue to slowly but surely jump onto the eco-train. As much as it’s a personal change that members of society need to think about, it is always a good sign when a major contributor makes a statement.

Since 2006, the WWF (World Wildlife Fund) has been operating in the Netherlands out of their own personal statement.

The WWF Netherlands Headquarters is a carbon neutral office. Designed by AUR Architects, the old headquarters were used as a starting point (instead of demolishing it) in order to create the fully sustainable structure.

Of course, what they don't want to tell you is the cost. For all the fawning, what they don't mention is that it was at a cost of 4M Euros (2006) - for a renovation (MIMOA) - not a new building no less. Well, at least the employees have a nice building to work in and at least WWF can claim they're "carbon neutral". For the money they spent, at least someone's happy even if it's not the wildlife I'm assuming the funds were supposed to be directed towards.

Raising Money for Charity & Selling T-Mobile

The common variable for success? Hot women (this important PSA brought to you from Freakonomics Blog). Here's T-Mobile's take on it:

Here's the academic literature (MIT Quarterly Journal of Economics):

in terms of both maximizing current contributions and inducing participation, we find that a one-standard deviation increase in female solicitor physical attractiveness is similar to that of the lottery incentive.

China's "China’s brutally long" standardized college entrance exam questions

I've never really understood the level of importance placed by some schools on standardized tests - particularly on kids. I think college entrance exams might be a bit different as you do need some type of standard measure but I can only imagine how unbearable the pressure is on some of these people. If you thought that writing the SATs was rough, think of something about 10x worse given the importance Chinese universities place on them. Check out some of the essay questions here (ChinaGeeks).

Quote of the Day: On Working in China

I agree wholeheartedly. It's amazing what you learn to brush off as being normal/acceptable/uncontrollable before long. From Silk Road China:

"... almost as difficult as dealing with all the unknowns and changes in China is convincing Americans that have not been to China in his company that China really is that irrational and difficult to deal with."

Productivity Bit: Finding the Hooray! in your Life and Business

This Venn diagram seems to not only a great diagnostic tool but a great prescriptive one as well (Lifehacker):

This will end well... Government Motors

... because politicians are renowned for their business acumen. From the Boston Globe, via Greg Mankiw:

Frank intervention extends life of GM's Norton center

General Motors Corp. will delay the closing of a Norton parts distribution center it planned to shutter by the end of the year, according to US Representative Barney Frank. The extension will temporarily preserve about 80 jobs....

The plant manager received word yesterday that Frank had successfully lobbied GM chief executive Fritz Henderson to delay the closing, according to Ridenour....

Frank, whose district includes Norton, said he told Henderson, "Look, I understand that these things have to happen but they don't have to happen in the midst of the worst recession in years."

Is Poverty a Human Rights Violation?

Another interesting point and counterpoint over at William Easterly's Aid Watch. Easterly points to Amnesty International's recent report that calls for getting people out of poverty, people apparently put there because of "entrenched interests", but saying the distinctions should not be blurred, poverty itself is not a human rights violation:

Poverty does not fit this definition of rights. Who is depriving the poor of their right to an adequate income? There are many theories of poverty, but few of them lead to a clear identification of the Violator of this right. Moreover, human rights are a clear dichotomy – someone violates your rights or they do not. But the line between poor and not-poor is arbitrary – it is different in different countries, and on a global scale, many still argue what is the right dividing line that constitutes poverty. So calling poverty a “human rights violation” does not point to any concrete actions that the “violator” must stop in order to restore rights to the “violated.”

Amnesty International counters, also clarifying that what they're talking about is absolute poverty (not relative poverty that amn:

It’s true that lack of income, in and of itself, isn’t a human rights violation. But poverty is about a lot more than just income. As Easterly knows, those who live on less than a dollar a day are poor not just because they lack income; the lack of income implies lack of access to services, clean drinking water, adequate education, housing, employment and so on. All of these are violations of the Universal Declaration of Human Rights and the International Covenant on Economic, Social and Cultural rights. To give just one of many possible examples, estimates indicate that as many as 8,000 children die daily in Africa alone from preventable diseases such as cholera and dysentery. It’s certainly true to say that these are diseases of poverty – the rich can ensure that their water is not contaminated and can seek treatment at private hospitals as opposed to understaffed government clinics – but they are more than that. They are violations of the right to health and the right to clean water.

And people living in poverty are vulnerable to violations of their civil and political rights as well. In the Favelas (shanty towns) of Sao Paolo in Brazil, police and gangs are in daily conflict. There are allegations of human rights abuse on all sides, and the government feels little pressure to respect due process in large part because this violence is taking place in an extremely poor part of the city. Ordinary people are in danger from gangs on the one hand and from a state takes their rights less seriously because they live in a poor community.

I'm sympathetic to the Amnesty International argument. Absolute poverty/hunger is generally not a question of a lack of resources - it's a question of government policies - which can range from crony capitalism (not to be confused with capitalism) to straight despotism. But on the other hand, surely there are enough violations there to attack the violations themselves instead of seeing an effect and concluding a violation must have taken place. I wonder if this also means that if countries aren't developed they're automatically violating their citizens' rights? Amnesty International has been increasingly political in the last few decades and I think lost its moral legitimacy particularly when it came to Iraq and I wonder if that like this - expanding human rights to include economic welfare - is merely another effort in their search for relevance or just more simply a question of mission overreach?

More Cause and Effect

What I don't get is that obviously President Obama isn't stupid. He also has some bright lights advising him on the economics front. So the question is doesn't he think that the trillions of spending will have longer term consequences? Or does he believe his priorities in changing how government work supercede what those might might be? Or perhaps most arrogantly he believes he knows better than the markets and that what he is doing will in fact strengthen them?

I don't know - what I do know is this: the further this drags on, the more obvious it becomes the stimulus wasn't about stimulus at all. Further, evidence mounts that the stimulus will end up weighing down the economy in the long run with permanently higher interest rates as the US dollar loses its relevance as a reserve currency. From Glenn Reynolds:

TREASURIES: Exit The Safe Haven. “The 10-year Treasury bond paid a 3.83% yield Friday afternoon, up from 3.6% in the last week of May and a 52-week low of 2.07%. One worry is that higher yields on benchmark government bonds will translate into steeper borrowing costs for home buyers and businesses, besides making the U.S. government’s deficit spending more expensive.”

Related: Interest rates soar on jobs data, putting housing at risk. “The Treasury bond market is in cardiac arrest today over the May employment report: Yields are soaring, dealing another blow to investors who’ve been hiding out in government bonds — and threatening another big jump in mortgage rates.”

Remembering that Thing That Happened 20 Years Ago

From Radley Balko (via Megan McArdle):

It was 20 years ago today that the Chinese government killed 2,000 to 3,000 of its own citizens for the crime of demanding their own liberty. This iconic photo is about all that’s left of them.

George Orwell said, “If you want a vision of the future, imagine a boot stamping on a human face—forever.” He’s all too right. Last century, an estimated 262 million people were murdered by their own government . That doesn’t include the hundreds of millions more killed by opposing governments during war.

Today ought to be a day to celebrate and promote human liberty, and to remember the abuses governments have heaped upon their subjects over the centuries.

So go find your own metaphor for the government tank pictured above.

Then put yourself in front of it.

China "Not the Next Silicon Valley"... It's Much, Much More?

That's according to Sarah Lacy who just got back from a trip profiling startups in China for TechCrunch:

What makes China so staggering is that everything that happened to corporate America over decades—think the television and media studios build out of the 1950s, the greed of the 1980s, the dot com bubble, the build out of physical and IT infrastructure, current Web 2.0 and CleanTech innovation—is all happening to China at once. [...]

And while China gets a rap for ripping off U.S. Web start-ups now, I think we’re going to start seeing U.S. start-ups copying a lot of elements of Chinese entrepreneurs’ business plans, whether it’s unlocking the value in virtual goods, experimenting with alternative online payment methods or developing more social forms of e-commerce, where like-minded friends shop together.

You always find the best ideas within atmospheres of constraints. It’s why some of the best companies are started during recessions. It’s why Israel was such a surprising hot-bed for Nasdaq IPOs in the late 1990s. And it’s why Chinese Web companies have come up with other ways of making money than just slapping ads on a site, because they had to.

While I think her optimism might be a bit overdone, I'd agree with her that the development of China is pretty amazing to see - and it is developing "all at once" which creates a great deal of opportunity but also spectacular collapses. Read the whole thing. Some of the comments are pretty interest as well.

Standardized Testing, Education & Aid

William Easterly is no fan of standardized testing:

The US already has RBM [results based management] in the form of the No Child Left Behind Act, which rewards public schoolteachers when their students score high on standardized tests. Some of the pitfalls were revealed when I interviewed one of the customers --a 12 year old rising 8th grader in an average public school -- about how this was working out. She said “Teachers remind us everyday about the test, and they spend more time teaching us how to phrase answers to test questions than actually teaching us facts.” Finally, the nightmare was over: “And then after the tests were over and taken, they stopped teaching, and the rest of the year we watched stupid movies.” (Less anecdotally, academic evaluations find this Act to have had some payoffs for the worst schools, but note the idiocy of applying it universally to previously well-performing or even average schools.)

I get the issues, but I have to wonder if the problem is standardized testing, the tests or the management of the organizations being tested. I just don't see how having a baseline of information to compare can be a bad thing.

Granted, the question of whether or not we're measuring the right things is obviously a valid one - e.g. creativity and problem solving. But maybe such things can't be measured - which is an explanation that strikes me as a cop out by those who don't want to be compared/measured.

Perhaps I lean towards agreeing with standardized testing because education doesn't allow for choice - in a marketplace of ideas, bad schools are subjected to the harsh realities of not achieving a willing market. So at least given a public school's captive audience, there is baseline information on both good and bad schools with standardized testing. In private markets, there is value for useful information and private enterprises are often better at filtering out gaming in the system when their own reputations/livelihoods are on the line - e.g. Zagat's for restaurants. Where public schools are subject to private markets is in real estate markets. The rich (or even the better off) have the option of moving to a new school district. The rest get 'left behind'.

LA Times profiles the American Indian Public Charter schools (via Donald Luskin):

School administrators take pride in their record of frequently firing teachers they consider to be underperforming. Unions are embraced with the same warmth accorded "self-esteem experts, panhandlers, drug dealers and those snapping turtles who refuse to put forth their best effort," to quote the school's website. [...] Not surprisingly, many Bay Area liberals have a hard time embracing an educational philosophy that proudly proclaims that it "does not preach or subscribe to the demagoguery of tolerance."

It would be easy to dismiss American Indian as one of the nuttier offshoots of the fast-growing charter school movement, which allows schools to receive public funding but operate outside of day-to-day district oversight. But the schools command attention for one very simple reason: By standard measures, they are among the very best in California.

Most of the kids who go there are poor. But what are they doing that's so different?

The short answer is that American Indian attracts academically motivated students, relentlessly (and unapologetically) teaches to the test, wrings more seat time out of every school day, hires smart young teachers, demands near-perfect attendance, piles on the homework, refuses to promote struggling students to the next grade and keeps discipline so tight that there are no distractions or disruptions. Summer school is required.

Back to basics, squared.

Of course if you read on (and I would highly recommend that you do), you realize just how draconian some of their policies are but at the same time they clearly promote a culture of excellence. While I might personally think that they go too far, it's also hard not to see that they at least provide an excellent foundation with high expectations to students who would otherwise not get it. But are they preparing students with the creativity and problem solving skills to succeed? The article doesn't say. On the other hand, should we also be worried that such paternalism results in workforce workers who are governed like those at Canon (Danny Choo)?

According to his book, employees can concentrate on the meeting at hand without chairs and they have been able to half the number of meetings each year. [...]Also in the photo you can see a blue sign on the floor. When Nikkei went to interview the president, while walking in the corridor a siren and flashing lights went off. The corridor was designed to detect whether employees were walking at least 5 meters for every 3.6 seconds.

While Easterly notes how aid agencies can game the system to skew results to profit, I figure that it's much like markets and profitability. Companies may choose to pursue profitability for its own sake while offering a given service or seek to be an innovative service provider and profit by design and as a byproduct. While I might make the argument that the latter is more sustainable and productive, won't both organizations being governed and subject to the accountability of consumers create value to those consumers? In the same way, while (often) subjective measures might be useful to organizations who don't rely on their users for sustainability, isn't it at least a useful starting point?

Because it was Never about the Stimulus

Taking effect too late with short to long term effects with dramatically higher interest rates. So what was the point again? Arnold Kling via Instapundit:

As we know, most of the stimulus spending does not take place until next year and beyond, so the short-run gains are puny. On the other hand, the big increase in the projected deficit creates the expectation of higher interest rates, which raises interest rates now. These higher interest rates serve to weaken the economy.

According to this standard analysis, the stimulus is going to hurt GDP now, when we could use the most help. Much of the spending will kick in a year or more from now, with multiplier effects following afterward, when the economy will need little, if any, stimulus.

This is the flaw with using spending rather than tax cuts as a stimulus. The lags are longer when you use spending.

Of course, if the real goal is to promote government at the expense of civil society and to create a one-party state in which business success is based on political favoritism, then the stimulus is working exactly as intended.

The Role of Geography in Development: Easterly vs Sachs, Round II

I was wrong. Much to my delight, Jeffrey Sachs has responded to Dambisa Moyo (while attempting to avoid re-referencing Easterly and avoiding ad hominem attacks). I suppose you try to fight the battles you can win but Easterly responds anyway, taking a sniper shot at the premise that Sachs makes of why Africa is different. Argues Sachs (HuffingtonPost):

Africa's differences with other regions lie not in aid, but in circumstances and history [...] Africa's tropical disease burden, heavy concentration of landlocked countries, decline of aid for infrastructure during the 1980s and 1990s, and misguided attempts by Africa's creditors to collect debt servicing under "structural adjustment programs" during the 1980s and 1990s all played their part.

Easterly makes the point that there isn't evidence to support the idea that what makes Africa different is geography (from his own blog at AidWatch): "but Sachs unveils such a bizarre geographic theory of Africa’s poverty, with such misguided implications for aid policy, that I am forced to respond:"

Summary in brief of Sachs’ geography theory: a region will be poor IF they are tropical, IF rainfed, IF landlocked, and IF they have the wrong mosquitoes – which, yes, fits many African countries. With enough IFs, you can fit ANY theory to any set of facts. If I am a short, balding, grey-bearded, bespectacled, white male economic development professor residing in Greenwich Village, I will be writing this post right now – it fits the facts.

Sachs also has a rather convoluted “aid works” narrative in this column. He says aid was high enough and went to the right things enough to achieve great things in Africa on health and education. So why didn’t it create economic growth? Because aid wasn’t high enough and didn’t go to the right things enough. [...]

And from Huffington Post, Easterly notes:

I don't have enough evidence to test any one theory of Sachs, but I know it makes for bad aid policy. Make sure that aid reaches poor people, which usually means it should not go to poor governments.

Jeffrey Sachs makes a number of other points referencing Moyo's rebuttal and while I look forward to her response, the debate has widened. Arguing perhaps for a middle ground at FT, Mo Ibrahim, founder of MSI/Celtel [if FT asks you to register, just replace "false.html" with "true.html" and delete everything after it] - a mobile phone giant in Africa comments:

In her book, Ms Moyo suggests that government bonds can take the place of development assistance. This is unrealistic. First, debt markets are not open to the African countries that most need capital. Second, the cost of government bonds is materially higher than that of World Bank or other institutional aid. Why should African governments pursue a detrimental line of financing to satisfy an ideologically-led approach to development?

Furthermore, even before the economic downturn, most financial institutions were not interested in investing in sub-Saharan Africa in a sustained manner, despite the fact that for the past 10 years the rate of growth has exceeded that of Europe. It is implausible that they will be interested now. [...]

The critical argument should not be about aid or no aid – no one can question the necessity of pure humanitarian aid as long as it satisfies basic good governance criteria. The argument should be about where to focus aid to achieve the best returns for donor taxpayers and aid recipients. I propose two areas to focus aid: the hardware of Africa, infrastructure and regional integration; and human software, in the form of education and health.

While I have enormous respect for Mr. Ibrahim and his promotion of good governance in Africa (Mo Ibrahim Foundation), I'd make the following correction. He asks why "Why should African governments pursue a detrimental line of financing to satisfy an ideologically-led approach to development?" and not pursue cheap forms of subsidized funds from the World Bank. But that's Moyo's point: once you accept such funds you become less responsible to your citizens than you are to foreign governments and aid agencies.

People respond to incentives, so do governments - it is a point that Mr. Ibrahim should be most aware of given the prizes he offers for good governance and for heads of state to retire.

Massaging the Numbers in China

The Wall Street Journal considers Chinese Government's growth statistics: "China's economic data are a bit like sausages: If you're a fan, it's best not to scrutinize how they're made." The question of course is whether or not China is really growing nearly as fast as it is because electrical consumption numbers are down. China's solution, amusing as it is, has been to stop publishing the electrical consumption numbers.

SRI Blog riffs off this pointing to how numbers are manipulated by companies and how you as buyer or even factory owner can get conned - let's count the ways:

1. Kickbacks
2. Exaggerated Costs
3. Supplemental Costs
4. Double Billing
5. Unnecessary Taxes, Licenses and Fees
6. Testing Fees (that never happen)
7. Hostage Payments
8. Cost Increases
9. Unnecessary Fees
10. Flat out Lies

Read on - but some useful advice I'd highly agree with: "Of course all of these “mystery meats” are in every country ... The keys to not getting snookered include: knowing your market, getting bids from competing suppliers, doing your research on wages, licenses, taxes and personally participating in as much of the process as possible. Double checking on all invoices and using different people for various sensitive portions of the purchase process will help too." I'd further emphasize the point that whenever goods are purchased across borders (and many times when they're not) you become increasingly vulnerable to any one of these manipulations.

On Chrysler Dealership Closings & Political Payback: More Smoke Than Fire

That's a relief. Jonathan Adler (via Instapundit):

I would also echo McArdle's sentiment that if there were any political funny-business in the Chrysler closings (and that's a big "if" at this point), it's far more likely that someone in the Administration intervened to protect an important Democratic contributor here or there than that the entire process was used to slam Republican dealers across-the-board. In any event, it seems to me there is far less to this story than meets the eye.

But, as Reynolds notes, "Given the bullying that went on with the secured creditors — and the way the whole Chrysler restructuring deal was set up to favor Obama constituencies — these charges were certainly plausible. But the evidence doesn’t seem to be there."