Thursday, November 29, 2007

The Economics of War

With the growing worldly unrest, the clear provocations that Hitler was foisting on Europe, and with the country still enjoying its “splendid isolation,” President Franklin Roosevelt signed the Selective Training and Service Act of 1940. With a single stroke of his pen he created the country's first peacetime draft and formally established the Selective Service System as an independent Federal agency.

With this act, Congress had declared that an “adequate armed strength must be achieved and maintained to insure the security of this Nation.” Secondly, that in a “free society the obligations and privileges of serving in the armed forces and the reserve components thereof should be shared generally, in accordance with a system of selection which is fair and just, and which is consistent with the maintenance of an effective national economy.” The wheels were set in motion for the United States to defend the world against the opponents of civilized thought, life and humanity.

This Act, more commonly known as The Military Selective Service Act created the obligation of a man of eighteen years to register for subsequent conscription into military service. Thirty years after Roosevelt affixed his signature to the law, I affixed mine to my draft card, but I was far from ready to defend anybody from anything. The most imminent threat to my life was the pending acceptance to college.

A few months before FDR signed this act into law, and half a world away, Hitler completed the “Great Polish Defensive War” and began the occupation of Poland along with the Soviet Union. Mass expulsions started in various parts of the country. Some 100,000 Jews were expelled from Polish territory during this period. In fact, more than 50 Jewish communities were deported wholly or in part.

Germany and Russia pursued their own official policy of "Selection" in which able-bodied men, aged 14 and over, were sent to labor camps which had been established in the Lublin and Kielce areas of Poland, and then on to Siberia. Women, children, and old men were deported in sealed freight cars and covered cattle cars. Upon arrival at their destination, some of the deportees were dead, others nearly frozen, or otherwise seriously ill. The survivors were bereft of clothing, food, and money. A few found refuge with relatives or friends, but most of them perished even before subsequent mass deportations began.

A young boy about 11 stood with his mother in the falling snow, herded by the occupying forces with several hundred others onto the train into several cattle cars. He was burdened with all that he owned in a tattered carpetbag and his mother’s suitcase. There was no room to sit as he stared through the slats. It was bitterly cold and the snow drifted horizontally as the train slid out of the station.

My first year of eligibility for the draft was 1971. The Selective Service Department randomly picked birthdays and draft order. We were all assigned a number from 1 to 366, indicating the order in which we would be called up. There was no escape for those born in a leap year. In 1969 all numbers through 195 were called. In 1970, numbers through 125 were called to serve. Vietnam had an insatiable hunger for young lives, and kept demanding more and more of them. In our continuing role as the defender of the free world and defender against all things evil, our draft boards very efficiently processed enough human capital to fill coffers and coffins alike.

The war for the hearts and minds of America’s stout hearted boys had long been lost. The sails that had billowed under the threat of the Communists and the Domino Theory were now empty of the wind that had propelled them. The country had no more fortitude for war. The war machine may not have been ready to stop, but we had swallowed the poison pill by turning the guns on our own children at Kent State where four young students died in a clash with the National Guard and nine more were wounded.

I was assigned my lottery number in August of 1971. It was 104. Even though I had obtained a student deferment to complete my college degree, it was quite disquieting to contemplate a life quite different from my current one. While I loved my country and all the freedoms that I enjoyed as one of its fortunate citizens, Vietnam had turned the country’s stomach to acid. Defending freedom just didn’t have the same patriotic ring to it that it did when I was in the fourth grade when the whole mess was just beginning. Nor many years earlier when that young Pole stepped onto the train.

In the fall of my junior year, Vietnam was finally beginning to wind down. Richard M. Nixon had been swept once again into office this time with a “Secret Plan” to end the war. With his democratic opponent winning only the state of Massachusetts, this was taken by the administration as a clear mandate to end the war in a manner of its own choosing.

The drafting had slowed. Fewer and fewer numbers were being called each month. By mid December the draft board had called up to 95 and there were rumors that there would not be an additional call. I watched the news as intently as I could to try and ferret out the hidden meanings in the reports about the war and the draft. On December 21st I wrote a letter to my local draft office releasing my student deferment. I waited out that last week in December, fully eligible to be called to war and heavily burdened with even the merest possibility of it.

The world somehow became a brighter place when in a couple of weeks I received my new draft designation from the Selective Service. Spring came just a little bit earlier that winter. I had ridden out my eligibility requirement and was now truly free to breathe again – to buckle down and find new purpose. I changed my major to economics and launched into a course of study that would get me out of college at the end of four years. At least this war was behind me.

There were still young men dying in Vietnam, and this would continue for two more years -- until April 1975, the official end to the war. Perhaps not the worst of it, but at least the bulk of the dying was done. This had been the prolonged struggle between nationalist forces attempting to unify the country of Vietnam under a communist government and first the French and then the United States (with the aid of the South Vietnamese) attempting to prevent the spread of communism. There was a tremendous cost in human life and re-assimilation into society for those who fought and survived.

A memorial to this war was dedicated in November of 1984. The social cost of warring against an ideology is almost insufferable. Many survivors today are still troubled by their experience and only marginally functional contributors and participants in their own life. The Vietnam War Memorial lists the dead. Men still cry at its walls.

In the spring I took a class in Macroeconomics, a branch of economics that deals with the performance, structure, and behavior of national economies. Its purpose is to seek to understand the interplay of aggregate trends in an economy with particular focus on national income, unemployment, inflation, investment, international trade and international finance. A course in macroeconomics looks at different types of economic systems and how they function. With our own economic system as a benchmark it was fascinating to see the efficiencies of Communism vs. Capitalism and the interaction of social policies and philosophical thought.

Our Professor led us through discussions and debates on which systems were more efficient and why. In our sterile class room, the consensus was that communism was more efficient for bootstrapping countries that were clearly third world, but that once a certain level of vibrancy and economic self sufficiency was obtained then communism became too burdened with the human element. There were some who disagreed and thought that it could work forever if people would just buy into the concept of working for the greater good.

It was Dr. Brzeski’s position that communism, as it was implemented in Russia's 5 year plans, become too complicated to track and perform against, and socialism saps the initiative of the human spirit. It had to collapse of its own accord – but there was no empirical evidence that it would. The experiment of communism was too young and our enemies didn’t run away just because we threw our blood at them.

As is true of many college campuses, the liberal leaning holds sway over the classroom and public forums. Many a conservative is shouted down at free speech rallies and the establishment is something to rail against rather than to appreciate for the freedom it allows us.

Likewise, college classrooms are isolated from the realities of life. Utopian ideas abound and fresh young minds grasp at the possibilities and potentials of a perfect world. In economics, the world is reduced to supply and demand curves with homage to interest rates and money supply. The pain of the loss of a family member rarely plays a part in a discussion of an investment frontier in which “guns or butter” is the most typical example of the concept of economic choice. Dr. Andrzej Brzeski did his best to instill in us some sense of reality when at the end of his course he told us about getting on that train.

I was long gone from the university when the USSR collapsed in December of 1991. I was the father of three boys and hoping that they too could survive without the touch of war that narrowly missed me. I am not proud of not serving, I am merely thankful that some of us did and only remotely aware of the true cost. It had been twenty years since I first met Dr. Brzeski and had thought of him only rarely in the intervening years. I was not an outstanding student. He would not have remembered me. But, I remembered him and I regret that I could not have said, “You told us so.”

All Rights Reserved

Friday, November 9, 2007

Casualties of the Revolution

There are few instances in life where we can recognize a specific event, action, product, new idea, or thing that could ultimately change the world. It seems that the best we can do is to look back over the past and connect the dots from then to now. Patterns emerge and sometimes there are precipitating events that we can recognize, but by and large, it is a landscape that consists of gradual reform, not distinct pivot points. In the world of politics we see a lot of reformers, but few revolutionaries. It is only when these events foment such radical change that it cannot be ignored any longer that we are swept into the history books as giving witness to a meaningful time and a place. History books are full of examples of revolutionaries, but in fact, they are few in number, and even radical change takes time and the use of an historical lens to bring it into focus. When the change doesn’t involve war or politics it is even harder to pinpoint an origin. But, it always starts with an idea.

Karl Marx had the idea, Lenin had the hammer. Rarely do time, place, and management expertise conspire to aid in the adoption of a radical idea. Even more rare is the individual who has a revolutionary idea and the expertise to capitalize on it. There have been many more good ideas thought up than implemented. Of course, there were people like Einstein, Oppenheimer, and Edison who created new ideas, or managed existing ideas and made them real, but again these are very few and very far between. Only their unique vision propelled them forward in the face of skepticism and failure and an inert society.

There is money to be made for the person who turns lead into gold, but for most good ideas there must be the confluence of special circumstances to make them a reality. First and foremost, there has to recognition of the practicality of a good idea in the first place. Alexander Fleming is given credit for the discovery of Penicillin, but he was not the first to have his bacterial cultures decimated by contaminating mold, only the first to think that this finding was important. Every good idea needs a champion to recognize its worth and potential contribution.

Second, the idea has to be able to be applied in a way that saves time or money, or creates ways to save time or make money. It has to be useful to society in which it is introduced. Chinese invented black powder and used it solely for entertainment, but later, it was adopted as gun powder by societies that were much more aggressive and saw the competitive advantage of guns over swords.

Third, it must be widely acknowledged and adopted by society. The third ingredient is not a given. Many a good idea has floundered when somebody was not ready to adopt it, and many a non-adopter left behind. The Decca Recording Company turned down the Beatles just before they became the biggest selling music group of all time. Thomas Watson, then Chairman of IBM, was sure that then entire market for computers consisted of 4 or 5 clients. His board of Directors was smarter than he was regarding the potential market size. This is why the idea that is owned by persistent champion is so important to its ultimate acceptance.

Junior high and high school science projects are typically born less of creativity than of the more tried and true. They are not particularly good places to find new ideas. Budding student scientists strive to duplicate the experiments that they find in their science texts, on the internet, or from the nostalgic reminiscences of their parents. If you have ever been to a local school science fair you have seen them all laid out on tables – the practical expression of the hypotheses printed in block letters on the threefold poster board background. Explanatory text printed with photos of the experiment in progress pasted to the board, and then the results in real life sitting in the foreground. These are proud moments for parents as they stand among the bean plants, copper wire, and solar panels, but few would think that any one of these experiments will change their lives.

The projects in any science fair represents literally hundreds of hours of family dynamics played out at the dinner table and on whatever work surfaces are handy as parents and kids work to bring this kind of study to life. These projects tend to be cooperative efforts, either with the parents helping their children gather material, or ideas, or framing the hypothesis, or more routinely arguing about exactly who needs to stay out of whom’s way. There has been more than one mother who had to make a place in the refrigerator for a bean plant that had to be kept in the dark and cold, perhaps another on the kitchen counter to bask in the window light.

My family was no different. My sister conducted two of these science projects. The first was a routine Bean Plant Experiment that encroached on the family’s health and cleanliness by placing a potted plant in the refrigerator for a week or two of dark and cold. (A by product of her experiment was to actually prove that the refrigerator light goes out when the door is closed.) A couple of years later, she did a second science project that actually changed the world as we know it today. The year was 1966.

The project was unassuming, but only slightly more clever than routine. It was not the idea that ended up being used outright, but the catalyst for what ultimately came about. Her experiment was on thermocouples. A simple experiment that measured the fluctuation in voltage when a couple of lengths of dissimilar metal wires were twisted together and their joints either heated or cooled, or in the absence of external heating or cooling, when a current was applied to the device the points would become hot or cold and the differences could be measured.

Thermocouples had been around a long time. My dad came up with the idea for her, but it was Kathy’s project and she researched and put it together. It was fun to do and fairly unique in that not many kids ever thought to test a thermocouple hypothesis. She earned an A.

The revolution began innocently enough. Soon after the science fair, Dad’s boyhood friend, Max, came to visit. Like my dad, Max was an entrepreneur. A self-sufficient product of the depression who knew hard work and was familiar with his own bootstraps. Max was in the Hospital identification band business. He manufactured, sold and distributed ID bands for hospital patients and was sensitive to the needs of the modern medical profession.

They got to talking as old friends do; comparing notes on family happenings and Kathy’s science project came up. Max had never seen a thermocouple work before and in a few minutes they were recreating Kathy’s science project in the kitchen. Max wondered aloud if they could use this technology for taking temperatures. Hospitals and Doctors waste a lot of time waiting for temperatures to registers on glass thermometers. There was a little spark between the two of them as they talked. Sure, this would be possible. How fast could they get a thermocouple to register a correct temperature? They experimented with wire, matches, and ice to test their theories. With their crude apparatus, they determined that it would take less than a minute. Max got more excited. He started to think this through. That shaved a least a couple of minutes off the use of a glass thermometer. It would still have to be used under the tongue. (That was familiar.) It also meant that the device would have to be stored in an antiseptic solution, wiped down, or used with some sort of disposable sleeve. It would also require more storage space than traditional thermometers. This could create certain problems with waste, supplies, office routine, perhaps creating barriers to adoption that might be difficult to overcome.

They had latched onto this idea with a fury akin to a dog on a pant cuff. They just couldn’t let go of its potential. They sat down at the kitchen table and kicked around more thoughts. Is under the tongue the only place you could get an accurate temperature reading? Why? Because it’s close to an artery. Was there any other location they could they use? How about, one of them postulated, in the ear? It is close to the carotid artery; there was little air movement and the temperature had to be fairly constant in the ear. But, how could they do that? A thermocouple required close contact to bring it to the temperature of its surroundings. It would take too long and be too uncomfortable for the patient. No, a thermocouple would not work. “How about an infrared reader,” my dad suggested. The years of his subscription to Popular Mechanics was paying off.

Max was even more curious. They had nothing to test this theorem. We didn’t just happen to have any infrared devices lying around the house to experiment with. But, Dad pulled out the encyclopedia and old copies of Popular Science and they studied at the kitchen table until they were both satisfied that this was the way to go. It would revolutionize modern medicine. They would build a thermometer that looked just like an Otoscope. It would look into the patient’s ear and within a few seconds register the patient’s temperature. Doctors were already used to using such a device to diagnose earaches. No antiseptics would be required. There was no potential for cross patient contamination. The temperature would more accurate than any glass thermometer because the patient’s reading could be controlled. Kids could talk all they wanted to and their reading would still be correct. It would work for animals too! That would open up the veterinary market to their product. Their concept was perfect, but was it practical?

Max had the contacts and they both had a little seed money. Dad had his own business to manage and Max was already in the medical supply business. It was only logical that Max take point. Max took the concept around to some engineering firms and found one that could make it happen. He negotiated design and development contracts with the company, and by late 1971, I held in my hand a battery powered infrared thermometer – the very first of its kind. It was revolutionary.

Of course, there was still work to be done. It needed a few refinements and lots of testing to insure accuracy. It needed be smarter so that it would not be “blinded” by very high temperatures. It needed to have some internal controls so that it would only measure temperatures within a certain range instead of anything and everything. Just a little more tweaking before it was ready for market.

As any of you who have worked on building a house know, that after the foundation, the walls and roofing are the first things to go up and the house looks nearly finished. The fact is that it’s only about 10 percent done and all the finish works takes the other 90 percent of the effort. Product development is no different, and the “tweaking” that was required to get this infrared thermometer to market was enormous. The partnership soon ran out of money. Venture capital was not nearly as easy to find in the early 1970’s as it was in the boom years of high tech and the internet in the mid to late ‘90s.

Without money, the miracle product began to slip away. In a shortsighted effort to preserve their small capital stake, Max had not patented the idea -- he had let the engineering company do that. The rights to the product reverted to them when Max and Dad were not able to meet the demand for payment for the additional required work. He had not consulted an attorney to guide him through the business processes and his own legal rights. Perhaps, Max let his optimism blind him to the finer points of practicality. Whatever the circumstances, the story turned ugly, hopeless, despairing, and Max ended up taking his own life. Perhaps there were other things going on in Max’s life that I was not privy to, but seeing his excitement around the kitchen table that one afternoon, this would have been enough.

The infrared thermometer languished for another twelve years before someone again recognized the potential of a good idea. In 1983, this thermometer finally hit the medical market with an enormous impact. It helped revolutionize health care in the United States and the world. Six million units sold almost overnight. Within months, they were in every doctor’s office, every hospital, every grocery and drugstore. In the last twenty years the cost and size have both been driven down so that this product is nearly ubiquitous with many more millions of units sold. Even the idea they had originally rejected, the thermocouple thermometer, made its way into the market place, and has been even more successful because the technology it was based on was not so demanding. Fortunes made, fortunes lost.

Revolutions always begin with indefatigable promise and they are what we make them. Someone must pay the piper as the harbinger of change to come. Sometimes there is a good idea. Sometimes we recognize it, sometimes we don’t. Sometimes we can do something about it, sometimes we can’t. Sometimes it catches on like wildfire, sometimes it doesn’t. But, one thing is true; revolutions are not without their casualties. If we are lucky enough to be at the right place at the right time, we can see it all happen and be satisfied. I regret only that Max could not sit around our kitchen table one more time to start another one.