Another wasted opportunity

I have hesitated about how to comment on Gates-gate. The cynic in me responded first. There are examples like this (he said-he said about whether an event was racial profiling) every day. Why did this one get national exposure? Because Gates is a friend of Obama. Heck, for a trip to the white house and the great national exposure both of these guys are getting (the book deals are already on the agents’ desks), I would gladly volunteer to be profiled and arrested.

If the result is a real and productive conversation about race and police procedures it would be useful enough that I will sacrifice the last two weeks of national attention on the more pressing matters of housing, health care reform, the economy, Afghanistan, Iraq, etc. But if not, what a waste!!! All I have seen lately is discussion of which beers they selected and if Obama selecting Bud Light was a political calculation because it’s the most popular beer in America.

So far, it hasn’t been much better than the Michael Jackson coverage, which also could have resulted in some real conversation about race, popular culture, and some other useful issues. But they never materialized in that case. All we got there is the debates about who will get custody of the kids and memorials about his music, his skin color evolution, and random gossip.

Another wasted opportunity. This is what I expect from US news these days.

Tech rally is an anti-politician indicator

As much as CNBC’s Jim Kramer has taken a beating in the past year from Comedy Central fans, he still has a die hard set of fans who keep his Mad Money ratings and book sales high. He said something last night that seems very insightful, but I hope it is not true.

He noted that it is the tech companies that are leading the stock market rally over the past few months. The NASDAQ index is way way up. He speculated that the tech sector is the one industry that the government is not trying to “reform.” We have tons of reform and regulation activities already in the finance/banking sector. Health care is being debated and something will come out of that. The cap and trade bill and other environmental reforms will change energy and utilities hugely. Real estate will be affected by the financial reforms and probably the energy reform. The auto industry is virtually owned by the feds. Tech is the only one they have left alone.

So why would that make the tech sector rally? The idealist in me really wants to believe that the government can improve our lives by making intelligent decisions regarding how to regulate industries and the market. But the evidence tells another story. Our government is made up of politicians – not policymakers. They are electioneers – not statesmen (or stateswomen). Senator DeMint (R-SC)’s exultant comment about health care reform being Obama’s “Waterloo” tells the story. He would rather achieve a political gain for the GOP in the 2010 elections than to see a successful reform of the nation’s biggest albatross.

And its why being left alone is the best indicator of success. Because government intervention invariably leads to losses, not gains. This is very sad.

Michael Jackson

For weeks, I have been complaining about the extensive coverage of Michael Jackson’s death. I freely acknowledge that he was the King of Pop and had a huge impact on American culture. But all of the other TV news was pre-empted for weeks. No matter how important he was, there were still wars in Iraq and Afghanistan going on, financial and economic messes to clean up, health care and climate change bills being debated in Congress, and all of that was limited to a 30-second update at the top of each hour. The coverage didn’t even talk about his impact on American culture. It was all about who is going to get the kids.

But then I read this. It makes some very good points. I still don’t think the coverage focused enough on the issues that would make the discussion relevant and important, but at least I am less ashamed to belong to the same population of TV viewers that demands 24/7 coverage of celebrities and their spectacle. Not happy about it, but maybe a little less ashamed.

Conflicts of interest.

This is just WRONG (full post here).

After I handed the book into the publisher (McGraw Hill), they let me know they had problems with my assessment of the Ratings Agencies. They were unhappy with my calling them “Pimps & Hos“, or describing their business model of rating junk bonds as AAA for big fees as “Payola.” (What else would you call it?)

Not coincidentally, McGraw Hill owns of the largest Rating Agencies, Standard & Poor’s.

My compromise was to change the tone — namely, to remove the reference to Pimps. However, in its place I was going to add publicly available data and congressional testimony, more detailed analysis, and quotations from experts. When it was finished, I found the revised section to be less vitriolic — but far more devastating to S&P. They (along with fellow rating agencies Moody’s and Fitch’s) were key enablers to the entire crisis. There were many other guilty parties, but I simply could not under-emphasize the ratings agencies.

When McGH rejected it again, I exercised my right to buy the manuscript back from them in January 2009 (I returned the advance). Numerous publishers were interested, but I went with Wiley — they have a great deal of experience publishing business/investing related books, and as a publisher, had no conflicts of interest that would interfere with telling the full story.

Aren’t there supposed to be firewalls or something to prevent this? After the Washington Post’s “error in judgment” last week, I guess we can’t be too confident that editorial firewalls are effective. The cynic in my always expected this from Rupert Murdoch’s publications, but Wapo and McGraw-Hill!! I am sooooo disappointed!!

the switch to digital TV

Business Week reports that the switch to digital TV is not going quite as planned. The local stations are all ready to add extra channels in their new bandwidth. Local weather, local sports, Spanish versions, even movie channels. But the national cable and satellite companies won’t add these channels to their lineups. So the bandwidth is going to waste.

Oh well. Nice try.

New Haven firefighters promotion exam

Despite all the controversy and the close vote surrounding the Supreme Court’s decision in the New Haven firefighter promotion exam case, it’s really not that complicated. Industrial engineers and hiring managers have been dealing with this kind of issue forever. From a purely “workplace efficiency” point of view, it makes sense to have exams that directly test someone’s ability to do a job before assigning them to that job. We call these KSAs, for knowledge, skills, and abilities. It makes no sense to have an exam that tests irrelevant KSAs – it would hurt the company’s (or firefighting unit’s) performance by hiring and promoting less qualified candidates.

The Civil Rights Act made an important contribution to this. The clause in question says that if there is a big disparity between the scores of minorities and non-minorities, then we should look at the exam with suspicion. That’s a good idea even if there was not a law requiring it. If the test is biased, it’s not good for the company either because it leads to less qualified individuals getting the job (or promotion). The Civil Rights Act was necessary because of the prevalence of discrimination at the time, which could lead companies to prefer less qualified workers that were white males. But even if that is no longer true today (a complicated question that is beyond today’s post), the idea to check our employment tests for subtle bias is still a good idea. There is evidence that ethnic minorities are not as good at pencil and paper exams but are just as good at realistic job simulations (which are better predictors of job performance anyway).

So it would make sense to look “with suspicion” at a test in which the white and Hispanic firefighters passed at much higher rates than black firefighters. That’s what the district should have done. They should have hired a professional to look at the exam and see if it effectively focused on real firefighting KSAs. If it did, then their "suspicions" should have been alleviated and they could have promoted the passing firefighters. If the test did not, then they should have thrown it out.

The problem was that they didn't do this. They got scared that different passing rates would lead the black firefighters to sue, so they threw the exam out without the necessary evaluation. With a small sample size, like in this case, it is possible than an unbiased test will lead to different passing rates of different groups. This is especially true if there are other differences, for example socio-economic, between the groups as well. If the white firefighters had more money to prepare, that could explain the difference in passing rates as well.

But the point is that looking at the exam with “suspicion” is different than throwing it out. The Supreme Court got it right this time. Companies should look at their exams to see if they are biased. If they are, they should change the exam. If not, they should keep the exam until a better one comes along. That’s what civil rights is all about. Knee jerk reactions are not the answer.