The Just In Time Government

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Just in time delivery is a system that improves efficiency by only producing items that are to be sold in the short term. It wasn’t really possible until the advent of faster delivery like UPS and Fed Ex. Once all the parts of the supply chain were capable of keeping up with different levels of consumer demand, JIT became more feasible. Say you run a clothing store that sells 5 shirts per day. It’s inefficient to stock 10 shirts. It’s better to stock 5 shirts, then take delivery of 5 more shirts each day. It reduces inventory and makes sales more efficient. It works for some things, but not for others. JIT works well in situations where demand can be forecast accurately. Manufacturing and delivery ramps up during holidays and ramps down during the rest of the year. You make more chocolate around Halloween than you do around the Fourth of July. You make more barbeque tools around the Fourth of July than you do around Halloween.

JIT can’t be applied to everything, though. A mall parking lot seems like an enormous waste of space in July. There are hundreds of parking spaces that go unused day after day. The mall maintains a large parking lot because they will need that capacity during holiday periods. If you go there looking to create efficiencies in July, you might be tempted to cut the number of parking spaces. That would be short sighted, because you would be woefully under capacity in December.

Recently, there has been a trend to try to apply private sector efficiencies to government programs. Like JIT itself, it works better in some situations than it does in others. Achieving efficiencies in supply can be good when demand for services and products can be forecast. Just like the mall parking lot, looking for efficiencies in situations that don’t lend themselves to easy prediction can cause problems. A good example is regulatory agencies. When businesses are working well, there doesn’t seem to be a need to regulate or inspect them. Why use government resources to confirm that there are no problems? The difficulty is the same one that happens when you look at the mall parking lot in the summer. Even though it seems like a waste, the excess capacity becomes necessary at some point. People seeking to improve government efficiency looked at the regulatory situation in the Texas fertilizer industry and thought that reducing the inspection capacity was a prudent solution. This led to fewer inspectors and made it possible for unsafe, insecure, situations like the West Fertilizer manufacturing plant to continue until there was an accident.  The West fertilizer Plant had not been inspected by OSHA for almost 30 years.

For a business, the sudden popularity of a new shirt fashion means that demand exceeds the production and delivery chain, leading to lost revenue. Governments exist, in large part, to deal with unforeseen circumstances. That reduces the instances where Just In Time efficiencies can be applied.  Politicians see a surplus and do not see it as an opportunity to bank against a future need.  Instead, they see it as an opportunity to further trim government, to make it more “efficient”.   That doesn’t mean that we need unlimited government, but we do need to empower government to do its regulatory duty.  Government is the way that we collectively face the unknown and unforeseeable.  We need to have a government that is capable of responding to new events and circumstances.   Letting government grow too large can lead to intrusive and unnecessary regulation.  Letting government wither away by trimming it in the name of “efficiency” isn’t the answer, either.  Creating the right balance of capabilities and efficiencies is more complicated than a soundbite or slogan.  Saying that all government is bad is no better than saying that government can solve all problems.

North Korean Missile Test

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North Korea conducted a missile test on Monday after the announcement of Kim Jong Il’s death.  This test may have larger implications in the hereditary transition currently going on in North Korea.  There are two intertwined factors that affect the transition of power that will inevitably happen now that Kim Jong Il has died.  Songun and Juche are the national mottos of North Korea.  Songun, loosely translated, means “Military first”.  North Korea has long held the military as the primary benefactor and protector of the state.  In their national narrative, the military is the only thing that prevents aggressive foreign powers from conquering the country.  Juche is the other side of this narrative.  “Self Reliance” is more than a socialist slogan, it is a framework that supports the actions  of the state.  Juche creates a siege mentality that pits North Korea against the rest of the world.  Through strict control of the national media, North Koreans believe that they enjoy the highest standard of living in the world, and that other countries will try to take that wealth away from them if they are allowed to.  It’s immaterial that North Korea is fundamentally dependent on foreign aid to sustain itself.  Without an external threat, there is no basis for the government to claim that the authoritarian measures they use to control their population are needed.

Juche and Songun combine to place the military at the forefront of the nation.  The difficulty of this emphasis is that an overly strong military can become a threat to the stability of the political infrastructure.  In pre war Russia, Stalin saw the military as a threat to his power base, and purged most of the officer core.  This gutting made the state vulnerable to an invasion by Germany during Operation Barbarosa.  North Korea stands at a unique place in history right now.  The emphasis on military strength is necessary to maintain the national narrative, but puts the politicians in a precarious position by creating rivals for power.  Since Kim Jong Il waited too long to begin grooming his successor, his death has created a power vacuum within the country.  Kim Jong Il himself was groomed for more than a decade before the death of Kim Il Sung in 1994.  Kim Jong Un has only had a few short years to gather power and prepare for this transition.  As a relative newcomer to the national political stage, he may not be able consolidate power before other forces within the country seize it.  This power grab will not take the form of a direct coup, so it may not be very visible to outside observers.  Kim Il Sung and Kim Jong Il are not simply political leaders in north Korea.  Nor are they secular saints as Stalin and Lenin were in the Soviet Union.  North Korea combines the traditional socialist deification with a cult of personality.  The Kims are not only the founders of the state, they are the foundation of the state.  North Korea as an entity cannot exist without the hereditary line started by Kim Il Sung.  The educational system in North Korea has propagated this mythos to the point that Kim Jong Un’s titular position is almost unassailable.  That does not mean that real power will rest with him when the dust settles.

Forces in the military and the central party may see Kim Jong Il’s death as an opportunity to seize power from Kim Jong Un.  In order to do this, they must exercise power in overt ways that do not threaten the state as a whole.  In places where the military senses that they have the authority and the will to conduct aggressive maneuvers, they may become aggressive towards their neighbors in an effort to influence the hereditary transition.  When the military independently exercises power, it is a direct provocation to the political establishment.  The missile test on the east coast of the country may have more to do with gaining influence in PyongYang than it does in keeping neighboring countries at bay.  Larger exercises in power, like the nuclear tests, come from the established political structure and are meant to act as threats against the external forces that support the Juche and Songun slogans.  Missile tests and isolated artillery barrages may be the means that the military uses to suppress opposition in the capital as government power settles into a new form.  In order to shape the outcome of the transition, the military may embark on a series of small international provocations, like this missile test.

It’s difficult to understand what the internal alliances are between the military and the central party.  They may be acting independently or in unison to create a new governing force in the country.  Regardless of which forces are collaborating to control North Korea, it is likely that a period of instability on the peninsula will be the inevitable result.  Since Kim Jong Un will be the new head of state, it is the power behind that office that will determine the direction that North Korea takes in the future.  As an inexperienced political figure, Kim Jong Un is most likely ill prepared to walk the fine line between the military and political forces in the country.  If he decides to blunt the power of the military, it will diminish the national narrative and the power of the central identity of the country.  If he decides to conduct a political purge, he will empower the military in a way that will eventually threaten his ability to maintain control as a dictator.  The task for Kim Jong Un is to use the political party and the military as opposing forces that allow him to keep power in his office.  The alternative is to become a puppet to a larger force, which will only be decided after a prolonged struggle between the two fundamental organizations that keep the country from collapsing.

For western governments, there is little that they can do to influence which way the balance of power shifts in the coming year.  China is in the best position to guide the power transition as the primary supporter and benefactor of North Korea.  It is in their interest to maintain stability between the Koreas since China is the initial destination for almost all defectors escaping the North.  A humanitarian disaster caused by a million refugees does not work within their own national narrative, and they will most likely go to great lengths to avoid it.  As a pragmatic course of action, they may back which ever force gains power within North Korea.  China faces the same difficult balancing act that Kim Jong Un does, though.  If one power gains too much influence over the course of the country, it may lead to more aggressive acts towards North Korea’s neighbors.  It’s not likely that China would be the target of an independent action by the military, but anything that causes instability in the country would inevitably spill over into China.  The stark nature of North Korean politics, which sees the entire world as potential enemies, does not have the flexibility to deal with the nuanced balance of power that would be required to maintain the state in its current form.  In most countries, this would lead to a military coup or a civil war.  In the insular  environment of North Korea, that conflict will be played out against its neighbors instead of internally.  As the living embodiment of the state, Kim Jong Un should be immune to overt challenges to his position.  That status will not protect him against other forces in the country that will seek to diminish his power to the point of becoming a puppet leader.

The New Age of Patent Medicine

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In the 18th and 19th centuries, patent medicine use became fairly widespread in the US. The concepts of general anesthesia and surgical hygiene were still in their infancy during the American Civil War. With such a dearth of knowledge about bacteria and the foundations of disease, a large area of medicine was left up to the imagination. Entrepreneurs marketed a wide variety of elixirs to fill the gap. They were supposed to treat diseases as diverse as incontinence, cancer, stomach aches, colic, and many others. Patent medicines were tagged like we tag our blog posts today, to touch on as many diseases as possible to increase their audience. Most patent medicines were formulated from substances that were known at the time to induce some form of euphoria or drunkenness. Alcohol, Opium, Cocaine, Arsenic, Radon, and a host of other ingredients were common in patent medicines.

Today, we look back on the patent medicine era and wonder at the naivete that produced so many dangerous medicines. The truth is that we still live in the age of patent medicine, despite the advances in science since the Victorian Age. We’ve developed treatments for many of the ailments that traditional patent medicines were meant to cure, but we’ve replaced them with new ailments and cures. Yesterday’s stomach ache is today’s lack of energy. In some ways, it’s an easier ailment to cure with a patent medicine. You only have to make the customer feel more alert, not cure a specific pain. Including a large dose of sugar or caffeine is usually sufficient to create a sense of alertness and energy.

We’ve become obsessed with energy drinks, muscle building compounds, and diet aids. The US doesn’t regulate “herbal supplements” like regular medicines. They’re treated as food supplements instead of drugs. This distinction allows the manufacturers to make claims and use ingredients that would not be allowed in regular drugs. Just like the patent medicine era of the 19th century, we only hear about the ill effects of these drugs when someone dies. Ephedra as an ingredient was banned in the US after a series of deaths brought its use in energy drinks and diet aids to light. As the ill effects of Ephedra became more widely known, the supplement industry created a public relations firm to assure the public that its use was safe. In addition to lobbying congress, they sponsored clinical studies to prove that Ephedra use was safe. For almost a decade, Ephedra remained in energy drinks. It wasn’t until the high profile deaths of professional football and baseball athletes that the ban gained any traction.

The regulations that govern dietary supplements are fairly loose. As long as a product does not introduce a new compound, or claim to cure a specific illness, it can be marketed freely as a supplement. That’s why most supplements are sold as diet aids without specific claims beyond weight loss. “Promoting general body health” is the term that’s usually used by regulators. It’s eerily similar to the marketing campaigns used by the patent medicines of the last century. We feel like we live in a modern society, immune from dubious drugs and protected from callous marketing. The Ephedra Education Council is a modern example of patent medicine. We may not even be aware of the dangers that some of these supplements pose. Metabolife, one of the largest manufacturers of Ephedra based dietary aids, was sited by the FDA for withholding customer complaints and injuries. It wasn’t until the dangers of these products were publicly exposed that it became clear that Metabolife was marketing a product known to cause deaths in their customers. The real naivete in our society is to suppose that these products are uniformly safe because of an advertising campaign or a corporate sponsored clinical study.

The problem isn’t restricted to dietary supplements, either. Most orange juices, even the ones that are labeled as 100% orange juice, use supplements to change the flavor of the final product. In order to store orange juice, companies remove all of the oxygen from the raw juice. This retards the decay process and allows the company to store the juice for up to a year before they process and package it. Removing oxygen from orange juice also deadens the “orange” flavor of the juice. In order to re introduce flavor into the juice, companies use unregulated additives. Since the additives are derived from extracts, they are not regulated as part of the orange juice. Indeed, the companies can market their orange juice as 100% natural, even though it has been modified with chemicals and fragrances.

Patent medicine is thriving in our new world of loose regulations. When the government introduced new packaging requirements in response to the “Fat Free” craze, companies lobbied to create loopholes in the new laws. In order to call a food “Fat Free” there can not be more than .5 grams of fat in each serving. Pam famously circumvented this requirement for their fat free spray by reducing the serving size to .25 grams. Even though the product is almost entirely based on fat, the smaller serving size allows them to market it as fat free. Without a chemistry degree, it’s nearly impossible for a consumer to recognize which foods are truly healthy, and which ones are simply products of clever marketing. The adage “buyer be ware” doesn’t apply anymore because companies have found innovative ways to obfuscate the true ingredients in their products.

Juche

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Juche, loosely translated, means “self reliance”. North Korea has used this concept as a central tenant of its government for about 40 years. The specific meaning and application of the slogan has changed, but the core value hasn’t. In its modern history, North Korea has relied on larger states to support it with aid and political legitimacy. That dependance may seem to contradict the idea of “Self Reliance” but it is consistent within the closed loop of political thought inside North Korea. In order to maintain relationships with both China and the USSR, North Korea had to develop a new form of socialism that was compatible with both. Juche shares some components with traditional socialism and the versions practiced in China and the USSR. The defining difference is the cult of personality that has grown around the Kim family. The Soviet Union and China both use leader deification as a part of their societies, but not to the extent that it’s used in North Korea. Stalin and Mao were both icons of socialism in the Soviet Union and China, and developed state sponsored personality cults. North Korea builds on those two examples, but places the Kims at the center of the state instead of using them as secular saints in the larger cause of Socialism. This has created a country that relies on specific individuals to maintain the state instead of a larger ideal or “revolution”.

When Stalin died in 1953, the Soviet Union entered a period of turmoil, but the state itself remained. The focus of Soviet style socialism was to maintain the October revolution, not serve the dictator. This allowed a measure of continuity that was independent of the country’s leaders. North Korea’s tradition is a little different than the Soviet or Chinese model. The central belief in North Korea is that Kim Il Sung is the founder and foundation of the state. Even today, Kim Jong Il is not the spiritual leader of the country. Kim Il Sung is still called President for Life, 17 years after his death. The state philosophy has expanded to include Kim Jong Il and his Kim Jong Un as a matter of necessity rather than part of the country’s narrative. This has created a hereditary system in North Korea that is fairly unique in the Communist world. Self reliance, Juche, incorporates the North Korean people into a single body politic that is represented by Kim Il Sung and his descendants. Louis XIV claimed that the king represented the entire body of the nation and was responsible for all aspects of it’s success or failure. The Kims embody the Juche principle in a similar way. The system they’ve created in North Korea relies on the mythos of the Kim family and their “miraculous” deeds in protecting the country from outside threats.

Juche needs an enemy to remain effective. Self reliance loses it’s power if there is no external threat to focus the country’s attention on. It’s not the same balance that the the superpowers maintained in the cold war. Instead of pitting two philosophies against each other to compete for global influence, North Korea sets itself against the world to maintain internal stability. An information vacuum is central to that stability. North Korean citizens believe that they enjoy the highest standard of living in the industrialized world. Even a small glimpse of the outside world would destroy that misconception, and destabilize the entire state. Without an external enemy, there’s no rationale to maintain internal secrecy. Likewise, without the internal secrecy, there’s no rationale to focus on an external enemy. The adversary has to be both faceless and real. North Korea has entered the information age in a limited way, so there has to be some kernel of truth in all the propaganda they produce. An imaginary enemy would be easier to create, but harder to maintain. The volume of information available outside North Korea allows them to pick and choose which stories fit the narrative they want to create. Even though North Korean televisions and radios receive a limited number of stations, there still has to be a consistent stream of content to satisfy both the state narrative and domestic expectations.

Overall, it requires a lot of effort to maintain the Juche idea. North Korea has had to extend self reliance to include the military (Songun) in order to maintain domestic stability as well as act as an external deterrent. This military emphasis creates a new power base outside the Kim cult of personality. In many dictatorships, empowering the military leads to instability. In the case of North Korea, that instability is more subtle. Since the populace strongly associates their national identity with Kim Il Sung, a revolution isn’t likely to take the form of a coup that topples one of his descendants. Instead, Kim Jong Un will most likely assume power once Kim Jong Il dies. Whether he wields that power in more than just name will depend on the military.

North Korean Hereditary Transition

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It’s hard to judge history as you live it.  Some things are easy.  Personal computers, the Internet, maybe even Facebook and Twitter.  I think the Romans who were alive when the eternal city was first sacked by Visigoths would recognize that as an historic event.  When we look back from our perspective, we recognize all the little steps that led to that day.  History doesn’t repeat, but it does rhyme, as the saying goes.  I wonder if we could see what “small steps” are occurring around us.  I know one.  North Korea‘s revolution was precipitated by decades of oppression and starvation imposed on the population by an immoral hereditary dictatorship.  The revolution hasn’t happened yet, but I’m fairly certain that it will.  It will start as an internal power struggle among the upper echelons of the military.  The Kims (il sung, jong il) have been increasing the power of the military.  They’ve needed a strong military to act as a deterrent against aggression, both foreign and domestic.  Having a strong military in a dictatorship is a difficult balancing act.  Stalin gutted his military to the point that it wasn’t a threat to him, but it wasn’t a threat to the Germans either.  A strong military can become an internal threat if it’s left unchecked.  North Korea’s solution to the military problem has been to focus the country’s energies like a laser on their neighbors and first world countries.  “Juche” doesn’t just stand for self reliance, it’s a slogan that embodies a manifest destiny and a national identity at the same time.  Juche implies a siege mentality where North Korea will always be at odds with the rest of the world.

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As the outside world inevitably intrudes into North Korea’s insular world, the military elite will want more of the first world comforts that Kim Jong Il and his inner circle enjoy.  Outside comforts, by definition, come with outside ideas.  Without a strong dictator to act as a benefactor, the military may start to see the dictatorship as something that only exists at their pleasure.  Normally, this would just lead to a new dictator.  North Korea is a slightly different situation, though.  In addition to the strong dictator/military relationship, the Kims have gone to great lengths to create a cult of personality.  It’s the emotional component of their internal control system.  In some ways, North Koreans see Kim Il Sung as their father, not just the father of their country.  The cult of personality has been a central part of the North Korean education system for more than three generations.  Presuming that the average lifespan of a North Korean peasant is less than 70 years, there is a vanishing minority of people who even remember North Korea before the Kims.

I think the North Korean revolution will be very quiet, and it definitely won’t be televised.  The military elite may already see the current power transition as an opportunity to take control of the state.  They can’t perform a direct coup, but they can take control before Kim Jong Un consolidates his power.  They would attempt to make Kim Jong Un a puppet.  A North Korean puppet state would leave some tell tale signs that we could see.  In order to take control, the military will have to exercise some power.  It won’t be directly aimed at the dictatorship.  It would most likely take the form of aggression towards South Korea, Japan, perhaps even China.  Aggression towards China is unlikely, but still possible.  It depends on where the military has the strength and will to do something that can be used as a bargaining chip in PyongYang.  The struggle isn’t for the dictatorship itself, but  for the power behind the dictator.

There are signs that this struggle has started in a small way.  Assuming that Kim Jung Il has been in declining health for at least 5 years, we can evaluate North Korea’s aggressive actions in that time frame.  Some of those actions may have been precipitated by the military to put pressure on Kim Jong Il.  Kim has also gone to China several times in the last few years.  As North Korea’s benefactor state, China is in a position to dictate the terms of a power transition.  Kim may be bolstering his son’s position in hopes of gaining them as an ally in the upcoming hereditary transition.  China’s main concern is to maintain stability on the Korean Peninsula.  Which power eventually gains control of North Korea may not concern them as much as a smooth transition.  China may back either side.  I think they’re more likely to back the Kims because a popular revolution will happen in North Korea, but not until the whole country is destabilized by a military coup gone wrong.  They will only delay the inevitable, though, if Kim Jong Un consolidates power at the expense of the military.  Even though they are rivals in this struggle, they need each other to maintain strict control of the population.

North Korea has always fascinated me.  It’s an attempt to create a country like Orwell’s Oceania.  To any rational person, that dark world is just a thought experiment on the depth of human cruelty.  A country based on such an imbalance cannot endure any crack in the facade.

A Business Climate

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I’ve been thinking about business practices and regulations.  A war is going on between groups that favor more regulations and groups that favor less.  It happens in every area of human endeavor, from what we see on TV to offshore oil drilling.  It seems like the balance between them shifts on tragedy.  When BP calculated the risks of drilling at a deeper depth in the Gulf, they didn’t consider a complete failure as a risk.  It is the role of regulations to envision the worst case.  That’s why they seem so ridiculous sometimes.  I worked on a disaster recovery/ business continuity study last year.  Thinking about disasters at work was a little disconcerting.  CSV has had wrecks that closed 25 square miles in our area before.  There’s a railroad within a mile of the office.  There’s a railroad crossing within 3 miles of my house, too.

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Too much regulation is bad, though.  I’m watching 1984 while I type.  That’s a world of nothing but regulation, where every aspect of life is controlled.  North Korea has always fascinated me because it’s an attempt to bring Orwell’s vision to life.  So where is the balance between business practices and regulation?  We have an adversarial system, like our judiciary.  Regulators and the regulated push back against each other until some tipping point is reached either way.  In the case of BP’s drilling operations, they flag their oil rigs in a such a way that they can avoid US inspection and regulations.  That’s the inherent irony of the regulation wars.  Taken as individuals, I think that BP would have agreed that the maintenance and operation of Blow Out Preventers is essential to the way they do business.  The same way we all agree that tailgating on the road is dangerous.  Give those individuals a sense of anonymity, like a car or a corporation, and they can do all kinds irresponsible things.   So, how’s your driving been lately?

Oil Doesn’t Mix With

I’ve read and heard a lot of things about the Gulf of Mexico oil spill.  For three months, I’ve been absorbing news.  I read a blog post predicting the end of Humanity from a fractured Gulf spewing Methane into massive tidal waves.  I heard that some politician went swimming in the gulf to prove there was no oil problem, ala the mayor of Amity in Jaws.  Once the oil spill got mixed up in the internet/cable news blender, only a couple things stood out for me.

I heard a Congressman apologize to BP for creating a 20 billion dollar fund to reimburse people affected by the spill.  My mind sputters with outrage trying to write something, so insert what you thought of it.

This ecological disaster will take a decade to even understand, and perhaps a generation to fix.  That was the planned operating lifetime of the Deepwater Horizon.

BP, indeed the entire oil industry, is drilling wells in areas that are outside their emergency response capability.  I mean, come on, did BP executives donate the golf balls they ground up to shove down that hole?   Once, when I was a kid, we set off a couple firecrackers in the driveway.  They shot right into a bush and set it on fire.  We ran around until the fire went out by itself.  I feel like the response to this oil spill has been like us setting off those firecrackers.  I would have thought that the subject of emergency response has come up at some point during the development of deep water drilling.  I don’t mean celebrity oil separators,   but the nuts and bolts conversations that all companies perform every couple years.  “What happens if everything breaks?”  It’s obvious that BP didn’t even have an informal plan, no engineers standing around the water cooler chatting about capping oil wells.  That may have been the inspiration for the caps they’re putting on the well, who knows?

The expense of this spill, the Billions of dollars required to restore just a portion of the Gulf to its former state, represents just a portion of the profit that BP will make in the same period of time.  It’s telling that a catastrophe of this magnitude won’t push BP into the red for even one fiscal quarter.