The Emperor’s New Clothes

July 9th, 2011


Ok, I am calling BS on the silliness of the debt limit “debate”.. We are told that our nation will default on its debt if the limit on the amount of debt allowed is not raised. Why would that be so? We could continue to borrow up to the present limit, so there is no need to default on repayment of principal. And interest? It presently constitutes less than ten per cent of annual expenditures. Why would the government fail to pay interest due? I guess because they are already borrowing 40 cents of every dollar of government expenditure, and they would elect to default rather than pay interest. But that’s a choice. As to default being the consequence of failing to raise the debt limit? It’s another story of The Emperor’s New Clothes.

Questions for Life

May 31st, 2011

1. Relative to what? We all have opinions, but they are all relative to some base assumptions that we often do not choose to examine.

2. Who are they? The infamous “they”. When a business representative, referring to another area of his or her company, says “they will/will not . . . “, how do you feel?

3. When should I do it? How about now?

4. How do I get people to listen to me? Is it the quality of the information, or how it is presented? Or where? Or to whom, which is usually how this question is directed.

Jim Hirshfield
May 26, 2011


November 12th, 2010

Let’s see if I, as a small business man, understand this further monetary easing. Our government is going to add $600 bil to the monetary supply by buying federal debt instruments from banks. This on top of $300 bil quantitative easing last spring. The stated goal is to put cash into the banking system so banks can lend it to small businesses.

Fallacies? I’ll list a few:

1. What will prevent the banks from simply buying back more federal debt, vs. making loans? Oh, that’s right, some bureaucrat has thought of that and we shouldn’t worry about it.
2. Will the continuing explosion of federal debt cause buyers of those instruments to demand a higher coupon rate, which would also have the effect of making it even more advantageous for banks to reinvest in them? That is, while deflation is the present concern, when will we “snap over” from worrying about deflation to dreading inflation?
3. Will this QE money, the potential inflation it brings, and potential higher interest rates per 2 above, cause businesses to be even more cautious in committing to hire people and make investments to expand their businesses? Note I did not say that it will cause inflation. Just that it increases the risk.
4. Just what is the nature of the risk small businesses perceive now, the risk that is causing them to be very conservative? My answer: they do not know what the rules are.
5. What will encourage small businesses to go in to the bank and try to borrow? I mean, those small businesses that a bank might think has a reasonable chance of repaying their loans. Of course: put a definition on the unknown risks they fear.

So great idea, government. Don’t do what has always worked – making the business environment more certain and more attractive. Go with the stuff that has not worked last year, the year before, or a number of times in the past. Go with an agenda for redistribution, not for growth and job creation.



March 20th, 2010

Some bright economist ought to give us a formula with which to analyze how much wealth and income can be taken out of the productive economy and used to deal with non-economic needs in a society. It seems obvious that any country has enough wealth to do a bit of non-economic investing, such as defense, justice systems, and welfare. The issue is to define the “sweet spot”.

While any country can do a bit of investing to satisfy other needs, it also seems logical that for each country there is a point at which such investing takes enough resources away from the productive economy that not only will the productive economy decline, but with this decline the availability of monies to do those unproductive but necessary things will shut down as well. This is what I call the “sweet spot”.

It is a complicated and, for that reason, a fun problem. For one, you could not create this formula with an analysis fixed in time, as governments seem to be good at borrowing against the future. So you would have to consider the cumulative effects over time, and the sweet spot would be defined not only as a per cent of GDP and a per cent of accumulated wealth, but also as a place in time in the future.

A second interesting consideration is how much of the non-economic funding is to be done by government vs. by the productive (i.e., private) sector. This would involve a whole sub-formula, it would seem, and a “loop” that analyzes whether to maximize the public or private sector funding of these needs first, using the other source as an alternative once the primary source stops growing.

But what a great tool it would be! We could see when things are projected to shut down per the formula, and then just argue about the assumptions shaping the inputs. I see that as a lot more clarity of discussion than we have now in our society. And that would be good!

Jim Hirshfield

Newspapers, Customer Service and Product Delivery

February 21st, 2010

So here’s a good one. I emailed my local (large) newspaper yesterday, The Seattle Times, and asked when the paper was supposed to be delivered to my home in the morning. They gave me the times for weekday and weekend. I then emailed back and asked that my paper arrive by those times. They responded “We will notify your carrier”.

Two issues in one. First, Customer Service. Shouldn’t they have said “We will ensure that your paper arrives on time”? The principle here is that customer service should take the problem from the customer and resolve it – not bounce it to some other part of the organization as if they were somehow different. In the eyes of the customer they are all the same.

Second, we have the issue of Product Delivery. What other large organizations rely on independent contractors to leave their product on your driveway (or in the bushes, out in the rain, etc.), hopefully in time to be of use?

Is this a useful business model for the 21st century?



December 22nd, 2009

Silent Majority” is a term we have been hearing for a long time. It identifies a sometimes large group of citizens who do not involve themselves in politics until some major issue comes to the fore. Does this group exist? I think so. Why are they silent? Easy. They are too busy raising families, working hard to make ends meet and to execute their life plans, to become involved in public issues. Or so they think.

If one does not plan to have a career in politics or public service, it is all too easy to fail to put anything about politics into your life plan. This is a mistake. What goes on in the world of politics affects all of us. As someone said, elections have consequences. But sometime, when people rise up, become vocal, and express their concern about what is happening in the country, those in the political world are surprised. They shouldn’t be.

So take a look at your life plan, and see what it contains regarding politics. Don’t have a life plan? Make one. My book will help, if you want help. But do it. Avoid being an eternal member of the silent majority by putting into your life plan the need to understand and respond to things political.



October 1st, 2009

Any organization that serves others must provide what is commonly called Customer Service. That is, when a customer has an issue, they need some one to call who will get the issue resolved. Here are some thoughts on providing excellent Customer Service:

1. Don’t give the customer any reason to call. That is, anticipate and fix problems before the customer ever sees their effects. We used to hold top level weekly meetings where we reviewed all unsolved customer service problems. More often than not these were new issues, often easily solved, but things the customer service people had not been trained to address.
2. Get rid of those extensive call director menus, and allow your customer to talk to a real person, quickly. I know this is a cost issue. My solution? Allow the customer to self select into a longer automated queue if they are comfortable doing so.
3. Have your Customer Service people take charge of the customer’s problem, lift it off of the customer’s shoulders, give your people a procedure for dealing with these things, and compensate them for doing so. Get back to the customer when a solution is provided.
4. Training, training, training. How can you expect your customer service people to know the answers to all the problems that might come up if you do not gather information company wide, craft solutions, and inform your people about them?
5. Compensation. Craft a structure to pay good employees for good work, as an incentive compensation plan laid over base wage.

Remember, you will not receive a call from your customer when he switches to your competitor.

Health Care Reform

September 13th, 2009

Health Care Reform

It is interesting how the process of making public policy highlights so many of the business adages in my book Fortune & Freedom: The Entrepreneur’s guide to Success. Previously I wrote about the need to define the problem before you attempt to solve it, and noted that little of this had been done in the national debate on health care. Someone must have read my blog, because starting shortly thereafter all I have been hearing about is the goals of health care reform. Unfortunately, there has been little discussion about specifics that would address those goals.

So let me give you an illustration of a business fallacy titled “Oh no, you did exactly what I told you to do!” See the picture in my book of the man with anguish on his face? He has just seen the result of his hasty solution to a problem he has not taken the time to define and analyze. Will this be all of us after the Health Care Reform initiatives become law? Or, to say it another way, let’s go back to the issue raised above, define the problems we are working to solve (there are plenty of them), and discuss and agree on solutions to those problems.

It seems to me that most people agree on the need and the goals of health care reform. The problems lie in laying out solutions to specific health care problems, and discussing and agreeing on these solutions. Pretty much all the discussion I have heard to date is vilifying the other guy for not agreeing with you. You certainly could not stay in business if you ran your company that way.


June 24th, 2009

In my book “Fortune & Freedom” The Entrepreneur’s Guide to Success”, I note in Part IV that identifying the problem before solving it is priority number one. I quote my middle school math teacher who said: “If I had ten minutes to solve a problem, I would spend eight minutes reading it.” So what is the problem we intend to solve with the proposed new Health Care Legislation? Is it covering people who do not have Health Care Insurance? Covering people who do not want health insurance? Or is it cost?

The President at various times says it is both, and that the present high cost of health care is caused by the profits of the for-profit insurance companies (not all providers are for-profit organizations). Some politicians such as Robert Reich assert that government competition to private providers will bring down the cost. (If you believe that, I have a bridge in Brooklyn I want to sell you – but back to the subject at hand). So what is the problem we are trying to solve?

And, of course, the above is only talking about the evidence of the problem, not its causes. So once we decide whether we are solving the problem of cost or coverage, we then need to identify the drivers, the problems that cause high cost or spotty coverage. Only after these drivers are defined and agreed to can we start to craft a solution.

Have you heard the phrase “A solution in search of a problem”? We need to be careful what we wish for. Our wish might be granted.



May 28th, 2009


That question is being asked more often in recent months. If your answer is “yes”, then in addition to seeking your next job opportunity, you might consider working on future opportunities in general.

In “Fortune & Freedom” I talk about the need to accumulate “necessary skills”, whether you intend to become an entrepreneur or simply to improve your future job performance. Those skills include selling, learning how our political system works at the grass roots level, and others. (Take a look at the Table of Contents on the web site for the list of the five key skills I think are important).

So between job interviews volunteer in a political campaign (yes, they are going on even now), get a job selling on commission, or take a course in accounting. My book has a lot more detail on what I recommend. So go for it!