Sunday, December 31, 2006

Goliath for Hire

One of the common justifications that I hear for government intervention in the economy, and specifically for regulation of enterprise is that the individual is exploited and pushed around by big corporations., that a large corporations has the ability to coerce the individual because of the power imbalance. This is what I fondly refer to as the David and Goliath syndrome, only in this case Goliath crushes David. You see this all the time in industries that are believed to be "essential" such as health care. The hospitals, the HMO's, the insurance companies... all "push the individual around". The individual "must have access" to health care, and so is in a tough position. Therefore, we must have controls on the industry.

This is hogwash.

Ignoring for a moment the fallacious claim that the individual must have access to health care, the posited scenario is a straw man. It ignores one fundamental mechanism that the market creates to deal with such a scenario: the agent. The concept of agency is the free market's mechanism for dealing with these sorts of issues. Merriam-Webster Online defines an agent as: one who is authorized to act for or in the place of another. An agent, therefore, is authorized to act on one's behalf in a given situation. What does an agent bring to the transaction? He may bring specialized knowledge, negotiating skills, time to spend on the issue, and even some of his own corporate leverage to engage during a negotiation.

Agents come in all forms, and may spend weeks or only minutes working on your particular issue. The easy ones to think of are people such as: real estate agents, doctors, lawyers, insurance agents. But agency takes many forms, and some are not so recognizable. A search engine such as Google is your agent, for a nano-second, providing you with information from its database. Consumer Reports or Underwriter's Laboratories is your agent, providing you with assurance on the safety or quality of particular products. Or one may think of new business models such as Lending Tree.com, the negotiating site for home loans. These agents serve the same purpose, by representing your interests, and bringing some sort of leverage to your side of the table.

Agency is the natural outcome of any division of labor society, and it is ubiquitous. The market's answer then is: you hire someone to represent your interests in a particular situation. You hire your own "Goliath" to fight your battles for you.

From a November 27, 2006 Forbes article "Only Suckers Pay Retail" comes a great example of how this works. As employees have been shifted to medical plans with higher and higher deductibles, companies such as My Medical Control have formed to meet the needs of the individuals now caught with larger hospital bills that they must deal with. The company has data on common procedures and rates charged across the country, and negotiates better billing rates on its clients behalf, saving the client an average of 22% off of their medical bills. The company, as many other agency's are, is paid out of the savings it obtains for its customers so the agency is accessible to everyone.

Such an agency is the obvious choice for those who need to keep their insurance premiums affordable by taking out high deductible plans. Such people take higher risk of incurring medical costs, but hire agents to act on their behalf if and when those costs materialize.

So stop whining for government to intervene. Find a "Goliath for hire"; they're everywhere.

Sunday, December 17, 2006

Forging the Shaft

My wife and I were in New York City last weekend for a shopping and sightseeing trip before the holidays. We stayed in Midtown just south of Central Park. On Sunday, we got a chance to spend some time at the Metropolitan Museum of Art. With only a couple of hours to spend, we both peeled off and headed for our respective favorites; she for Asian and Egyptian, and I for 19th century European and American.

Except for Greek and Roman sculpture, the 19th century has most of the gems of painting and sculpture. It is too bad however that Kant's influence in philosophy can be seen making its way into late 19th century. This decay included choice of subject, and so it is a tragedy that just as the Industrial Revolution was occurring, that art was turning its back on so wonderful a subject.

My find for the day was this painting which I stumbled upon by accident in the American wing. It is "Forging the Shaft" by John Ferguson Weir ca. 1868. A larger version can be found over on the Met's website or Pursuing Praxis blog (which has a nice overview of the American wing - I like an idiot left my camera at the hotel).

This was not the most prominently displayed painting, and frankly I walked by it the first time. With little time I was scanning galleries quickly and seeking out only paintings that quickly caught my eye. This one from a distance is smaller and, since the color palate is very dark, it didn't catch my eye.

However, once I saw it up close, I was blown away. It is exceedingly difficult to find industry as the subject of paintings of the era, and much less to find one so well executed. There are two aspects to this painting that I found fantastic. One is the rendering of light, using the furnace and the metal ingot as the only source of light. The second is the depiction of effort and tension (i.e. of work) on the part of the laborers.

This was by far my favorite. I sat and looked at this painting for over 15 minutes.

When I returned home, I realized that he has several paintings using similar themes, including "The Gun Foundry" and "Tapping the Furnace".

Saturday, December 02, 2006

Talk about a Big Screen!

From a Forbes article, Field of Screens: self-illuminated astro-turf! Imagine a sports field also being it's own advertising board, and big screen TV. Maybe ads (and ad revenue) between plays, and helpful graphics such as that yellow "first down" line from your TV, now on the field itself.

A manufacturer has figured out how to incorporate fibre optics into fibrous material of astro turf. Used today on internally-lit Christmas trees, the technology is two years from commercialization in turf. A myriad of uses, not thought of before, could follow on the heels of this innovation.

Friday, December 01, 2006

GenX in the Chemical Industry

Just another day at the grist mill for a few chemical industry GenX'ers, including yours truly.