Penchuk.com

It’s been a while since I’ve posted anything family related and the throngs of followers of this site have been clamoring for it. OK, maybe I’m exaggerating just a little. Regardless, here’s what’s happening with the boys.

Ben – Our oldest is a few months into first grade now and doing well. He’s reading more and more. Both Laura and I have been impressed at how far he’s come. Once in a while it’s a little jarring when he reads something you don’t expect him to (like an email you’re typing). Yesterday we went to the NC State Fair with some friends. Ben and Carter (his buddy) went on a bunch of rides, including a small roller coaster. Last year, Ben was terrified of it and refused to ride it. He’s definitely growing up and getting over some of those childhood fears. He’s also a big baseball and hockey fan – hard to believe he’s my son, huh? Right now he’s not playing any organized sports but come spring, I’m sure baseball will be back on the docket. Over the summer we put bunk beds in the kids’ room and Ben loves sleeping on the top bunk. Ben’s also become something of a card shark. We took a family trip to Lake Lure, NC, near the end of the summer and Ben was introduced to poker. Grandpa Duff is an aficionado and Ben fell in love with the game. He even took all of Duff’s chips in one game. Now, Ben wants poker chips for Christmas. How’s that for a judgment call? Do you get your 6-year old poker chips? Time will tell.

Jack – This kid makes us laugh. He’s hilarious. For example, he’s probably going to be a cowboy for Halloween, but he’s been wearing the hat and boots around the house for days now. He walks around saying things like, “Howdy, pardner.”  He’s also doing well in pre-school.  The other day he sang his ABC’s all by himself.  He’s also fond of telling us, “I had a bad day at school”.  We think he read a book about a kid that had a bad day and now Jack likes to play the sob story.  Of the two kids, this is the independent one.  Jack can go upstairs into our playroom and spend an hour up there with toys and living in his own world.  His brother always wants someone to play with, but Jack is alright doing his own thing.  He’s got such a good nature about him which is countered by the fact that he’s 3 years old.  The good news is that he won’t be three forever.  We’ve started playing hockey in the street now and he’s incredibly coordinated.  It’s been fun to see him grow up in the shadow of his older brother but still carve out his own way.

Check out the photos and see how big they’re getting.  Until next time…

State Fair

The other day I wrote about Dell receiving an incentive package from NC and Winston-Salem.  It’s still being discussed in the local press as evidenced in this article from Local Tech Wire (emphasis mine).

“They could have succeeded. It’s a gamble,” said Sen. David Hoyle, D-Gaston, the primary sponsor of the state incentives package targeting Dell that was approved hastily in a one-day legislative session in November 2004. “You take a chance, and you roll the dice.”

There are two issues I have with Sen. Hoyle’s approach here.  First, the money used to “roll the dice” isn’t his money.  Frankly, I’m not real happy with an elected state senator that deems it his place to “gamble” with hundreds of millions of dollars that aren’t his.  The people of NC could have used that money more wisely on their own than by giving it to a corporate welfare recipient.  If he wants to gamble, do it on his own dime.  Second, the government, in this case, endorsed a single company.  They essentially played favoritism by deeming Dell to be worthy of incentives aimed directly and specifically at Dell.  Why are they worthy but other companies are not? All companies, big or small, should have the same incentives to put up shop in NC.  That point is made lower down in the article.

I also love this statement (emphasis mine):

House Speaker Joe Hackney said he doesn’t regret the Dell deal, because it probably generated additional tax revenues from the jobs it created.

Isn’t that great?  It “probably” did what it was intended to do.  I “probably” won’t vote for Mr. Hackney at the next election.

The one good thing, which I haven’t been able to fully grasp yet, is how it appears Dell only used some $8.6 million of the almost $280 million in incentives available to it.  Perhaps in the long run, the finances of this deal will work out OK.  But, the principles remain the same.  The government shouldn’t “gamble” taxpayer money on corporate welfare.

Just got my annual subscription notice for the Wall St. Journal’s online edition. I’ve been a loyal subscriber for 12 years now and every October my credit card gets charged. Years ago I realized that if I got the paper edition, they would stack up and I’d probably never read them. For me, the online only option is the way to go.  I read it every day and love the email I get with all of the stories from that day’s paper.

This year’s subscription was $197, which is quite a hike from last year’s $119 (it’s a 65% increase). Rather surprised, I went to the “My Account” section of WSJ.com and looked at the billing options. There are two.

• Annual subscription: $197
• Monthly payments of $12.95 (annual cost of $155.40)

Fine. It’s a big hike in price and frankly, one that made me question whether or not to continue paying for it.  I like the WSJ and its coverage so I’ve decided to keep it but, of course, I’ve changed to the monthly option.

But what I don’t get at all is why in the world would they charge MORE for a one-time annual subscription than the monthly option?  Typically, a discount is provided when someone pays upfront for a whole year.  After all, the seller gets extra money upfront and reduced risk. With the monthly option, there’s more work involved (doing something 12 times versus once) and an overall higher risk level.  If that’s the case, why have the pricing disparity the way it is?  Shouldn’t the WSJ, the paper of record for business, understand this simple concept?

Even with the lower priced option, I’m still looking at an over 30% increase in price.  Frankly, I’m still questioning whether to continue subscribing, but now I’ll have a monthly reminder to consider pulling the plug.

A few years back North Carolina and Winston-Salem gave Dell some $280 million in incentives to build a plant in the Piedmont Triad.  Now, less than 5 years later, Dell’s closing that plant.  They’re probably going to have to give some of that money back to NC and W-S, but it won’t be all of it, it won’t be with interest and it won’t be profitable for NC and W-S, that’s for sure.

What it all boils down to is that I am not a fan of government incentive packages.  They don’t work.  Companies can be wooed with huge tax breaks and frankly, that’s nothing more than commercial welfare.  One of the biggest reason these incentives are given out is because neighboring states are doing it, too.  I have a much better idea:  create an overall tax structure that will encourage ALL types of businesses to the state.  Reduce corporate tax rates so that the total business climate in the state is friendly and inviting.  Companies will come on their own, no need for massive incentive packages.  All companies will benefit and the state won’t look foolish for making a major investment in a company that can just turn around later and leave.

This will be the fourth time that I’ve written about this (12/3/08, 12/11/08 and 3/17/09) and I’m thrilled to see it on the pages of the Wall St. Journal.  Senator John Thune of SD, wrote (emphasis mine):

Our financial markets are no longer in free fall and the crisis has receded. Yet we now find ourselves in a troubling situation where the federal government is a major owner of more than 600 U.S. financial institutions and banks, as well as two auto makers, an international insurance conglomerate, and numerous other businesses…It is time to bring an end to the TARP emergency measures and come up with an exit strategy to get government out of the business of running businesses.”

Hear, hear.  The US Government has no authority to own parts of private businesses.  It did what it had to do (even if I was uncomfortable with it at the time) to keep the economic system afloat, but now that time has passed.  It’s time to divest.

It’s all over the news these days, even CNN.  Obama’s popularity is falling and his unfavorable numbers are rising.  He’s facing large problems ranging from unemployment, war in Afghanistan, his health care initiatives, and a plodding economy.  If he doesn’t change course soon, I wouldn’t be surprised to see his favorability ratings slide further.

Here’s how I think we got here.  First, Obama came in to office with huge momentum, hope and an overall belief that change was good.  He immediately went about campaigning for his stimulus program.  Since it was so large and so controversial, he had a difficult job to sell it.  He did so by talking down the economy.  In an op-ed back in February, 2009, Obama wrote:

Because each day we wait to begin the work of turning our economy around, more people lose their jobs, their savings and their homes. And if nothing is done, this recession might linger for years. Our economy will lose 5 million more jobs. Unemployment will approach double digits. Our nation will sink deeper into a crisis that, at some point, we may not be able to reverse.

Translation:  pass the stimulus or we’re screwed.  Essentially, his comments added to the overall belief in a poor economy and violated his campaign trademark:  Hope.  One thing I learned from my economics classes back at ol’ Skidmore was that the economy is heavily influenced by opinion and psychology.  If you feel things are good, they probably are.  Same thing for a bad outlook.  As head cheerleader, the president didn’t help.  So, once the stimulus passed, Obama moved on to health care and started pushing massive changes to the system.  The issue at hand, however, is still the economy.  That’s the biggest problem the country is facing.  Obama hurt himself by firmly establishing the belief that things were so bad that it’s taking a long time for things to get better.  Perhaps unwittingly, he destroyed hope.

So here we are in September, 6 months after the stimulus and the numbers don’t lie.  Things are, by far, worse than they were. The economy may be a turning a corner but it hasn’t yet.  I just got a news update via email saying that back-t0-school sales across the country fell flat and that sales numbers are down.  Not good.

Today’s WSJ has a column by Karl Rove in which he writes:

Mr. Obama’s problems are legion. To start with, the president is focusing on health care when the economy and jobs are nearly everyone’s top issue. Voters increasingly believe Mr. Obama took his eye off the ball.

In addition, Mr. Obama is trying to overhaul health care without being able to tap into widespread public unhappiness. Nearly nine out of 10 Americans say they have coverage—and large majorities of them are happy with it.

That’s exactly right.  The biggest issue at hand is the economy and jobs should be the number one priority.  Yet, Obama is seemingly 100% focused on health care reform.  Guess what?  If someone unemployed gets a job, they typically get health care and as the polls show, they’re typically happy with it.  This puts Obama in a catch-22.  If the economy gets better, jobs will follow and health care will become less of an issue.  If the economy doesn’t get better, Obama can push health care, but his favorability ratings will continue to fall because the unemployed can’t get jobs.

In the end, this tells me that there has been a strategic error made in pursuing health care reform.  I don’t want to write about the pros and cons of the various proposals out there (at least in this post), but would suggest that it should be shelved temporarily so that he can turn the economy around.  He needs to start being the head cheerleader and be relentlessly optimistic.  Use the bully pulpit to start highlighting economic success around the country.  If he does that, he’ll be seen as the leader of the economic turnaround and you’ll see his popularity rise.

Ben: Daddy, I know when you were married!

Daddy: When?

Ben: 2000

Daddy: Aaahhh, feels like 13 or 14 years…

Mommy: [Glaring at Daddy]

Daddy: …of the best years of my life.

<5 second pause>

Ben: [With sincere skepticism] With Mommy?

The health care debate is raging in this country and a key part is how to pay for it all.  President Obama believes a big chunk of the cost savings can be achieved through “cutting wasteful spending“.

“The President is dedicated to restoring a sense of fiscal responsibility in Washington, which is why his plan will be deficit-neutral. He explained that by simply cutting wasteful spending, we can pay for 2/3 of health reform right there.”

Color me skeptical.  There have been various cost estimates bandied about, but for the sake of argument, let’s use $150 billion annually.  Two-thirds of that is $100 billion, which is not a small sum.  How can we get to that much savings?  Today’s Wall St. Journal has an article about the $102 million in savings that the entire government has found through such exercises as:

• Emailing daily press clips rather than printing
• Not immediately repainting cars upon purchase
• Deleting unused email accounts
• Turning off unused telephone lines
• Putting more people on flights
• Printing on both sides of a piece of paper
• Getting news online for free rather than print subscriptions

Is this a joke?  Our government hasn’t ALREADY implemented things like this?  So, the same massive organization that just figured out that unused telephones and immediately painting new cars is costly will be able to save $100,000,000,000.00 annually in health care?  Can you seriously tell me that and keep a straight face?  It doesn’t make any sense to believe that we’re going to see massive savings in spending by bringing in millions of more people under the government’s health care umbrella.  Obama just said, “The biggest driving force behind our federal deficit is the skyrocketing cost of Medicare and Medicaid.”  If that’s the case, prove that costs can be cut there BEFORE tinkering with the health care of millions of other Americans.

Watching the boob tube last night and saw an ad for Ford that had the tagline “Why Ford.  Why Now.”  Mike Rowe (who I’m a big fan of) stars in this commercial and follows up the tagline with “Why Not?”  Seriously?  Is this the best that Ford could do?  “Why not?”  The message I got was, “Hey, why not buy a Ford?  Why?  Why not?”  Oooh, now I’m convinced.  What does this say about their brand?  It’s not good.

My suggestion would have been to drop the “why’s” and just go with “Ford Now”.  Make the tagline a call to action, get people thinking about buying a Ford today.  They could have followed up “Ford Now” with benefit statements that bolster the brand.  Best fuel efficiency.  Low price.  0% APR.  Not enough?  How about the $4,500 tax break?  Buy American.  Ford Now.

I typically don’t criticize Detroit because I think they’ve got a bad reputation that precedes any actions they take, but this is a bad marketing idea.