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Archive for October 17th, 2019

U.S. Procurement Won the Civil War, Today It Would Lose A War to China

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Matt Stoller writes at BIG:

Today’s issue is written by two government procurement experts (and readers of BIG). One is an anonymous currently practicing government contracting officer who has been doing acquisitions for ten years. The other is Lane Becker, who was formerly with the Technology Transformation Services at GSA, where he started and ran the 10x investment program ( Before that Lane started a couple of companies in Silicon Valley. These folks are really smart, you are in for a treat.

Their piece is on innovation and war in the 19th century and today, which as it turns out, are conceptually the same. What do the Confederacy, Union procurement, and Chinese development of their air force have in common? More than you think…

But first, my book is out today! Goliath: The Hundred Year War Between Monopoly Power and Democracy. Buy it, read it, and tell me what you think. The first excerpt is out in the American Prospect on one of the great villains of American history, Andrew Mellon. . .

U.S. Procurement Won the Civil War, It Would Lose A War to China

If it were not for a single unorthodox approach to contracting by the U.S. Navy in early 1861, the Confederate States of America would very likely have won the Civil War.

The story of how the Union kept Washington from falling into the hands of the Confederates by buying smarter is illuminating — as is the reason that such a purchase would be almost impossible to make in the United States today, given the level of dysfunction in our present-day defense contracting system.

At the beginning of the Civil War, the Union was able to successfully establish a naval blockade because the Southern states had few ships of their own. A blockade was critical to prevent cotton from flowing to Europe, allowing the South to strengthen its financial, military, and foreign policy position. But the Union’s blockade was tenuous. The U.S. Navy at the time was, according to the assessment of U.S. naval secretary Gideon Welles, “feeble, and in no condition for belligerent operations. Most of the vessels in commission were on foreign service; only three or four, and they were of inferior class, were available for active duty.”

The Confederacy’s naval secretary, Stephen Mallory, sought to take advantage of the Union’s naval weakness, and crafted a superior fighting ship to defeat the Union on the water. When the South took the Gosport Navy Yard in Portsmouth, Virginia, in April of 1861, the confederates salvaged the hull of the U.S.S. Merrimack, and Mallory ordered his men to rebuild the top half of the scuttled wooden ship with iron — a first for its time. As one historian noted, “Mallory understood that innovation and creativity would be his primary hope in the face of an overwhelming conventional force he could not match.”

Union spies inside the Confederacy sent a steady stream of information about the building of the “ironclad” northward. Union leaders realized that to maintain the blockade, they needed better ships. The Navy issued open advertisements and gave respondents 25 days to submit plans, but, “still hanging on to what they knew best,” the request was laden with requirements that severely limited the range of what could be offered in response while also ensuring the build cost would remain high (a situation that will sound strikingly familiar to anyone involved in government acquisitions today.)

The selection board received proposals for 16 designs and settled on two, but, worried that neither would actually float, asked the finalists to provide mathematical evidence of their ships’ viability. This request stumped the submitter of a design for the U.S.S. Galena, Cornelius Bushnell, until a chance encounter at The Willard Hotel in Washington D.C. with the owner of a major ironworks plant led him to a Swedish born engineer named John Ericsson. Ericsson did the calculations in a night, and then, offhandedly, proceeded to show Bushnell an entirely new design for an ironclad ship he had designed 10 years earlier.

Bushnell later said listening to Ericsson talk about building his ironclad “awoke [him] to the fact that salvation was in store for our Government and country.” Ericsson’s design had no masts, rigging, or sails whatsoever,  and was much smaller than similar fighting ships, more like a modern day submarine. Most importantly, it was made entirely of iron, not wood with iron plating, which meant it would be able to withstand a significantly greater attack.

Bushnell took the model directly to Secretary Welles. Impressed, Welles and Bushnell attempted to convince the more conservative naval officers on the selection board to approve this new design despite its deviations from their list of required features, ultimately enlisting President Lincoln to join them for their presentation.

Even with Lincoln’s endorsement, the design was rejected by the board as too radical. Undeterred, Bushnell convinced Ericsson to come to Washington to present to the board himself. After much debate, the board relented and allowed Ericsson to proceed, convinced by the fact that his $275,000 submission was by far the cheapest, and that he could build his ship in 100 days — the only proposal that would be finished by the time the Merrimack’s conversion into the C.S.S. Virginia would be completed.

On March 8th, 1862, the Confederate ironclad left port, headed to the northern side of Hampton Roads, Virginia, where the James River meets the Chesapeake Bay, and where the U.S. Army was stationed at Fortress Monroe with several wooden ships enforcing Lincoln’s blockade.

Panic set in. Should the blockade fall, as Secretary of War Edwin Stanton said to Lincoln, “it was not unlikely we shall have a shell or cannon-ball from one of her guns in the White House before we leave this room.” Fortunately, Ericsson had finished his ship, the U.S.S. Monitor, two weeks earlier. The crew of the Monitor sailed 51 hours straight to get to Hampton Roads, arriving six hours after the fighting had begun and several Union ships had already been lost.

The two ships were evenly matched and battled for several hours, but in the end, the Monitor prevailed, entirely because of Ericsson’s design. The classically ironclad design of the Virginia — the top half of the old Merrimack now covered in iron plating but the bottom still exposed wood — meant that, as the battle wore on, the Virginia used up so much ammunition that the ship began to lighten, eventually rising high enough in the water that it was about to expose its wooden underbelly to the all-iron Monitor. The Virginia steamed off before that could happen. The Union had won.

War without Competition

It is as true today as it was during the Civil War that bringing new ideas into old institutions is a daunting task. But whereas in 1861 it was difficult for someone like John Ericsson to get his idea for a new kind of ship into the hands of the U.S. Navy — requiring a combination of talent, connections, persistence, and sheer luck, all very American traits  — today it would be impossible.

That’s not to say that similar threats desperately in need of inventive responses don’t exist. They’re everywhere, whether it’s the Government Accountability Office (GAO) noting that every major weapons system is riddled with cybersecurity vulnerabilities that could neutralize them entirely, warnings from top level commanders that the military needs to adapt, or experts outright declaring that as things currently stand America will likely lose a war against “near-peer” rivals Russia or China. But we’ve professionalized and obfuscated the practice of government contracting to such a degree that it’s become nearly impossible to penetrate by normal industry, let alone dogged patriots like Ericsson. Eisenhower’s warnings about the military industrial complex 50 years ago have truly come to fruition.

Healthy competition encouraging new entrants and smaller players are critical to the successful development of any new technology. This is especially true for military technology, where historically it has been outsiders who bring the biggest changes, like Patrick Blackett essentially creating modern day operations research during World War II. The ironclad board in 1861 got 16 bids and awarded to three different companies, but that level of competition is unheard of for today’s major weapons systems, where 67% of major government defense contracts are now awarded to companies without any form of competition. . .

Continue reading.

Written by Leisureguy

17 October 2019 at 10:59 am

Nancy Pelosi stands up to Donald Trump — something those in the White House cannot do

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Finally Trump is facing some decent and principled pushback. From the photo above, you can see President Trump looking dazed and confused. He doesn’t understand just how bad his Syria decision was, and because he has difficulty in assimilating information that conflicts with his biases, he is floundering — and he quite clearly doesn’t like that feeling, so naturally (being Trump) he blames others. He simply cannot process the idea that he might have been wrong.

Lawrence O’Donnell has an excellent comment on the meeting and photo and their significance:

Written by Leisureguy

17 October 2019 at 10:26 am

Inside TurboTax’s 20-Year Fight to Stop Americans From Filing Their Taxes for Free

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Justin Elliott and Paul Kiel report in ProPublica:

Last fall, Intuit’s longtime CEO Brad Smith embarked on a farewell tour of the company’s offices around the world. Smith had presided over 11 years of explosive growth, a period when Intuit had secured its place in the Silicon Valley pantheon, and the tour was like a long party.

In Ontario, employees wore T-shirts with Smith’s quasi-spiritual sayings: “Do whatever makes your heart beat fastest” and “Repetition doesn’t ruin the prayer.” In Bangalore, India, workers put on Smith face masks as they posed for selfies with the man himself. Fittingly, the tour culminated in San Diego, the home of TurboTax, the software that transformed the company’s fortunes. There, Smith arrived at his party in a DeLorean, and as he walked a red carpet, cheering employees waved “Brad is Rad” signs. To Smith’s delight, his favorite rock star, Gene Simmons of Kiss, emerged. The two posed for pictures, Simmons clad in black and the beaming CEO flashing the “rock on” hand sign.

Intuit began in the 1980s as an accounting software company focused on helping people with their bookkeeping. Over time, the company, like the other giants of Big Tech, cultivated an image of being not just good at what it did, but good, period. In a recent Super Bowl ad, Intuit portrayed itself as a gentle robot that liberates small-business owners from paperwork. The company stresses values above all, urging employees to “deliver awesome” and pursue “integrity without compromise.”

Intuit’s QuickBooks accounting product remains a steady moneymaker, but in the past two decades TurboTax, its tax preparation product, has driven the company’s steadily growing profits and made it a Wall Street phenom. When Smith took over in 2008, TurboTax was a market leader, but only a small portion of Americans filed their taxes online. By 2019, nearly 40% of U.S. taxpayers filed online and some 40 million of them did so with TurboTax, far more than with any other product.

But the success of TurboTax rests on a shaky foundation, one that could collapse overnight if the U.S. government did what most wealthy countries did long ago and made tax filing simple and free for most citizens.

For more than 20 years, Intuit has waged a sophisticated, sometimes covert war to prevent the government from doing just that, according to internal company and IRS documents and interviews with insiders. The company unleashed a battalion of lobbyists and hired top officials from the agency that regulates it. From the beginning, Intuit recognized that its success depended on two parallel missions: stoking innovation in Silicon Valley while stifling it in Washington. Indeed, employees ruefully joke that the company’s motto should actually be “compromise without integrity.”

Internal presentations lay out company tactics for fighting “encroachment,” Intuit’s catchall term for any government initiative to make filing taxes easier — such as creating a free government filing system or pre-filling people’s returns with payroll or other data the IRS already has. “For a decade proposals have sought to create IRS tax software or a ReturnFree Tax System; All were stopped,” reads a confidential 2007 PowerPoint presentation from an Intuit board of directors meeting. The company’s 2014-15 plan included manufacturing “3rd-party grass roots” support. “Buy ads for op-eds/editorials/stories in African American and Latino media,” one internal PowerPoint slide states.

The centerpiece of Intuit’s anti-encroachment strategy has been the Free File program, hatched 17 years ago in a moment of crisis for the company. Under the terms of an agreement with the federal government, Intuit and other commercial tax prep companies promised to provide free online filing to tens of millions of lower-income taxpayers. In exchange, the IRS pledged not to create a government-run system.

Since Free File’s launch, Intuit has done everything it could to limit the program’s reach while making sure the government stuck to its end of the deal. As ProPublica has reported, Intuit added code to the Free File landing page of TurboTax that hid it from search engines like Google, making it harder for would-be users to find.

Twelve years ago, Intuit launched its own “free” product: the similarly named “Free Edition” of TurboTax. But unlike the government program, this one comes with traps that can push customers lured with the promise of “free” into paying, some more than $200. Free Edition was a smash hit for Intuit and its pitch for “free” prep remains core to the company’s growth. Recently, it launched a “free, free free free” ad campaign for the Free Edition, including a crossword puzzle in The New York Times in which the answer to every clue was “f-r-e-e.”

Intuit knows it’s deceiving its customers, internal company documents obtained by ProPublica show. “The website lists Free, Free, Free and the customers are assuming their return will be free,” said a company PowerPoint presentation that reported the results of an analysis of customer calls this year. “Customers are getting upset.”

Intuit also continues to use “dark patterns” — design tricks to get users of its website to do things they don’t necessarily mean to do — to ensure that as many customers as possible pay, former employees say. A marketing concept frequently invoked at Intuit, which goes by the acronym “FUD,” seeks to tap into Americans’ fear, uncertainty and doubt about the tax filing process.

An Intuit spokesman declined to answer ProPublica’s detailed questions about its efforts to fend off a government filing system, but he provided a statement.

“We empower our customers to take control of their financial lives, which includes being in charge of their own tax preparation,” he said, adding that a “government-run pre-filled tax preparation system that makes the tax collector (who is also the investigator, auditor and enforcer) the tax preparer is fraught with conflicts of interest.”

The IRS is seemingly the biggest threat to Intuit and other commercial tax prep businesses, but it has more frequently acted as the industry’s ally, defending the Free File program even in the face of critical internal reviews. The IRS declined to comment for this article.

The consequences of Intuit’s efforts affect a huge proportion of the taxpaying public. Americans spend an estimated 1.7 billion hours and $31 billion doing their taxes each year. Just 2.8 million participated in the Free File program this year, down from 5.1 million at the program’s peak in 2005.

Intuit’s success has made the men who run the company rich. Smith, the CEO who stepped down last year and is now executive board chair, had a stake worth $20 million when he became chief executive. It ballooned to $220 million by last year. Co-founder Scott Cook is now among the country’s wealthiest people, his fortune soaring to $3.3 billion.

This year, Intuit was close to realizing a long-held goal: enshrining the Free File program in law, effectively closing the door on the IRS ever creating a free tax filing system. But an outcry followed ProPublica’s reporting on the matter and Intuit’s treatment of its customers, prompting the provision to be dropped and state and federal investigations into Intuit’s practices.

Yet even after this setback, the company remained steadfastly confident that its clout in Washington would win the day.

“What we’re not gonna do is fight this publicly because that is exactly what they want us to do,” said Sasan Goodarzi, the new CEO, in a video released to staff this May and obtained by ProPublica. “We are actually working with the IRS and members of the Congress to ensure that the facts are very clear.”

Intuit has dominated the tax software market since 1993, when for $225 million, it bought Chipsoft, the San Diego-based company that had created TurboTax. Even then, TurboTax was the most popular option, but Intuit pursued a plan of aggressive growth. The product necessarily came on a disk, and by the end of the 1990s TurboTax boxes were nearly ubiquitous, on shelves in office supply stores across America.

As internet speeds increased and dot-com mania took hold, it became apparent that Intuit’s future was not in a box on a shelf. It was online.

The prospect of TurboTax’s growth was vast for another reason. As late as 2001, around 45 million Americans still filled out their tax forms on paper. For Intuit, those were all potential customers.

But Intuit wasn’t alone in seeing possibilities in the spread of high-speed internet. In Washington, lawmakers began pushing the IRS to modernize and get more taxpayers to file electronically. It was a no-brainer: Filing taxes online would be easier, and the IRS would save staff costs on processing paper returns.

The danger to Intuit’s growing business was obvious. If the government succeeded in creating a system that allowed the vast majority of taxpayers to file online for free, TurboTax profits would plummet. Intuit recognized that the notion of “return-free filing” was not going away on its own.

And so in 1998, the company hired Bernie McKay, a onetime Carter administration aide and a senior lobbyist at AT&T, to be its vice president for corporate affairs. Intuit executives like to talk about having a “customer obsession” in developing their products. McKay’s obsession is stopping government encroachment. Known to physically bang the table to drive home a point, McKay’s style is “aggressive to the point of offense,” said one fellow tax prep lobbyist. An Intuit spokesman said, “This mischaracterization of Mr. McKay is pure fiction.”

McKay, for his part, when asked at a recent tax industry conference which Star Wars character he is, responded, “Darth Vader.”

The year McKay was hired, Congress passed a major overhaul of the IRS. The bill, reflecting Intuit’s lobbying, said that the IRS “should cooperate with and encourage the private sector” to increase electronic filing.

While McKay came through in his first big test, in 2002, the company found itself up against an unexpected foe, the George W. Bush administration. The threat came from a broad administration initiative to upgrade government technology. One of the proposals called for the IRS to develop “an easy, no-cost option for taxpayers to file their tax return online.”

Without such an option, taxpayers were stuck either filing on paper or, to file electronically, paying a tax professional or software company like TurboTax. Providing an alternative would be an obvious improvement, said Mark Forman, an official at the Office of Management and Budget who led the “e-government” program. The technology wasn’t all that complicated, and creating a free, automated filing system would help tens of millions of Americans. “This was seen as a low-cost, high-payoff initiative,” Forman recalled in a recent interview with ProPublica. Standing in the way, he said, was an industry “that lives off the complexity of the tax code.”

Intuit revved its new lobbying machine. Even before the OMB report was publicly released, a group of Republican lawmakers, led by TurboTax’s hometown congressman, wrote to the agency arguing that there was no reason for the government to “compete” with the “well-established” private tax prep companies. Intuit’s lobbyists also went above the OMB and pressed their case directly to the White House, Forman recalled.

At the IRS, “all hell broke loose,” remembered Terry Lutes, who was then the head of electronic filing at the agency. Intuit’s clout on the Hill meant that lawmakers were soon accusing the IRS of making “secret plans to undercut the industry,” Lutes said. The agency ran the risk of seeing its funding cut if it were to pursue the Bush plan.

The IRS commissioner at the time, Charles Rossotti, also opposed the idea. The IRS’ customer service staff, already too thin to respond adequately to Americans’ questions about the tax code, would have to grow substantially to handle millions of software queries. Congress “will never give you sufficient funding,” Rossotti told ProPublica.

So the IRS felt caught in the middle. The question became, Lutes said, “Is there some way to come out of this with something for taxpayers that addresses the administration’s objective and at the same time is acceptable to industry?”

Intuit, it turned out, did have a way. Since 1999, as part of the company’s strategy to head off encroachment, TurboTax had been offering free tax prep to the poorest filers.It was a program that served to bolster the company’s arguments that government intervention was unnecessary.

This became the basis for a deal. The industry would offer free tax prep to a larger portion of taxpayers. In exchange, the IRS would promise not to develop its own system.

Intuit organized a coalition of tax prep companies under the name the Free File Alliance, and after negotiations with the IRS, the group agreed to provide free federal filing to 60% of taxpayers, or about 78 million people at the time. Government officials touted the solution as a marvel of public and private cooperation. Americans would get free tax prep, and it would cost the government almost nothing.

For Intuit, it was the culmination of years of lobbying. The IRS had signed a contract that said it “will not compete with the [Free File Alliance] in providing free, online tax return preparation and filing services to taxpayers.”

What’s more, “free” wasn’t as unprofitable as it sounded. The alliance, guided by a lawyer who was also an Intuit lobbyist, won a series of concessions that made the program palatable to industry. Free File only required the companies to offer free federal returns. They could charge for other products. The state return was the most common, but they could also pitch loans, “audit defense” or even products that had nothing to do with taxes.

Free File had another bright side: The companies could tailor their Free File offers so that they didn’t cut into their base of paying customers. The agreement said the industry had to offer free federal services to at least 60% of taxpayers, but each company individually only had to cover 10% of taxpayers. Intuit and the others were free to limit their offers of free tax prep by age, income or state.

There was little incentive for the companies to publicize a free alternative to their paid products, and the IRS agreed that the Free File offers need only be listed on a special page of the agency’s website.

For Intuit, it was a major victory in the war against encroachment. The company could now focus on turning whatever new customers it acquired through the program into paying users, both that year and in the future.

The first year of Free File was 2003, and for Intuit, things went well. On paper, the Free File Alliance was a collection of 17 companies, all of them vying to serve the American taxpayer. But in reality, it was a group made up of two giants and a bunch of gnats. Intuit’s only significant competitor was H&R Block, and even it was a distant second. The rest of the alliance consisted mostly of tiny companies with names like As a result, Intuit could tailor its Free File offer just the way it wanted.

But the next year, Intuit began to lose control of its creation. . .

Continue reading. There’s much more.

Written by Leisureguy

17 October 2019 at 9:35 am

iKon’s stainless slant again and the start of a witch-hazel series

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I’m sure that this is an Erasmic shave stick, an inexpensive shave stick from the UK, and again I was able to get the lather to work well with a badger brush. That convinces me that the difficulty I had a few days ago was because I simply did not get enough soap scraped onto my stubble. That said, I do find that the synthetic brushes work better and more easily bright forth the lather from a shave stick.

This razor is essentially the same stainless-steel iKon slant I used yesterday, except that the head has had a DLC coating applied to (I’m sure) eliminate the tea-stain problem that occurs with some brands of blades. Like yesterday’s razor, this head has excellent acoustic properties, magnifying the sound of the cutting of the stubble to a marked degree, which for me adds to the pleasures of the shave, engaging another sense in the process.

Three passes, total smoothness, a tiny nick on the upper lip (from the ATG pass), which My Nik Is Sealed sealed. Then a good splash of the first witch-hazel-based aftershave in a new series: Prospector Co.’s Peary & Henson:

Hamamelis Virginiana (Witch Hazel) Distillate, Organic Aloe (Barbadensis), Distilled Water, PolySorbate 20, Vegetable Glycerin, Pimenta Racemosa (Bay), Commiphora Myrrha (Myrrh), Rosmarinus Officinalis (Rosemary), Eucalyptus Globules (Eucalyptus), Pinus sylvestris (Pine), Lavandula Angustifolia (Lavendar), Melaleuca Alternifolia (Tea Tree), Phenoxyethanol.

They describe the fragrance as “Witch hazel, cedar water, and aloe bring the bay to life and fresh coriander adds a sharp bite.” A very pleasant finish to a good shave.

In case you see only the shaving posts, I want to call your attention to a very interesting and well-done move, “The Game Changers.” The page at the link lists sites that stream the movie (including Netflix), and it’s a movie worth watching. Moreover, that page has a link to the recipes for the enticing meals shown in the movie.

Written by Leisureguy

17 October 2019 at 8:40 am

Posted in Food, Movies & TV, Shaving

Trump’s letter to Erdogan, three days after Trump removed US troops from Syria

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Trump’s letter shows an unhinged mind.

Written by Leisureguy

17 October 2019 at 1:17 am

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