Political career assassination

The medias last week were full of the story about allegations against Dominique Strauss-Kahn for sexual assault.

I looked at the farce on television and could believe that those people (the medias) were actually believing what they were saying. Lets just say, for their sake, that they were just objectivelly reporting the presented facts.

The guy was arrested, and by enchantment this was publicized right away nation wide. Either the medias are very effective in getting news or… someone somewhere had all the intentions for this story to become public. And everything was done to make sure that Strauss-Kahn looses face before the eyes of the public: we saw him chained like a vulgar criminal, when it was time for his trial, they passed him between two low rank truants. Even Michale Jackson had a better treatment than that. Now I can ecknowledge that Jackson was a good singer, but we are talking about the head of the IMF here!

What’s my point? Look at the facts behind the facts. Today the president of France is Nicholas Sarkozy. Sarkozy is of central right confession, he worked under former president Jacques Chirac in the Union for a Popular Movement Party which is a center-right party. Sarkozy won the presidency at the last elections against the Socialist Party.

And do I have to remind you that America is lethally allergic to socialism? So having a centrer-right president at the head of France plays the game of the United-States.

But now here comes the time for the next elections in France. And this time Sarkozy doesn’t rank well in the polling. In fact it’s the Socialist Party that is foreseen to win the elections. And who is the leader of the Socialist Party? Your bet! Strauss-Kahn!

So this is veeeery convenient to some that Strauss-Kahn has beed arrested and treated like he was. The blow to his reputation is undenyable. Strauss-Kahn lawyers said this week that they are confident that Mr. Strauss-Kahn will come out of this white as snow. I believe them. But that’s not the point. Because the aim of the entire affair has been filled: to kill Mr. Strauss-Kahn’s reputation.

So we just witnessed the assassination of a political career. Don’t be fooled about it and about what you hear. And don’t over exagerate too. I am not talking about global conspiracy and the Illuminati and all that. I don’t say neither that this was asked by Sarkozy or anyone around him. I don’t know who’s the sponsor behind it. And I don’t care to know. I just say that this story serves some people good. And that this is just a plain good old political career assassination at a grander level. To me, this is not purely accidental and random that this story happened just now.

Strategically speaking, since this is a blog on strategy, put all you values and innibitions asside and look coldly at what was done and atchieved. We must admit, all feelings and values asside, that all this was well planned.

Moubarak - The End

Well, well! After 18 days of hanging on. Beware what the people want!

That's the take away from this episode of history. You can rule. You can accumulate wealth by looting, corruption, extortion. But sooner or later you will get on to the people's nerves. And when that day comes, there is nothing you can do to avoid social justice. Unless of course if you accumulate 30$ to 60$ billions in wealth. Then you can take you money and run.

What happened in the last days of Moubarak I don't know. And since I don't have a direct line with the president of the United-States just yet, I can't ask him what happened. I can only speculate. I guess that in the last days, the phone has been busy between Moubarak's administration, the White House and Europe. I guess Moubarak wanted to make sure that if he was to flee away, his assets wouldn't be seized nor frozen like his partner the ex ruler of Tunisia. He might even have been offered a safe place to... retire in peace and security.

That's the least America, Europe and even Israel can do to accommodate a long time ally, in gratitude for keeping peace in the area for 30 years.

At the end of the day, the big winners yesterday are the people of Egypt. I am very happy for them and I really wish for them that they will make the good choices to prevail justice, democracy and freedom. They earned it!

Three Hahoo for the people of Egypt that showed to the world how to stand with courage, determination and relative peace and harmony in their protestations!

Egypt! Hahoo!

Egypt! Hahoo!

EGYPT! HAHOO! HAHOO! HAHOO!

Moubarak out? Just not yet.

Yesterday Mubarak went with another twist in his strategy. He announced that he will raise all salaries for the government workers. How convenient! This is a clever move. After making sure of holding the power, the police, the army, the press. Now its the turn of the government itself. Because you can hold what ever government if no government officials follow you, you won't go far.

Then, knowing that he hold tight his government, his government officials, the police and the army, after inviting the opposition for empty negotiations he went on with a threath: if people don't go home he will have to use the army to what ever extent that the situation may require. Why didn't he use the army before? Because he had to secure his government, make sure that the police and the army was behind him. Then he had to organize mock negotiations so he can use the failed talks to justify further use of violence.

And then what happened today? Coup de theatre! He said he was transferring part of his power to the vice-president. When everybody believed that he would address the nation and step down... no no no he remains!

I am not quite sure I understand his latest move. One thing for sure he must hold the vice president tight some how. Lets see...

Mubarak's move on probing the situation

Yesterday I heard on the news that Mubarak was opening a channel for discussion. While most people saw this as a weakening in Mubarak's lines, I had my reserves. I see it as a tactic to gauge the population. And the answer is: its the population that is weakening.

Allow me to explain. The people came down the street and said:"Mubarak out! Period!" And they were clear about the fact that they wouldn't leave the street before the guy was gone. And now, chapter two, people are saying "Mubarak wants to negotiate. Lets hear what he has to offer" See? Who's weakening?

People are down the street for what? A little less than a month. They are hungry, they are tired, thy are penniless and jobless. They are scared and Mubarak does not budge an inch. Psychologically speaking that is enough to weaken their moral. So that is why their will moved from "Mubarak out!" to "Mubarak? What do you offer?"

Now in Mubarak's perspective. Knowing that the population is weakening, he should offer nothing. Because he knows that the revolt is waning. The international press is getting tired of the story and are starting to look away for better scoop. So it is a question of time before he wins. Time is his best friend. So what should be a good move now? You open discussion with the people. This brings you two things.

One: you can gauge the weakness of the people by the weaken demands they make.

Two: it buys you time.

So what is the tactic during the negotiations? Divide and conquer. He probably will make false moves, making the people think that he is willing to concede, but he will not. And the reason to do so is to create hope in the heart of people. If you create hope and it fails, people will think that at least he was listening and that the people won a moral battle. But if he comes to the table not giving an inch, he might just piss people enough for them to remain in the streets longer. So his interest in to appear open and willing.

As an added bonus, if and when the negotiations fails, Mubarak will be able to complain to its people:"See! I tried to talk! I really did! But your representatives are making demands that are just unacceptable. They do not representing you well my people!"

As I read in the news paper yesterday:

"Egyptian President Hosni Mubarak, who may have won concessions yesterday allowing him to serve the rest of him mandate, did so with the same tactics that kept him in office since 1981: divide and conquer the opposition.

The regime is really good at what it does, said Shadi Hamid, director of research at the Brookings Doha Centre. Its very good at dividing the opposition. That's its skill and we've been seeing it for 30 years."

Source: Vivian Salama & Glen Carey, Bloomberg News.

Moubarak move - Machiavelli would have approved

Well my friends, I don't know for you but each time I turn on my TV set at night to watch the news in Egypt I get a new lesson in strategy.

What started it all in Egypt? The people saw what the population did in Tunisia and they said to themselves:"Now wait! If they can do it, we can do it too!" And the turmoil began. At first it was genuine people tired and frustrated against the regime. They were manifesting in peace. But they wanted to pass their point across.

What did Moubarak do? He addressed the nation. Stating that he was dissolving the government and that there were to be elections to better address the people's demands. It didn't work. The people remained in the street.

So next thing he deployed the army in order to "secure the streets and protect the population" of course. It didn't do.

He dissolved the government. So now he control the three main democratic powers: executive, legislature and the judiciary. We all know that to ensure a democracy, you have to separate the powers. OK what's next? Ah yes! The press. The press is known to be the "fourth power" with its power to influence. So previously this week, he cut the Al Jazeera feed in Egypt. Al Jazeera is the muslim version of CNN.

Ok lets see on the cross list:

legislature: checked

executive: checked

judiciary: checked

the press: partial check. We need to address the international press in order to suppress the international opinion.

army: still in control.

Ok lets look in the streets: what? They're still there?!

Now comes the cherry on the sundae. The master peace that Machiavelli would have been excited about. Lets organize a counter insurrection party. Those people will get down in the streets. And they are precisely instructed to get violent and attack both insurrectionists and the international press. And they should shout slogans in favor of Moubarak. Now such a party shouldn't be difficult to put together. In a country which has its economy at a total halt, giving a "salary" to the counter insurrectionists will be appealing to some people.

And look at what is happening from the last two days. Violence. Insurrectionists getting attacked, and international press fleeing home because they are afraid for their security. This last move may just be the kind of move that will ensure Moubarak to prevail.

I am not endorsing Moubaraks moves. I sincerely wish more democracy, peace and jobs to the Egyptian people. Since I run a strategic blog, I had to point out the strategic moves that are right before our eyes. Here and now. Live.

Borrowed power vs True power

Borrowed power or true power? Look at the actual case of Zine el-Abidine Ben Ali of Tunisia and Hosni Mubarak of Egypt. Those people believed, I guess, that they were there for ever. If you asked Kadafi of Lybia a few weeks ago, I would suspect that he would have been confident to stay in place. Try to probe him now. I'm sure that his convictions are a little more shaky. Even if his country remains in relative peace and harmony... so far.

I've been having this thought for a while now. And my introspection on the subject is not finished. What do Ben Ali, Mubarak and Kadafi have in common? They all stand (or standed) on borrowed power. As long as the people tolerate them, everything goes smoothly in the world. But don't be too exuberant. You better walk with your bottom cheeks tight. Because you never know when the people will have enough.

So what is true power then? It is not Kim Jong-Il. It is not Fidel Castro. Those are the same as the others. They are just pressing the people's balls a little harder. So what is it? What is true power? I think it's money. Look at the big shots in this world. I mean the real ones. The major league ones. Most of them you don't hear much about. But do you think that, because you don't hear about them, that they are not active? Far from it. They are just keeping it low profile. They get people elected. They get bills passed. They endure and prosper. For generations. And when there's a head to roll, its not theirs.

Its the same thing in enterprises and politics. Look at the CEOs. Look at presidents, senators and governors. Are they that powerful? Their heads can roll in a matter of minutes. And it did. They are just as good as the next election or the next profit report. Or until people get tired of them. But the major shareholders, the others playing behind the curtain or the people ... they remain.

So my take away from it all is don't mistake true power from borrowed power. You still want the CEO's job? Fine. But make sure that you do it for the right reasons: money, contacts, prestige. But not power. If you do, you're running after a shadow. Even popularity and prestige are false gods. It takes time to get and it can be removed from you before you know it. And you're left with nothing. Worst! People look at you as they look at their drop before flushing.

Once again look at the very rich. Ok they have the prestige of their wealth. But are they actively after popularity and prestige? No. They are after true power. And it seams that keeping a low profile about it is a good strategy.

Sputnik moment

Last Tuesday January 25th, president Obama addressed the nation with the State of the Union's speech. This was one of the most profound speech I heard so far in my life. And yet, judging by the comments the next day, and the reactions on the markets, the speech were mostly unnoticed.

What is it that he said that is so profound? He said that US faces "...Sputnik moment." That will define whether America leads of follow on the global stage. He went ahead stating that the country "...lags behind..." other countries in academic achievement and Obama said that "...US lead has slipped..." And then he also said "...we are poised for progress..."

Why are those words so important and what does he really mean?

Lets do some basic economics. Look at figure 1 below.

Figure 1

This is a classical output function. The output function goes like this: Y=Af(L,K,H) where Y represent the national output of products and services. L represent labor, K represents capital and H represent training and formation. So output is a function of labor, capital and training.

As you can see the slope of the production function is increasing but less and less. This is what is called the decreasing marginal return. Lets take a simple example to explain this phenomenon. Lets say we want to paint rooms. Now to do so we need at least paint and a paint brush. Thus we need to invest capital (K) in order to get the work done. By investing capital we will get the good tools to do the work. But tools without painters gets us nowhere. We will have to hire people to get the rooms painted. Therefore we add labor (L). Now we're in business. We have a painter with some paint and a paintbrush. The job gets done. What do you think will happen if we add another painter and invest a little more capital? Why yes that's it! We'll get more rooms painted. Now what would happen if the first painter shows his skills to the newbie? He will learn faster and the job will get done faster too. So it doesn't hurt to inject some training (H) into our little exercise. And our output (Y) will increase again.

But what happens if we add more paint brushs than painters? Or if we add more and more painters? There will come a time where all those people will step on each other's foot and then the production will decrease. Even training has its limitation. That is why the output slope is increasing fast at first and then, decreases. But now what? Are we doomed to get to a certain level of production and then stagnate there for eternity?

Lets get back to reality a little. USA's output has increased to a pace of about 2% per year for the last decade or so. Same thing for most of the OECD countries. Why can't America change gear and get more produced? Because America is at point USA1 (see Figure 1). And with all the effort it can pull, it would may be able to advance to point USA2 if it's lucky. Ok so why is it that for the same period China output increased at a pace of something like 6% to 7% per year? Are they better than America? They have better planners or its the population?

None of it. China is able to get from point China1 to point China2 (again see figure 1) in a short period of time because China was behind and is now playing catchup. In other words they had less qualified painters and less paintbrushes and now they are investing more capital and more training to get the job done. But don't worry, when they'll get to USA's level, they will also loose pace and their growth will be much more like USA.

Ok so we are all doomed at one point to anemic growth? And what does this have to do with Obama's speech?

Look at the output function again. What do you see? Yes. You see that A is multiplying all the other factors. But what is A? Well A my friend is technological innovation. Look at Figure 2 now.

Figure 2.

As you can see with technological innovation USA can move from point USA1 to point USA2. So with no more investment in capital, labor and training, USA is able to increase its output by innovation. This is the equivalent in our example of inventing the paint gun. Therefore our painters will be able to paint more rooms in less time. The painted rooms output would increase.

Do you begin to see where Obama's speech is leading? He wants to educate the Americans in order to produce a pool of brains that will, hopefully innovate in their respective fields and ensure that America will keep and edge and its leadership in the world.

Now that you understand Figure 1 and Figure 2, you are able to appreciate what Obama really means when he says "we are poised for progress."

This is why I say that Obama's speech is clever, profound and visionary.

This is a pure move of national strategy. And to me, he took the right turn.

Oh! And by the way. If you don't believe that America is getting behind in education. I suggest you put your hand on the documentary Waiting for Superman. It's very enlightening.