Fractals of Change

Stimulus Delayed Is Depressing

Some programs meant to be funded under ARRA (American Recovery and Reinvestment Act aka the stimulus bill) are dangerously delayed in getting under way. It is still not possible to submit applications for broadband or smart grid or e-health projects (just to name a few) because no final rules have been promulgated describing how grants for these programs will be awarded. The obvious problems caused by this delay are that we are going to miss some of the summer construction season and the promised jobs won't be delivered when they're most needed. Not so obvious but more serious is the danger that these promised but not delivered programs are helping to prolong the recession.

For example, planned alternative energy projects are being put on hold in the hope that there will federal money for them. If there were no promise of federal money, some of these projects would be underway. You can't blame the project organizers for seeing if they can get some of their costs defrayed; after all, they may have to compete with projects which do get federal funding. You can blame us in government for not moving fast enough to make the rules clear, end the uncertainty, and let the projects get underway. We're delaying the day Americans will have the benefits they deserve from these programs and, for the moment, we're discouraging job creation with our unfulfilled promises.

There are reasons, of course, for the delay; but there are no good excuses.

At the federal level, it is difficult to write regulations for competitive grants which make sense nation-wide and satisfy at least a majority of political constituencies. Typically regulations have to first be proposed and published in the federal register, then there is a comment period, finally there are final regulations. The proposed regulations have been slowed by the fact that the stimulus bill was passed at the very beginning of a new administration; most agencies didn't even have secretaries yet, let alone all the deputies and assistants who actually make the policy decisions which become regulations. When the regulations are final, grant requests will be written and submitted; then an evaluation period; and, at the end, awards; only then can work begin.

It doesn't have to be this slow. In many cases the agencies would have been well within the letter and intent of the law if they'd made preliminary allocations to the states by formula and allowed work to get underway; in other cases Congress can amend the law. Later allocations could be competitive and could depend, partly, on how well the states were spending the initial allocations. Vermont and other states ARE already doing highway projects because that money was deliberately allocated by formula. It's not too late to release some money for broadband, smart grid, e-health and other priorities by formula and get that work going now. With the help of our congressional delegation, we're urging that approach in Washington; you'll be able to read here whether or not we're successful. More important, you'll benefit from more jobs and better infrastructure sooner rather than later if we can get these processes underway.

It's fine to criticize the feds but are we moving qucikly enough in Vermont? See here for some of the answer to that.

PCs Under Fire

Smart reader Cletus White responded to my post predicting that netbooks will replace many PCs with this comment:

"Netbook, yes maybe...but I read your blog from a facebook link and responded here on the couch via my apple iPod touch (home wifi). It's not a netbook . It's an Internet appliance about the size of a playing card."

He's right; it's not just netbooks but all sorts of devices which are replacing PCs in our lives. During the day my Blackberry is now my take-along email machine, not my much heavier Toughbook which used to be my constant companion. Blackberry's good integration with Exchange makes this practical since I can reply, delete, and folder from the Blackberry and not have to redo any of it when I go back to my desk. Sent mail ends up in my sent mail folder no matter where I read it from.

Since the Exchange Web Client which runs in a browser (officially Office Outlook Web Access) is now very good (formerly it was awful) and since I'm online so much of the time, I don't use the standalone Outlook client on my PC to do my State of Vermont email when I'm out of the office; I do it all in a browser window. That's great in an Internet café where I don't have my own machine. More important to the future, since I'm just working in a browser, I don't really need the PC; I could be on a netbook or some other connected device.

Web sites are developing mobile-friendly versions of themselves and the iPhone shows how even websites authored for PCs can be reasonably accessible on smaller screens. During our recent trip to Greece, we used Kindle's onboard dictionary for word disputes (in English) and Google Search and wikipedia on Mary's connected iPhone for settling all other bets. Even if I had a cellular data plan for my PC on this trip (too complicated and expensive in Greece), using the iPhone was faster than booting up a computer; and, like a PC, the iPhone took advantage of WiFi in hotspots (We didn't get Skype working on it, though).

Perhaps a sign of times to come (and certainly partly a result of recession), Microsoft reported a 32% revenue decline in quarterly profits and the first ever decline in quarterly revenue since it went public twenty-three years ago. People aren't buying as many computers, of course; they're not upgrading as often. But this from the Wall Street Journal story on MSFT earnings:

"In addition to slumping PC sales, Microsoft faces a challenge from netbooks, the inexpensive laptop computers that are the only segment of the PC business enjoying growth. Microsoft hasn't been able to charge as much for the versions of Windows that are generally bundled with netbooks as it can for software included with other types of PCs."

Even worse for the future of Microsoft is that netbooks almost never come with Office and some, like the one I bought, don't have Windows on them at all.

Having learned from my prediction in 1984 that mainframes were on the verge of extinction, I know that PCs will be with us for years to come. But the future is a world where all sorts of appliances are used to get online and where applications and data usually live in the cloud with access through a browser. No one will consider it necessary to have a PC to go online. No one will be offline for very long.

Ryan InterContinental

Why is the luxury InterContinental like low-cost no-frill Ryanair? Read on.

What a deal! Mary went on Priceline and got us three nights in the Athenaeum InterContinental Athens for $100 night, just a little more than we paid for the three star Acropole Hotel in Delphi.

At check-in, knowing we were paying so little, I accepted the €30/night upgrade offer to a renovated room on a high floor. The room is nice and we can see the Acropolis, which is lit up at night. I'll never know what the un-upgraded room would've been like.

Well, of course the Acropole had free WiFi; it's €19.95/day for the cheapest option at the InterContinental up to €49.95 if you want 10Mps and need it to work not only in your own room but in public areas and meeting rooms.

Breakfast was included at the Acropole. It's €30/each at the InterContinental (but you can get your eggs other than hard boiled). Mary and I like cheap, greasy breakfasts (she actually prefers sticky to greasy) but the InterContinental is in a commercial zone which seems to be free of competing restaurants. That also meant that last night, when we were tired from a day on the Acropolis, in the Agora (birthplace of democracy), and walking around the old city, we ate in the hotel restaurant. Pretty good food but ouch! A bottle of three buck chuck equivalent goes for €26. A bottle of Jack Daniels (which we didn't have) is €140.

Ryanair will famously fly you for a single euro plus tax on some routes. But then there are the booking fees, credit card fees, baggage fees (where do you think US airlines learned that trick?), priority boarding fees (no assigned seats so you want to be able to make a dash to stay out of the middle), lots of opportunity to buy things inflight, and nada for free.

Has lnterContinental learned to use Priceline as a low cost lure? Probably not but it wouldn't be a bad strategy.

See http://blog.tomevslin.com/2007/03/easyjet_is_chea.html for my experience with Ryanair clone easyJet.

How Projects Get Selected for Stimulus Funding

There's almost a trillion dollars of stimulus money available nationally under the American Reconstruction and Reinvestment Act (ARRA). There will be somewhere between $800 million to one billion available in Vermont. Despite these staggering numbers, only a fraction of the projects which people would like to use stimulus money for will actually get ARRA Funds.

What's eligible for funding?

Only certain categories of project are eligible for funding and only so much money is available within each category. Famously, swimming pools and casinos are NOT eligible. Less well-known is the fact that there is no money aimed specifically at school construction, although a small amount of Government Services Fund money could theoretically be allocated for this purpose (see previous post) as can some community development block grants and rural development grants. Likewise there is no money aimed at libraries, museums, and other cultural institutions. Some projects at schools and cultural institutions may, however, qualify as energy-saving. There is money for energy saving projects.

As you may already know, candidates for ARRA funding must be nearly "shovel-ready". The idea is to create jobs now so a project which still needs to get environmental permits may well not qualify no matter how desirable. What you may not know is how long it can take to go through various environmental reviews; twenty years for a major road project is not uncommon. The Vermont Legislature is considering various ways to speed up permitting under Vermont law without sacrificing our environmental values. If these bills become law, Vermont will better be able to use ARRA funding for its highest priority projects. However, no federal environmental laws have been waived nor have their processes been streamlined. For this reason alone most highway projects, for example, have to come from an existing list of projects already well-along in the permitting process.

Even given categorical restrictions and the requirement that projects be shovel-ready, there are still many more projects than dollars in almost every category.

Who decides which projects get funded?

The answer is "it depends".

In some cases various federal agencies will make the funding decisions, usually according to more-or-less objective criteria which they will publish or are in the process of publishing. The Obama Administration has been adamant that "politics as usual" will not play a role in determining how this money is allocated. However, Vermont's congressional delegation as well as the delegation from every other state will try to assure that the rules are written in ways that are most helpful to the states they represent and that their states get at least fair consideration under the rules. The agencies will almost surely try to spread the money across states – in some cases because this is what the law requires; in others because it's customary to do so. Early indications are, however, that merit and not politics will be most important when competitive grants are awarded directly from Washington.

It is already clear that in certain cases like broadband infrastructure, Smart Grid, and E-health, regional cooperative applications will be considered to have greater merit than uncoordinated, stand-alone grant requests. It's part of the job of the Office of Economic Stimulus and Recovery in Vermont to provide coordination in these areas.

In other cases money comes directly to a state and it is up to the state through its own procedures to decide how the money gets allocated. The Douglas Administration, like the Obama Administration, would like to see funds allocated on merit rather than politics. How funds actually get allocated in Vermont depends, however, on what the Governor and the Legislature are able to agree on during the budget process. For example, Governor Douglas has recommended that $10 million dollars be put into a revolving loan fund for zero interest loans to public institutions to use for energy-saving projects. If this is approved by the Legislature, then the Pubic Service Department will draw up objective rules to determine which projects actually get access to these funds (we already know that there will be more projects than funds in this category).

There are some bills in the Vermont legislature which favor specific projects. If these bills become law and the projects are eligible under federal law and regulations, these projects will get priority for scarce dollars.

What doesn't happen is the Vermont Office of Economic Stimulus and Recovery making arbitrary allocations of ARRA funds although, as mentioned above, we are coordinating some competitive grant requests to help the State as a whole. Put bluntly, even if we were convinced that you had the most worthy request or important project in the whole state, the money is not ours to give. We're glad to hear about what you want to do. It's our job to help direct you to the state or federal agency which is making the decision – if any. We may be able to help with advice on how best to make a grant request. If you don't see the answers you need at recovery.vermont.gov, you'll find various ways to reach us at http://recovery.vermont.gov/contact_us.

On Executing Flawlessly

Every speaker at Vice President Joe Biden's stimulus czar summit told us that the act required us to be "extremely transparent". One woman went a bit further. "The press'll be watching you", she reminded us. "If you make a mistake, they'll be all over you. So you have to execute flawlessly," she concluded.

Not going to happen. The goal of executing flawlessly for something that hasn't been practiced over and over is not only silly but counter-productive.

You can't both act quickly and flawlessly. You can't try new things without making mistakes. Three bad things happen when "execute flawlessly" is the mantra: you move extremely slowly because you're over-studying every move; you don't innovate because you can't predict the results if you do; and you hide mistakes when you make them (perhaps even from yourself) because it's career-limiting to have been wrong. I saw all three of these bad results up close when I was at the old AT&T; posted about that experience here.

In an innovative environment you KNOW you're going to make mistakes; the important thing is to recognize them quickly and learn from them. It's not making mistakes that's wrong; it's not recognizing them or, worse, covering them up.

The transparency requirements of the American Recovery and Reinvestment Act (ARRA aka the Stimulus Bill) are a good idea. People ought to be able to see how their government works, mistakes and all. By the way, if you spot a mistake or worse, you can report it to us on the form at http://recovery.vermont.gov/contact_us/report_concerns. That's one way you can help us do our job better.

My colleagues and I in the Office of Economic Stimulus and Recovery DON'T promise to execute flawlessly; we know we're not going to. We have to move quickly and we have to innovate so we'll make mistakes. I'm sure we've made some already. We do promise to be transparent and to recognize and fix our mistakes as quickly as we can. And we do expect to take our lumps in the press when we make mistakes – the press won't be doing their job if they don't watch how we do ours.

In the interest of transparency, just want to set expectations realistically.

The Right Way to Stop Piracy

The crews of both the container ship Alabama and the USS Bainbridge just gave a good practical antipiracy course. The crew of the merchant ship fought back and avoided leaving the pirates in possession of a big ship full of hostages; Captain Phillips was apparently especially brave but did end up hostage. Navy snipers ended the danger to the Captain by killing the pirates – the opposite of paying ransom which would have encouraged further piracy.

Ironically an op-ed in today's New York Times, written before the rescue, says:

"So we end up with the spectacle of an American destroyer, the Bainbridge, with enough Tomahawk missiles and other weaponry to destroy a small city, facing off against a handful of Somali pirates in a tiny lifeboat. This is not an efficient use of American resources. It indicates how pirates, like terrorists, can attack us asymmetrically. The challenge ahead for the United States is not only dealing with the rise of Chinese naval power, but also in handling more unconventional risks that will require a more scrappy, street-fighting Navy."

Apparently we do have a "scrappy, street fighting navy". All three pirates were shot in the head while bouncing on a choppy sea. The one with the AK-47 pointed at the back of the American captain never got to shoot.

Not every attempt to fight back will end as well; we have to be prepared for that. But fighting back discourages piracy and saves lives; paying ransom to pirates finances extortion and murder. Thank you to both American crews for the sailors whose lives they've just made safer.

It’s The Netbook, Stupid

Personal computers are an obstacle to broadband use. They're complicated, expensive, heavy, take forever to boot up – and unnecessary. Ironically I'm writing this post on a computer because I'm on a plane, one of the few places (besides rural America and developing nations) where broadband isn't available.

Mary was thinking about how to achieve Vermont's new goal of making broadband available to everyone including those who can't afford or don't know how to use computers. Suddenly we realized that computers are a problem, not a solution. If you know you're going to have good broadband, you don't need a computer to browse the web or communicate; you don't even need a computer to create documents, use spreadsheets, store and analyze data. We need to compute but we don't need a computer. The personal computer is an expensive, inconvenient, and inefficient way to all these things. Of course people like me are also hooked on computers.

So we bought a netbook. It took a while to find one with Linux instead of Windows; but that's what we wanted to experiment with. Vista has conclusively proven how much of a barrier an operating system can be. Linux is not only free but also non-obtrusive. Finally bought an ASUS Eee PC 900 with a builtin video camera, mic, and speakers (Skype ready), an 8.9" screen, and a 16 Gig harddrive (which I would have as soon done without). Didn't buy any applications, of course. $247.56 at Amazon with free shipping. (I know, I know, this is really a computer; even has Intel inside. But we're only using the browser and the explorer so it doesn't count as a computer).

Carefully I kept my nerdish self away when it came. Mary was up and on the Net using our home wifi in about ten minutes after opening the box. Mary's not a novice but she's also not a nerd. Looks good so far. I came back in when I heard the music and found her happily listening to Internet radio from India on the not-too-shabby speakers.

Here's our plan. Mary transitions off her HP to the netbook. She uses only online apps through the browser; she stores her data in the cloud (actually better for collaboration). Pictures live at Picasa or the like; videos in YouTube; white papers and spreadsheets in Google Docs (lots of Google here). Side benefits are her environment is available at whatever Internet café she uses to go online and backup is no longer an issue. In fact she was delighted to find after a small snafu with the word processor in Google apps, which made all the words disappear ,that every edit she'd made had resulted in an automatically archived version of the document.

If this works than maybe we don't worry about computers and software for the newly connected. A netbook'll actually be better – cheaper, easier install, easier to use, no software to buy, and probably replaces the landline phone with Skype video calls.

The Most Sought After Money in the Stimulus Bill

Most of the money coming to states under the American Recovery and Reinvestment Act (aka ARRA aka the stimulus bill) is for very specific purposes and must go to very specific programs. Usually, but not always, there is also a maintenance of effort (MOE to us bureaucrats) requirement which assures that states don't just use the federal money in place of state money. However, there is a sliver of money ($17.17 million in Vermont out of a total of more than $800 million) which can be used for almost any government program and which can supplant the use of state funds. This is the most sought after money in the whole stimulus program. Because there is so much flexibility in using it, everyone has an argument as to why it should go to whatever project he or she is passionate about (or an advocate or lobbyist for).

Just so you can keep things straight, until last week this super-flexible money was called the discretionary 18.2% of SFSF (State Fiscal Stabilization Fund). It is now called the General Services Fund (GSF) so I'll use that name in this post.

When I started the job as Vermont's Chief Recovery Officer there had already been over $100 million of proposals received for the $17 million we have available here. The pile of proposals has continued to grow. This money is especially attractive to those who have not found any other program in the stimulus bill for which their project would be qualified but it also sought after by those who would otherwise have to compete for scarce funds in specific programs. Needless to say, more people are going to be more disappointed than happy over the eventual allocation of GSF.

So who decides how the GSF money is given out in Vermont?

The language of the federal law says "The Governor shall use 18.2 percent of the State's allocation [of SFSF] for public safety and other government services." (later regulations make clear that "and" should have been "or"). Some people have reasonably concluded from this language that the Governor of Vermont can unilaterally decide where the money goes which is probably why so many proposals have come directly to the Office of Economic Stimulus and Recovery. However, in Vermont federal grants whose amounts are known during the legislative session are appropriated by the Legislature through the budget process in the same way that money raised from taxes is appropriated to specific programs (some other states DO allow their governors to spend federal money unilaterally). The Governor can and does propose a budget; the Legislature generally has its own ideas about what the budget should be and can pass any budget the House and Senate agree on subject to veto by the Governor.

The short answer is that the budget process now underway will determine how the GSF money is spent in Vermont. The answer will be known in about a month when the budget bill is agreed on and the legislature can adjourn.

What is under discussion for use of the GSF money in Vermont?

Governor Jim Douglas proposed that all of the $17.17 million, which will be available over two years, be spent on economic development, most of it through the Vermont Economic Development Authority (VEDA) which will be able to use the stimulus money to attract additional private capital. The administration's estimate is that this allocation will result in up to $160 million of loans and equity being available to Vermont businesses including farms - literally "seed capital". The purpose is to grow the Vermont economy now and have a better tax base and jobs that last after the stimulus money has dried up. Full disclosure: I am a gubernatorial appointee and was involved in drawing up this plan.

The House Appropriations Committee proposed that half of the GSF money or $8.58 million be used for public safety. Since they didn't propose new public safety programs, the effect is to relieve pressure on the FY2010 budget – and there certainly is plenty of budget pressure given declining revenues and increased demand for social services. They didn't say how they propose spending the other half; that decision would be made in next year's budget.

The philosophical difference between these two proposals is whether the money should be used to reduce short-term pain (which is real) or aimed at creating economic growth now and in the longer term rather than relieving pressure on the budget. IMHO, the first alternative is dangerously close to eating the seed corn – always a temptation when it's winter and you're hungry. Civilizations which don't have the discipline to avoid eating the seed corn don't last.

What if I have an opinion on how GSF money should be spent?

If you have an opinion, now's the time to make it known; there is only about another month before a final decision is made in the form of the state budget. Usually final results are somewhere in the range between what the governor and the legislature propose; but we haven't even heard from the Senate yet so it is certainly possible that other ideas will be introduced.

A form for contacting the Governor is at http://governor.vermont.gov/contact.html and his hotline is at 800.649.6825. Contact information for legislators is at http://www.leg.state.vt.us/legdir/legdir2.htm. In the end this is your money and you certainly have a right to tell us how it should be spent.

Coming Up: Other ARRA sources if your project doesn't get GSF funding.