Cooking the Books

by Mike Crouse

We just returned from the 72nd Annual Intermountain Logging Conference held in Spokane, Washington, about a six hour drive from our office located just outside Chehalis. It's a toss up driving over either White Pass or Snoqualmie Pass, either one of which leads through what is (or was) some of the most productive and actively managed forest in the United States. It is a living testimony to the vitality of these lands in producing this most sustainable and renewable resource.

Enjoying the scenery during the few hours it takes to cross the pass, you cannot help but be impressed with the sheer beauty and volume of resource, whose footprint is further enhanced by the steep terrain that packs the carpet of trees even more. It is little wonder this part of the world is amongst the very best for growing trees.

I'm a bit of a news and talk radio junkie, and thus during the drive was also treated to the wonders of both our state and federal governments ongoing orgasm of spending, and whose only considered means of paying for this spending frenzy is with increased fees, rules, regulations, and of course taxation. Justification for this comes from telling us the obvious, "... these are tough times and it requires tough action," blah, blah, blah... is there anyone out there who has missed the economy is anemic?

Thus it is stunning that with all acres of standing public forest asset, which in another time would be harvested and put to work providing raw materials, jobs, taxes, and new CASH for the public benefit, which could, no SHOULD be used, to pay for the lavish spending spree is instead just standing while we (the taxpayers) are bilked for more tax dollars... stunningly myopic.

Most of us are living proof the economy is struggling, albeit gradually improving, but that there is light (and it's not the train) at the end of the tunnel.

Operating any business requires foresight and the courage to act on what you see as the future hopefully for opportunity that generates money, or as in the current economics, opportunity to prepare and make the best of present storm.

And whereas government should reflect this same pattern, their sheer girth and structure, as we've seen the past few decades, has engendered a very different response, seemingly designed not to protect their constituency but to protect the living beast that is governmental largesse. And while there are certainly exceptions to this (not too surprisingly, the closer the government is to their constituency, the more conscientious elected officials are over growth, spending and staff size), the urge for efficiency is all too often lost to the appearance of efficiency and sacrifice, bring a whole new meaning to the phrase "cooking the books."

"Cooking the books" is a term typically applied to "evil capitalists," otherwise known as those of us in business. It's a buzzword describing fraudulent activities performed by corporations in order to falsify their financial statements. Typically, cooking the books involves augmenting financial data to yield previously non-existent earnings... that is how many in media apply it to business, of course. But the same "cooking" takes place in the in the public, scientific, and non-profit sector as well, massaging date, changing definitions, and otherwise working to spin the numbers to serve your given policy purpose. It is no less fraudulent but the practitioners of this variety of rarely-followed up on "cooking" distort reality and seem to rarely, if ever, held accountable.

In Washington state our governor rolled out the "2009 Green Jobs" report that claimed 99,000 green jobs in Washington, implying a "green feather" in Washington's had for being so eco-conscious. Closer analysis, however, revealed those green jobs were cooked up in the ever popular "relabeling" scheme where you take existing jobs and re-label them green. Of the 89% of employers responding to the state's Employment Security Data survey, which represents 71,000 of the reported green jobs, said there was little or no difference in the work done by green employees and non-green employees. And the cooking doesn't stop there. According to the Washington Policy Center, "taxpayers are paying around $2,400 per trainee to acquire green job skills that employers overwhelmingly said were no different than skills needed for existing non-green jobs," how nice.

Congress' accounting lingo appears to be confusing by design from early in the last century in what we'd describe in Clintonesque doublespeak. While there are many variations the most common double speak comes in budget talks. Typically in business when you have an increase in revenue it's called an increase, or a decrease in spending it's called a decrease (duh). But in the shameless (and sham-full) congress when one speaks of budgets the baseline is not from the previous year's budget. Instead, first consideration is your "projected" budget, which may or may not have automatic increases, built in.

Confused yet? ...read on. Just taken at face value however, that projected budget's increases are decreases are their base line for all calculations. Deliberations typically come relating not to the actual expenditures but projected expenditures... thus when your projected budget increase was 20%, and that is reduced by 50%, the net effect is an increase (not a decrease) of the budget by 10%. The report reads that you've reduced expenditures by "50%!" even though in fact you have a cozy little bump up of 10% on the previous year. Handy if you're a bureaucrat or it is a pet project for your particular district... but smoke and mirrors cooking of the books if you're a taxpayer... and all too typical.

It is little wonder our country is being spent out of existence by the very elected officials who have sworn to protect the constitution. We are just now starting to see some of the realities shoved through on the infamous "historic" health bill whose numbers are nebulous at the very best.

At least congressional numbers have a flirting familiarity with real numbers, even though they are seriously cooked, and demonstrably doctored.

The environmental industry's numbers run the entire gamut of reliability: from factual, to selectively skewed, and in the most extreme examples data being pulled out of the hat... such as the oft quoted "species vanishing at the fastest rate in history" and "deforestation at an unprecedented rate,"...phrases cooked up by their marketing firm. And that is not to paint with a broad brush all research from environmentalist firms as shabby. There's some very good research that's come from ecologists but there is a host of truly shabby shams of "results by design" that are not intended to reveal nature but instead reveal the results that support your pre-ordained conclusion, and others that take that portion of the data from a survey that yields the results you want to dramatize.

The computer modeling so frequently trotted out as "sound science" is based on this massaging of data, where the results are based on a host of assumptions... legitimate enough only when your assumptions have a basis in fact. The idea is to isolate factors sufficiently that you can demonstrate thorough testing and observation how your theory works in the real world. When your real world is the computer model, rather than the complexities of the real world, the verification of theory is as good as those assumptions.

Welcome to the world of climate gate, which the world has seen from University of East Anglia's Climatic Research Unit, where the data used in the vast Global Warming debate has come into question not only in terms of the data's collection, but how it was selectively cut, pasted, and massaged over decades breaking virtually all the tenants of the scientific method.

The problem: this is not scientific discovery as much as it is political science, a truly unholy alliance that harkens of the dark ages of myth and alchemy rather than discovery of the unknown. Cooking the books is great in the world of spin, but falls far short of the openness and transparency frequently touted by policy makers, and not only can but has resulted in some public policy disasters we, our children, and grandchildren have and will pay for.

Back to reality

And in the real world of business, economic slowdowns, severe recession and economic depressions have to be dealt with quickly and in real world terms. You cannot just reshuffle and rearrange deck chairs... as inaction can be a fatal error that puts you out of business. The options are increase your income, expand your market, and reduce your expenses so you have a smaller "nut" to crack to make payments and meet operating costs.

It has meant reducing benefits, perhaps reducing hours, reducing (or eliminating) overtime, and paying particularly close attention to maintenance to keep existing machinery operating longer. And it's meant layoffs... real jobs, real people, real skilled labor force.

Thus it is particularly galling to private enterprise, whose labors ultimately fund through taxes, fees, and labor the very government who is, less than transparently, living and spending high while we pay the toll again, and again, and again.

Not only is it annoying but it is both an outrage and the source of real resentment that we see particularly state and federal government continue to strut with the arrogance that in some magical way government can "create" jobs by growing government, and giving away our tax money.

What's utterly lost on the elected class is that their money is OUR money, and that they are doing a particularly poor job of managing, respecting, and spending it on our behalf.

So when considering the theatrically inspired pain and sympathy we hear from state capitals and our federal officials over the "pain" of the business community, laid off workers who cannot find jobs, and the "greed" of capitalism, hold up a mirror and let them see reflected back at them the source of the problem, particularly in the current feeding frenzy of legislation directed against business in general, and cascading down on the shoulders of small business in particular.

There is no doubt we'll continue to experience a slow, but hopefully steady increase in business overall. But for this to actually accelerate and improve our overall financial health and prosperity, government needs to follow those same conservation measures the rest of us are subject to: spend less, greater efficiency, real change in reorganization, and pruning those entities no longer contributing to success.

Small business is the engine that our prosperity is built upon. In this changing climate we demand government make the same reductions and reformation the rest of us must as a reflection of what their constituency must go through to not only survive but be in a position to thrive as we come out of these doldrums.

There's a brighter future ahead. To be a part of that future you've got to be prepared and anticipate.

There's been a radio advertisement running the past few years encouraging people to save money, whose theme is "Feed the Pig," which is meant to encourage you to feed your own piggy bank of personal savings. From the first time we heard that the image that came to mind was continuing to "feed the pig," of government's unceasing appetite for our money. Now is the time to take heart and roast that pig, and put it on a austere diet.

Media's taken particular delight in casting stones, throwing paint, and otherwise dehumanizing in any way they can those who have become so incensed at our "governmental class" that they are making their feelings known in organized dissent known as the Tea Party Movement. You'd almost think media had an interest rather than being the unbias reporters they claim to be. The best way to do that comes in November, when we have mid-term elections. Between now and then a very vocal and active public needs to watch the boys and girls in the pig pen very closely, and hold them accountable for the excesses of spending particularly in the past several years.

Mark your calendars

Coming up in September of this year is the 6th Pacific Logging Congress "In-The-Woods" Active Equipment Show, held on the Longview Fibre Timberlands just outside Clatskanie, Oregon. The show will have a three day run, September 16-18 and features the latest in harvesting and logging technology on active logging sites. For more information on the coming show visit their web site at: www.pacificloggingcongress.com