Why I will never buy a Toyota product

Much has been written in the last 90 days about Toyotas, recalls, unintended acceleration, and safety and quality. The Los Angeles Times, for example, has an excellent series of stories they've called "Road to Recall" going over the calamity that is Toyota. Toyota's problems are particularly discomforting for owners given Toyota's previously stellar reputation for quality and reliability, a reputation that Toyota had no qualms charging extra for.

Like anything manufactured by humans, Toyota vehicles are susceptible to flaws. However, while it is inevitable that every product can be brought down by mistakes, it is not inevitable that these mistakes lead to the same train wreck that is now befalling Toyota and its vehicles.

There is most definitely a right way and a wrong way to respond to a crisis and at every turn, Toyota has picked the wrong one.

That said, I now present to you the reasons why I will never buy a Toyota, Lexus, or Scion product

1. PIECEMEAL RECALLS: Various Toyota models are sold in nearly identical form in multiple countries. One would expect then that if a model is recalled, it would be in all countries. Sadly, evidence indicates that Toyota did not do so and instead waited weeks or even years between recalling nearly identical models in separate countries.
   
2. UNDERESTIMATING/TRIVIALIZING THE PROBLEM: Evidence indicates that reports of unintended acceleration came to Toyota's attention as early as 2004. By late 2009, Toyota had enough reports of unintended acceleration to know it was a problem, but it was apparently not enough to warrant a full-fledged recall (1). In other words, Toyota was pulling a Pinto. Lastly, throughout the entire recall mess, Toyota has steadfastly insisted that the unintended acceleration problem is "rare", completely ignoring the fact that it is anything but rare if it happens to you.
   
3. FOCUSING ON PROFIT: On February 21, 2010, an internal Toyota document (dated July 6, 2009) was released in which the company boasted it saved "$100 million" by negotiating with federal regulators to limit the scope of an upcoming recall over unintended acceleration.
4. OBSTRUCTION OF JUSTICE: Perhaps this is just political posturing, but Henry Waxman (chair of the Congressional committee giving Toyota the screws) accused Toyota of withholding information and relying on flawed studies to dismiss consumer complaints of unintended acceleration. Separately, Congressman Edolphus Towns, head of the House Oversight and Government Reform Committee, said that Toyota "deliberately withheld" evidence in lawsuits related to vehicle safety, exhibiting a "systematic disregard for the law." When read in conjunction with Toyota's handling of the recall thus far -- including an absentee CEO, piecemeal recalls, memos boasting of $100M savings, stuck floormats and gas pedals, and stubborn insistence that the car's electronics are fine -- goes to show you that Toyota really has no fucking idea what it's doing.
   
5. OVERESTIMATING THEIR ABILITY TO SOLVE THE PROBLEM: In the US, the first Toyota recall due to unintended acceleration was in or about October 2009 for -- allegedly -- defective floormats that would cause the gas pedal to jam. Does that make sense from a sheer logic perspective? No. First, it seems that a floormat that moves (much less jam the gas pedal) would be very easy to spot. Second, lots of cars have floormats and being low tech devices, it seems to me that there's nothing unusual about Toyota floormats that would cause them to stick/move more than Honda or Ford floormats. Third, the recall was by-country -- meaning, for example, that Camrys made in the US were affected but Camrys made in Japan were not. I'm not an expert in how Toyota makes cars, but it stands to reason that Camrys sold in the US are the same (i.e. same parts), regardless of where they are made. The second recall in mid-January 2010 was over gas pedals that were slow to return after being depressed. On the surface, this seems slightly more logical, except for one small thing: fixing the gas pedal doesn't solve the problem.
   
6. BLATANT STUBBORNNESS AND AN INABILITY TO SOLVE THE PROBLEM: Toyota first said that sticking floormats (somehow) caused the unintended acceleration. Three months later, it was sticking accelerator pedals that were the cause (except now it seems like they weren't). During Congressional testimony in late February 2010, Toyota executives even admitted that the recalls would not totally fix the unintended acceleration problem, (to which I would respond "You built the fucking car you imbecile! If you can't fix it, who the fuck else can?"). Despite all this, the one thing Toyota is absolutely sure about is that the unintended acceleration problem is not (emphasize NOT) due to the electronic throttle system that Toyota introduced in many models in or about model year 2002. (By a strange coincidence, reports of unintended acceleration shot up in Toyota models shot up after mechanical throttles were replaced by electronic ones.) Toyota's insisted this even though an automotive professor was able to reproduce the problem by fiddling with the electronic throttle system in a Toyota Avalon.
   
7. RELUCTANCE TO ACCEPT RESPONSIBILITY: In February 2010, as the problems with Toyota vehicles increased, Congress decided to hold a public hearing. If you saw the hearings, you know that Toyota CEO Akio Toyoda was there and gave testimony with the help of interpreters. It wasn't always this way, though: Up until the last minute, CEO Toyoda was not going to appear before Congress, insisting instead that US-based Toyota executives could handle it. Toyoda's hands-off approach to this entire recall matter (including his grammatically-challenged apology) is also telling (i.e. it tells Toyota's customers that the company doesn't give a rat's ass), but it is possible at least some of Toyoda's reluctance may be due to cultural issues.

As in any endeavor (life, law, business ,etc) a judgment that is based on the totality of the circumstance is likely to be more representative of the truth than one based on a singularity. What does the Toyota mess (so far) tell us? The vehicles themselves are well-engineered and reliable 95% of the time. If Toyota would pull its head of its proverbial corporate ass and be open and honest to the same degree they've been stubborn and shifty, then the remaining 5% would have been dealt with long ago.

As a start, for example, here are several things Toyota could have done to handle this recall, but did not as far as I know.

1. Setup a 1(800) number where consumers could get information on whether their car was recalled.
   
2. Create a website with videos detailing the problem and what work has been done on a day-by-day basis to solve the problem. This strikes me as a much better way to handle any recall than to leave your customers high and dry with nothing but "We are working hard to solve the problem" to comfort them.
   

Good to hear that the other auto companies capitalized on Toyota's misfortune by offering customers a whopping $1,000 to trade in a recalled Toyota model. And so exemplifies rule 2 of business: kick your opponent when he's down.

Why health insurance premiums will always go up

Several weeks ago, the San Jose Mercury News did this story comparing the cost involved in driving a car versus taking public transportation. (Because the Mercury News is a very uncool paper that doesn't make their stories available on the web indefinitely for free, the story I'm referring to is called "Running on Empty: Bay Area transit in crisis" and was written by Mike Rosenberg. The story ran on January 9, 2010 on what I believe was the front page of the main section of the Merc).

Anyway, the conclusion of the story was that -- surprise, surprise -- in almost all circumstances, taking public transportation around the Bay Area is an all-around loser. It takes longer to get where you're going -- sometimes 2 or 3 times longer -- and you don't save enough money to make the extra time spent worth it. On top of that, depending on the agency, you risk being beat up or stabbed. The only way public transit makes sense is if parking a car is either very expensive or very difficult. When I go into downtown San Francisco, for instance, I always take public transit because parking is so expensive.

The reason for the Mercury News' article originally was that the imploding economy is causing many public transportation agencies in the Bay Area to lose money as income falls but expenses don't. To plug their deficits, these agencies are raising fares.

The problem with raising fares, as the Mercury News discovered, is that it actually makes the deficit worse. As fares get more expensive, people with cars decide that it's actually more convenient (and possibly cheaper too) to drive instead. As a result, fewer people take public transit which means the agency still gets fewer fares. The only result of higher fares is that people who have no choice but to take public transit (the elderly, the poor, the young, etc) are forced to fork over ever increasing amounts of money to get where they're going.

This same phenomenon is quite common in other arenas. When newspaper or magazine circulation decreases -- perhaps because the subscriber views the paper online, people think the reporting sucks, etc -- the publication itself gets less subscription revenue. It may be tempting to simply raise subscription rates on the remaining subscribers to make up the difference, but what does that do? Right. It causes more people to cancel their subscriptions which means even less revenue. When you factor in advertising, the problem gets even worse. Fewer subscribers means lower advertising rates since advertisers don't want to pay a lot to advertise in a paper few people read. If you raise advertising rates to make up the difference, you merely accelerate the rate at which advertisers leave.

The other arena (or at least the other arena that comes to mind right now) in which this occurs is health insurance. Recently, Anthem Blue Cross made headlines in California because it wanted to increase health insurance premiums for some customers by 39%. The reason? A variety of factors, including the poor economy, the higher cost of treatment, etc.

Like most people, I've noticed for the longest while that the cost of health insurance just keeps going up -- often much faster than the rate of inflation. I struggled for the longest time to understand where all that money was going, but now I think I understand.

Because health insurance is not mandatory, healthy people who are unlikely to need health insurance -- for example, healthy 23 to 26 year olds -- often get rid of it to save money when the economy gets bad. The underlying idea of any type of insurance is that the premiums paid by those who are unlikely to need it subsidize the expense of providing benefit to those who are likely to need it. In other words, healthy people help pay for the cost of treating the unhealthy. As more and more healthy people drop their health insurance, poor people necessarily have to pick up more of the true cost of their treatment.

By raising premiums on the unhealthy, however, you simply cause more people to drop their insurance. For example, maybe it was the healthy 23 to 26 year old customers who dropped their insurance when the economy went south. This caused premiums for everyone else to go up in order to provide the same coverage for those who remained. The new higher rate, however, will cause the healthy 28 to 31 year old customers -- people who likely don't need health insurance also, but who have less price elasticity than the healthy 23 to 26 year old customers -- to drop their coverage. This in turn causes premiums to go up even more for the people who remain.

At this new higher rate, maybe the healthy 32 to 36 year old customers will be incentivized to drop their coverage, thereby causing rates for those who remain to go up further still, which then causes the health 37 to 40 year old customers to drop their coverage... and the cycle keeps going.

Thus, it's not so much the cost of health care is increasing rather than there are simply fewer people remaining to cover that cost.

What goes down, doesn't always come back up

People often say in various forms that Silicon Valley is the bed of technological innovation and a huge driver of economic prosperity. I've lived here my entire life and would agree that our past history does support that in some respects, but I'm also aware of one simple truism: past performance is no guarantee of future success.

A report that was issued today by some pundits agrees with me: Silicon Valley still has a lot of fancy and cutting edge tech shit going on, but there are serious problems afoot as well. At a minimum:

• Venture capital investments are down
• Patent filings are down as well
• The number of mid-level jobs has also gone down (cough, outsourcing of jobs, cough)

Additionally, there's the usual plethora of shit to blame on the California state government -- high taxes, crumbling infrastructure, crappy schools, etc. On top of that, the last decade or two has also seen the rise of other tech centers around the world, including Austin, TX, Bangalore, India, and various tech hubs on the US East Coast like Boston and Research Triangle Park.

This brings me to my point and it's that what goes down does not necessarily go up. In more specific terms, the economy will not simply "get better" again because it's gotten better in the past. As Andy Grove said in Only the Paranoid Survive, there are strategic inflection points in business (but also in life generally) in which the old way of things is lost forever. Case in point:

1. In the late 1990s, Napster came out which facilitated wholesale copyright infringement of music. The record companies, of course, sued Napster out of existence, but then popped up a whole slough of similar services. The ones I can think of off hand include Kazaa and Morpheus, but I'm sure there are tons more. Before Napster, the record companies forced consumers to buy songs by the album. Now that Napster is gone, are consumers back to doing that or have you been living in a damn cave for the last decade and never heard of iTunes?
2. Years ago, the US still relied on Pony Express riders to deliver mail and other packages around the country. Then the telegraph was invented which allowed messages to be sent long distances without the need for someone to actually hop on a horse and hand deliver the message. When the first Pony Express riders found themselves without work, I'm sure someone must have thought 'Don't worry, this telegraph stuff is just a fad -- we'll be back to hand delivering messages in no time.' And they were right, if you ignore telephone and email.
3. When the first automobiles started appearing on US roads in the early part of the 20th century, they replaced horse drawn carriages. Did carriage drivers get displaced? Sure. Did some of them think that cars were just a passing fad? I do. Were they just a passing fad or did they represent an inflection point in which technology changed forever?
4. When the first manufacturing jobs in the Midwestern US started going overseas to China, Mexico, and the like, do you think those manufacturing workers stood around and said 'Don't worry, those jobs will come right back in a jiffy -- no one's ever going to buy something made in China anyway.' When outsourcing of engineering jobs first started in Silicon Valley in or around 2001, that was the sentiment a lot of people here echoed -- that the jobs would come right back to the US once the economy picked up. Some jobs did come back -- most notably Dell's executive level telephone customer service -- but for the most part, I'd say they haven't. And unemployment (currently 11%) in Silicon Valley has languished for the better part of this decade. Older tech workers find themselves increasingly having to start over again in their 50s and 60s. Coincidence?
   
5. And, finally, something more recent: when Google, Yahoo, and others first started putting maps on the Internet, I'm sure the paper map makers weren't worried -- 'A map on a computer screen? Ridiculous. You can't take a computer screen into the car with you. You'll always need paper maps.' Can you still get a paper map? Sure, but it's a lot harder as more and more people use Internet maps instead.

Lastly, from a general logic perspective, the idea that the good times will always return is silly -- if they did always return, then nothing permanently bad would ever happen.

My 2009 Persons of the Year

Last year I began a tradition of naming someone my Person of the Year, usually someone who did something newsworthy that year. There are no formal criteria, but I consider what the person did and what it personified. Many things can count -- the inaugural winner was a woman (who later contacted me!) from Arizona who went out for a jog in the desert and got attacked by a fox who ended up biting her on the arm. A typical jog in the desert you might say, but here's what made the woman a badass and my 2008 Person of the Year: the fox wouldn't let go so the woman jogged the mile or so back to her car WITH THE FUCKING FOX STILL ON HER ARM. She then somehow managed to dislodge the fox, throw it in her trunk and drive to the hospital.

For 2009, I had three contenders.

The first was US Airways Captain Chesley Sullenberger who, in case you've been living in a damn cave, landed an airplane in New York's Hudson river after he lost both engines to a flock of geese. (Damn'd geese!). FYI, Captain Sullenberger is a California native.

The second was Captain Richard Phillips of the cargo ship Maersk Alabama. In April 2009, Captain Phillips' ship was steaming past the coast of Somalia when it was hijacked by a group of pirates. Captain Phillips got his crew off (I think), but in doing so got taken hostage by the pirates aboard one of the Maersk Alabama's life rafts.

The third is actually a group: Captain Phillips was freed after5 days when said pirate hostage takers poked their heads out of said life raft -- and got them blown off by three US Navy Seal snipers on an adjacent US ship.

In a world in which laws are rarely enforced and people have forgotten that actions speak louder than words, there can only be one choice amongst this group of three.

For exhibiting ingenuity, selflessness, tenacity, grace under pressure, and the strength of character to persevere against any and all odds to get the job done, my 2009 Persons of the Year are the 3 US Navy Seal snipers who in a split second stood up for what was right in the world by rendering swift and deadly justice. Those 3 brave men will remain anonymous forever, but wherever you are, gentleman, this American salutes you.

Good things come...

To those who wait. Yesterday, I was notified that I passed the July 2009 administration of the California Bar Exam. My feeling at the time of the exam was that I would pass because it ended up being easier than the practice examinations I had done. However, passage is never guaranteed because there is always the chance that you may draw a bar grader who, despite being a lawyer, just has no idea what you're talking about. As a former engineer, I was particularly concerned about this, especially if I drew the stereotypical "liberal arts" attorney.

What I think drove me a lot these last few years was that some people -- more than 1, but not by much -- doubted that I could do it. I know now -- and I likely knew then as well -- that while few engineers and scientists go to law school, enough of them do it that you have to be a complete turnip (no offense to turnips) to think it earthshatteringly unusual.

However, when I began seriously applying to law school some years ago, that was the sentiment I encountered. That law was a waste and that a technically-trained person like myself had no business whatsoever going into it. When I persevered, that sentiment turned into active disdain: I would never make it into a law school, and even if I did, I'd never graduate and I'd certainly never pass the California Bar, one of the hardest Bar exams in the nation. One of the supervisors -- a hardcore and very narrow-minded physicist -- I had at the time was the worst. He knew me quite well, my having demonstrated my abilities (mental in particular) to him on numerous occasions. If anyone was in a position to write a glowing letter of recommendation for graduate school for me, it was certainly him.

When I asked, he said sure, that he'd be glad to. He was quite well connected in the scientific community we worked in and with his recommendation, I likely could have gone to any number of schools. However, when he found out it was for law school (versus graduate school for a doctorate or masters degree), he said no.

Racial stereotypes

This posting is not in response to the Henry Louis Gates arrest that occurred about a month ago, but that arrest did get me thinking about this topic so it was indirectly the source.

Incidents similar to the Gates arrest happen periodically where someone is profiled based on their appearance. Just this past weekend, for example, some really famous and important Bollywood actor from India was stopped at Newark Airport in New Jersey, allegedly on suspicion of being a terrorist. Why? I think his last name was Khan, which is allegedly a common name for terrorists, I guess. (Sorry, as you can guess, I don't follow Bollywood movies, although I probably should in order to keep up with my Renaissance Man image).

Anyway, when the misunderstanding behind the incident is resolved, the news will invariably show someone who says something to the effect of "This incident just shows how much more work we need to do to combat stereotypes and racial prejudice", etc. Some outreach event (diversity forum, tolerance workshop, etc) usually follows until the media attention fades.

The fact that these incidents keep repeating tells me that the workshops and forums don't work. What does? As usual, the solution is up to every individual and here it is: play against type.

What I mean by that is this: surprise people by playing against stereotype. For example, suppose that a stereotype is that Asian students only excel in academics. Break that by being an Asian student who also excels at something else, like sports. If the stereotype is that Jews are cheap, then surprise people by being a Jew that tips generously. If the stereotype is that young black men are all drug dealers or gang members, surprise people by staying in school and going to college. If the stereotype is that all Mexicans are lazy, break that by being the hardest-working, least-lazy worker there is. Most stereotypes are formed by people based on what they see in their own lives which means if they get surprised enough, the stereotypes will (or should hopefully, anyway) start to fade.

And that's how change happens.

The New Silicon Valley

Allegedly, the recession of 2000/2001 ended sometime in 2001-2002. The economy then went on an alleged tear from 2002 through 2007/2008 when it went into the current toilet it's in. That's what the government says, the official figures say, etc. If you instead, however, look at reality, the story is a bit different. A lot of people -- particularly engineers who lost their jobs circa 2001-2002 -- never found equivalent replacement work. What work they did find was usually inferior in some way -- less pay, less benefits, etc. My personal experience was that the 2000/2001 recession took away a whole class of jobs (high-paying, with benefits, etc) that never came back again. What jobs that were available from 2002 till 2008 were (again, in my experience) largely tied to real estate in some way, which as history has since shown, was all vapor.

Thus, there's a dissonance between real life (in which the recession still seems very real) and the government's official economic figures that say the precise opposite. I've struggled to reconcile this difference for a while as a pure academic exercise. Like anyone else, I trust my own senses over what the government tells me. As an aside, I'll remind everyone that the government's unemployment figure only counts people who are looking for work and that many now believe unemployment is significantly higher than what the government says.

Anyway, what got me on this was this story in the August 12, 2009 edition of the San Jose Mercury News (Silicon Valley still a center of the tech world, Page 1A). One worker interviewed for the story says that what he's seen change is that while innovation still happens in Silicon Valley, that's it. The more I thought about his statement today, the more I think he's correct.

When I was growing up, there were two general classes of workers in Silicon Valley. First, there were the innovators. The definition of this is really amorphous, but the idea is that an innovator thinks of or originates an idea and then works to reduce that idea into rough practice. This might be building a prototype device or coding a really crude version of the program to, essentially, prove that the idea (a) works, and (b) can actually be made into a tangible product that can be sold. The actual making of that product used to be done by the second group of Silicon Valley workers. I don't know what to call this second group, but if the first group could be thought of as leaders, then this second group consisted of followers. Most followers, I would say, are what we would call normal, middle-class people. Up until about 2000/2001, this system of leaders and followers worked fine.

Then the 2000/2001 recession hit.

The biggest consequence I remember that that recession brought about was outsourcing. Specifically, the manufacturing of tangible objects when to China while the manufacturing of intangible objects (computer code or routine office services like payroll processing) went to India or Eastern Europe . I don't know what the salary difference was then or is now, but I'm prepared to gamble (and I never gamble) that it costs less to have the equivalent task done in India or Poland than it does in the United States. Is the quality the same? Probably not, after you factor in a bunch of factors like experience of the worker as well as cultural and educational differences, but the cost difference was so much that you could, in essence, afford to suck at something.

I think that explains why some have said that the economy (generally, as well as in Silicon Valley) has stagnated: the innovators are still in Silicon Valley and, for them, life is still great. On the other hand, the followers -- who live in track-houses and used to populate the sea of windowless cubicles at most companies -- aren't doing so well, because the work they used to do has now been sent overseas. Sometimes the work comes back, even though it costs more in the US, for other reasons, like time zone convenience, but for the most part, I'd say the work is gone for good.

Is this a game changer? Not at all. This has happened throughout history time and time again, but this time it may be happening on a much larger scale.

More on that tomorrow.