It’s here! Orders to Nowhere is now a book!

It’s finally here!  The first edition of Orders to Nowhere is available in print.  It will be six to eight weeks before it shows up in bookstores, and a week or so before it hits Amazon.com.  If you want to avoid the wait, you can order it straight from the printer by clicking the cover:

Orders to Nowhere

Since you are a loyal reader and follower of the blog that got it all started, you can use the discount code ZVGYFQ28 and save 10% off the cover price.

Thank each and every one of you for reading and following my journey through transition!

There and back again: Observations on China

Hello again!  It has been a few weeks since my last post, and during that time I was fortunate to travel to Asia with my MBA classmates and generally have a tremendously good time.  This is also a shameless plug for you to take advantage of the Post 9/11 GI Bill and pursue an education beyond your military service.  You will meet great people, learn a ton about things completely unrelated to bayonets, machine guns, fighter jets, or aircraft carriers.  You might even get a chance to travel abroad without carrying a sidearm- trust me, it is a great experience!

Anyhow, the purpose of our trip to Beijing was to familiarize us  with the business environment in China by introducing us to a variety of companies.  We also were fortunate to see some of the true wonders of the world, such as the Great Wall of China and the imperial Forbidden City.  It proved to be a very insightful and interesting trip.

We spent the duration of our stay in the capital city of Beijing.  The city is enormous, with a population of some 20 million residents, and sadly modern, with mile after mile of largely uninteresting and recently constructed apartment and office buildings set atop former villages, farms, and historical streets of ancient Peking.  Sadly, the rush for modernization comes at a high cultural cost.

It also comes with an astonishing impact on the environment, most evident by the astounding level of air pollution that blankets the city.  It is like a fog that obscures buildings from view even though they are only a few blocks away.  The air quality is so poor that many residents wear surgical masks to protect themselves, and after being there for a week and suffering from a sore throat and sinus problems it seemed to be a pretty good idea.

Pollution aside, the insights on business and government in China were very valuable.  I learned more about how China works during that one week than I did in years of reading and studying the country.  As MBA candidates we critically observed the business environment in China, and here are some impressions that I came away with (and please note, these are my opinions):

China has enjoyed tremendous financial growth largely though revenue garnered by the privatization of land (well, the pseudo-privatization of land, as all land is owned by the government but can be “sold” in the context of a very long term lease) in urban areas.  In effect, cities are growing by usurping lands previously held by villagers or farmers, with those hapless former inhabitants being relocated into towering and identical blocks of high rise apartments.  The displaced persons are compensated and provided a place to live, but the difference in the amount of compensation that is provided is a pittance in comparison to the price the land commands when privatized.

This model has a serious problem, however, in that there is only so much land that is valuable enough to generate the revenue required to keep growth at a high level.  This will result in a gradual decrease in revenue from land sales and a corresponding negative effect on growth.

We received an insightful briefing from a financial manager, who pointed out the problems with financing growth through land privatization.  He showed, however, that there exists a revenue stream that will supplant and possibly exceed the real estate market: the spinoff of State Owned Enterprises (SOEs) to the private sector.

The definition for State Owned Enterprise that I am using includes those companies that are wholly owned by the government or those that receive investment in the form of capital or other resources from the government.  In essence, the SOEs are provided a distinct competitive advantage because they are the beneficiaries of the Controlled State Economy; they can receive investment from the government without the expectations that come from traditional Western investors, such as financial returns or other shareholder rights.

Anyhow, the government can earn somewhere in the realm of 30 –  40 trillion yuan (their currency, which equates to somewhere in the 5 – 6 trillion U. S. Dollar range) in revenue from spinning off these enterprises.

Or so they believe.  I don’t think so, and here is my opinion as to why:

1.  A significant consideration for the Chinese government is employment.  They have 1.3 billion people in the country, and in order to keep everyone happy they need to have jobs.  This leads to programmatic inefficiency in Chinese industry and government, with the choice to employ people over employing automation or seeking other efficiencies.  That is perfectly fine when firms are receiving investment funds from the government (which is happy to allow inefficiency as long as people are employed) but not so much when a SOE is spun off and must compete in a free marketplace.

Here is an example from a computer chip manufacturing firm that we visited during our trip:  The company, which is a SOE that receives a significant amount of capital from the government, manufactures chips that are used in mobile phones.  The facility has “clean room” manufacturing areas on three floors of the building.  The entry into the clean rooms is monitored by a young man or woman, who spends his or her entire day standing at the door and running an Electrostatic Discharge detection wand over each employee as they enter the room (this is important because any stray static electricity introduced during the manufacturing process can damage or fry the chips).  If my memory is correct I think that there were two entrances per floor, with a helpful wand bearer at each one.  Since the firm runs two shifts per day, and operates on a four day on, four day off schedule, this yields a requirement for four complete sets of employees.

By doing the math (six employees per shift times four shifts equals 24 employees) it is evident that a large number of people are doing something that in a western facility would be performed by an automated sensor.  While labor is cheap in China, the cost of labor is rising with the emergent middle class.  That said, the inefficiency is acceptable for a SOE because the costs are absorbed or mitigated by government investment.

Governmental mitigation only works with true SOEs – if the goal is to harvest revenue by spinning SOEs off into the free marketplace, then the valuation of the companies will suffer because no western investor will accept the inefficiencies of a SOE after acquiring the firm.  In the free marketplace costs must be reduced in order to increase the bottom line, and labor that can be replaced with automation will be replaced.  I believe that this ingrained level of inefficiency will devalue the companies that the government spins off.

Getting back to employment, though, is important.  If these firms are spun off and the personnel inefficiencies are corrected with automation it will result in an aggregate increase in unemployment, which is counter to the government’s goal to keep the people happy through work.  An increase in unemployment means an increase in disgruntled citizens, and the magnitude of such an increase in unemployment will be enormous if so many SOEs are spun off.  What, then, will the government do with all of the unemployed people?  I don’t know, but whatever they do it will have a negative effect on economic growth.

2.  Healthcare, the environment, and everything else.  It is ironic that capitalist societies have managed healthcare for their citizens but communist China does not.  Healthcare in China is largely a cash driven model for the bulk of the citizenry.  As the country modernizes the antiquated healthcare system, it will result in a major drag on economic growth, as will the need to clean up the environmental problems that have emerged as a result of industrialization.  The problems of pollution and the negative impact of industrialization on the environment have only now begun to be addressed in China, and the costs associated with these problems will be profound.  Again, this will result on a drag on economic growth.

China is experiencing an industrial and economic revolution in a span of a few decades that the west took over a century and a half to get through.  As such, they have maximized the ability to capture and hold market space in manufacturing due to their cheap labor and lax regulations, but as labor costs increase and the need to clean up and regulate industry grows there will be a slowdown on the trajectory of growth for the nation.  The country is plowing an unbelievable amount of money into infrastructure, with planned cities growing by millions of people per year, bullet train lines linking population centers, and road networks expanding to meet the explosion in car ownership.  These things cost money, which will only cost more as labor costs grow and the need for infrastructure increases.

So, in conclusion, I think that China has some serious hurdles to jump over in the near- and mid-terms, but I think that they will overcome the challenges and thrive in the long term.  It will just take a considerable amount of time, treasure, and collective pain to get there.  I came away from my visit to China convinced that the country is in for rough seas ahead, and I am unwilling to place my personal investment dollars on their ship of state until they weather the storm.  After they reach their nadir, however, I believe that the opportunity for investment is tremendous.

With that, I will leave my trip to China and get back to the exciting world of transition as we dive into the wonderful world of job interviews….

The Post 9/11 GI Bill Shot Clock

There has been quite a bit of news coverage lately concerning benefits that veterans from our most recent wars are eligible to receive for their service.  Many educational institutions and training programs have come under scrutiny as a result of questionable practices, but why does it appear rampant these days?

The answer, simply put, is the remarkable educational benefits in the Post 9/11 GI Bill.  The bill is generous, and pretty much everyone who served more than 90 days in uniform since September 10th 2001 is eligible.

The intent behind the GI bill is best summed up by Senator Jim Webb, a former Marine who was highly decorated for his service in Vietnam:

“The Post-9/11 GI Bill started with a simple concept: that we owe those people who have served since 9/11 the same type of quality educational benefits that those who served in World War II received.”

The bill is indeed tremendous in its scale and scope.  Millions of men and women are entitled to the provisions in the legislation, and in cases where the veterans don’t need to go back to school they can pass eligibility to their children.

Recipients are entitled to 36 months of benefits.  With summers off, this makes a four year university degree possible for every veteran or serving member of the armed forces who desires one.  The dollar amount paid by the program equals the in-state tuition for state schools, and with a stipend for books and a housing allowance, it is possible for a veteran to attend a top-notch college or university and earn a degree.

Unfortunately, there is also the opportunity for the veteran to squander the benefit by falling victim to those organizations and institutions that more interested in taking their money than ensuring that they receive a quality education.

Webb, who introduced the bill to the Senate the day after he was sworn into office, recognized the problem and has introduced new legislation to address the situation.

“Some for-profit educational institutions are providing our students a good education, but abuses by certain institutions could put the integrity of the Post-9/11 GI Bill program at risk,” said Webb.

To counter the abuses, he introduced the Military and Veterans Educational Reform Act.  The act requires schools participating Veteran Administration and Department of Defense educational programs to meet the educational standards currently required for Pell Grants, federal student loans and other federal education programs. To receive funding from the VA, the schools must also disclose both default and graduation rates in addition to other information that students need to make informed choices about their education.

The problem for vets and servicepeople is that the 36 months of GI Bill eligibility are set in stone.  The recipient cannot get those months back in case he or she makes a poor decision and uses their benefits for an education at a dubious institution.  Once those benefits are used up, they are gone and the veteran is out of luck.  The educational institution takes the money and the vet loses out.  Since there are so many veterans and so much money devoted to the GI Bill it has become a cash cow to some disreputable institutions, and it is for that reason that Senator Webb moved to change the rules.

There is help at the local level, too.  This past weekend the North County Times ran an article by Mark Walker that highlighted the work of Pat Uetz, who as a retired Marine Colonel is heading up the University of San Diego’s Initiative to Protect Student Veterans.  He is spearheading a very effective effort to help veteran students.

“If you are a current or former student veteran of a for-profit education company and believe you were misled or are unsatisfied with your education, or you are considering enrolling in a for-profit company, then contact the USD Veterans Legal Clinic as soon as possible,” says Pat.  “They will assist you and there is no charge for the clinic’s services”.

You can contact the clinic at (619) 260-7470 or email to veteransclinic@sandiego.edu.  For additional information on USD’s Veterans Legal Clinic and USD’s other free legal clinics go to http://www.sandiego.edu/law/free_legal_assistance/.

GI Bill part 2: Transferring benefits from the MGIB to the Post 9/11 GI Bill

I wrote in my last post about the GI Bill.  It is a great benefit that really helps veterans like myself obtain an education or get vocational training that will provide the tools we all need to enter the civilian workforce. I am using the Post 9/11 GI Bill to help defray the costs as I pursue my MBA.  Having served before the attacks on the twin towers, however, made me eligible for two GI Bill programs: the  Montgomery GI Bill  (MGIB) and the Post 9/11 GI Bill.

There are advantages and disadvantages to both bills, and it is important to do your homework and fully understand the nuances of each.   GI Bill comparison  is a great side by side comparison of the two bills, so click on over and take a look.

In my case, I transitioned from the MGIB to the new bill because it resulted in me being entitled to an additional 12 months of benefits that I otherwise would not have been able to utilize.  While it was a good idea for me, it may not be good idea for everyone.  Here is why:

The MGIB has many provisions, but for the sake of this post I will talk about the two major parts of the bill: the Active Duty benefit (aka MGIB-AD or “Chapter 30”) and the Selected Reserve benefit (aka MGIB-SR or “Chapter 1606”).  As the titles indicate, there were different programs for active duty personnel and those in the reserves.

In my case I was in the Organized Marine Corps Reserve when I was working on my undergraduate studies.  During that time I used all but about two months of benefits from the MGIB-SR, meaning that I received about 34 months of benefits and had about two months worth left over.  Since a vet can only use 36 months of benefits under that program I initially thought I was out of luck.  Fortunately, there is a provision that allows for vets like me to transfer between programs and take advantage of an additional 12 months of benefits.

A veteran is eligible for a total of 48 months of benefits.  That said, the individual programs may offer shorter benefit periods, and in the case of the MGIB and the Post 9/11 bill this is the case because they are both 36 month programs.  A vet can get the additional 12 months only if he or she is eligible for the both the MGIB and the Post 9/11 bills because the only way to get the extra time is to convert from the MGIB to the Post 9/11.  There is no bill for the Post 9/11 to convert to, so there are only 36 months of benefits available.

There are two scenarios for transferring from the MGIB to the Post 9/11, and they have enormously different ramifications, so PAY ATTENTION TO THE NEXT TWO PARAGRAPHS IF YOU WANT TO TRANSFER OVER!!!

First, the MGIB-SR (Chapter 1606).  This was my situation.  I used up about 34 months of benefits as a reserve Marine and had about two months left.  The VA simply added my remaining balance of about two months to the 12 additional months of Post 9/11 eligibility and presto!  I had 14ish months of eligibility under the new bill to use towards my education.  All I had to do was complete the Veterans On Line Application (click here: VONAPP) and indicate that I wanted to apply for the new GI Bill.  Once my application was approved I received my updated entitlement.

For the MGIB-AD eligible veterans the situation is VERY DIFFERENT!  In their case, their 36 months of benefits is really 36 months of benefits.  If they have never used their MGIB-AD and they switch over, they will receive 36 months under the new bill.  If they use 35 months under the MGIB-AD and apply for the new GI Bill they will receive only one month under the new GI bill.  Here is the key: in order to get the additional 12 months you must completely exhaust your MGIB-AD benefits, and I mean completely- use up every day because if you have only one day of eligibility left and you apply for a transfer you will get one day of benefits under the new bill, and the decision is irrevocable!  Once you have used up the MGIB-AD you can then re-apply for benefits under the Post 9/11 GI Bill using  VONAPP and receive 12 months under the new bill.  Make sure that you do it right because as I said, once you apply and are accepted for a transfer there is no going back.  Don’t say I didn’t warn you!

It is easy to see how much of your MGIB you have used.  All you need to do is call the VA at 1-888-442-4551 and ask the counselor which program you currently fall under and how much eligibility you have left.  Once you have that information, you can decide if you want to transfer over or not.

Good luck!

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Lessons Learned:

1.  The old and new GI Bills are different, and there are a lot of ins and outs that you need to consider before you pull the trigger on a conversion.  Make sure to do some research and find out what works best for your situation.

2.  Once you do pull the trigger on a conversion from the MGIB to the Post 9/22 GI Bill it is irrevocable and final.  There are no “do-overs”.  Make sure you are committed to the decision you make!

3.  If you are uncomfortable with completing an online application, you can download the fillable .pdf document here – http://www.vba.va.gov/pubs/forms/vba-22-1990-are.pdf. All you need to do is complete it and mail it in to the address listed on the form.

4.  If you have any questions, call the VA.  You will be on hold for a while, but they have a nice callback service which you can use; the counselor will call you back so you don’t have to listen to cheesy ’70s disco cover tunes while on hold.  I recommend calling early in the morning as my wait times went from an hour to a few minutes when I called as soon as they opened the lines.  Here is their contact information:

Telephone number:  1-888-GIBILL-1 (1-888-442-4551).

Be advised this line only accepts calls from 7:00 AM – 7:00 PM central time Monday – Friday and you may experience long hold times.

The GI Bill

As I wrote in my last post I am pursuing my MBA at the University of Southern California’s Marshall Business School, and I truly appreciate all of you who helped out with my research project.  Getting an education is expensive these days, and fortunately for me, and for all honorably discharged veterans, the VA is there to help out with the Post 9/11 GI Bill.

For those of you who are unfamiliar with the GI Bill, here is a quick rundown of how it came about and evolved into what it has become today:

The GI Bill originated with the end of the Second World War.  In 1944 the U. S. Government passed the Serviceman’s Readjustment Act.  Apparently calling the new law by its formal name was a mouthful, so it quickly became named after the people it was designed to help- the GIs returning from the war (GI was slang for anyone in uniform, coming from the term “Government Issue” or “Galvanized Iron”, depending on which story you believe).  Anyhow, the veterans coming home from Europe and the Pacific were able to take advantage of a wide array of benefits which included home, small business, and farm loans, unemployment compensation, and educational benefits.  As a result of the program a staggering sum of nearly 8,000,000 veterans (almost half of all who served during the war) pursued higher education.

Over the following decades GIs went to war again and again, and as they did the GI Bill was there to help veterans when they came home from places like Korea and Vietnam.  In the 1960s benefits were opened up to veterans who did not serve in war, and over time the GI Bill dwindled until it was a shadow of its former self, essentially offering a small stipend to help defray college expenses.

That changed with 9/11 and the subsequent wars in Iraq and Afghanistan.  With hundreds and hundreds of thousands of Soldiers, Sailors, Airmen, and Marines serving tour after tour in harm’s way the Congress passed the Post-9/11 Veterans Educational Assistance Act of 2008, which quickly became known as the “Post 9/11” or “new” GI Bill.  It focuses primarily on educational benefits for veterans (as shown below, which I adapted  from their website  at http://www.gibill.va.gov/benefits/post_911_gibill/index.html):

– The GI Bill will pay an eligible veteran’s full tuition & fees directly to the school for all public school in-state students. For those attending private or foreign schools tuition & fees are capped at $17,500 per academic year.  For those attending a more expensive private school or a public school as a non-resident out-of-state student, a program exists which may help to reimburse the difference (the “Yellow Ribbon” program).

-For those attending classes at the greater than ½ time rate, a monthly housing allowance (MHA) based on the Basic Allowance for Housing for an E-5 with dependents at the location of the school. For those enrolled solely in distance learning the housing allowance payable is equal to ½ the national average BAH for an E-5 with dependents ($673.44 for the 2011 academic year & $684.00 for the 2012 academic year)

-An annual books & supplies stipend of $1,000 paid proportionately based on enrollment.

-A one-time rural benefit payment for eligible individuals.

As you can see, the new GI Bill is pretty generous.  Not everyone is eligible, however.  In order to take advantage of the benefits the veteran must meet the following criteria:

-You must have served at least 90 aggregate days on active duty after September 10, 2001, and you are still on active duty or were honorably discharged from the active duty; or
– released from active duty and placed on the retired list or temporary disability retired list; or
– released from active duty and transferred to the Fleet Reserve or Fleet Marine Corps Reserve; or
– released from the active duty for further service in a reserve component of the Armed Forces.
You may also be eligible if you were honorably discharged from active duty for a service-connected disability and you served 30 continuous days after September 10,2001.

In my case, I was originally eligible for what was known as the Montgomery GI Bill when I enlisted back in the early 1980s.  I used it to help pay for tuition and fees for my undergraduate work, and I received payments of about $150 a month or so, depending on how many credits I was signed up for.  Now that I have transitioned out of uniform I am eligible for the new GI Bill, but there is a catch.

Of course!

There is always a catch.  It turns out that veterans are only allowed to take advantage of GI Bill benefits for a total of 48 monthly periods.  If you are in school for a full year, then you use 12 months of benefits.  If you take summers off, you use up nine months.  In my case, I used up 45 months of my benefits while I was enlisted, and that didn’t leave much for me to use after I got out!

Fortunately, the new GI Bill recognizes that there are a lot of us in that position.  The VA authorizes an additional year (12 months of benefits) for vets like me who used up a lot of their alloted time.  For me, the fifteen or so months works out pretty well because my program is nineteen months long.  Fortunately I had been saving some money to prepare for my post-military education –  otherwise I would have been out of luck.

So the GI Bill is a tremendous benefit for veterans who are eligible.  I highly encourage any separating or retiring servicemember to look into it, and to do so soon.  It is an expensive proposition for the government to pay for such a generous program, and it probably won’t last forever…

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1.  As with any VA program you must register for benefits.  Go to www.va.gov and complete the VONAPP (Veterans On Line Application) in order to get started.  You can complete the paperwork at any time, so get started as soon as you can in order to draw benefits as soon as you start school.

2.  There are different rules for public and private schools.  Basically, the VA will pay up to the highest state school rate for the state you attend college, but for private schools there is a cap on tuition and fees.  Make sure to surf the VA GI Bill website to find out what pertains to your situation.

3.  A great benefit is the housing allowance that you receive while attending school.  It only pays while you are in class (no spring break or summer payments) and it is also not allowed it you are still on active duty.  It may be to your advantage to start your education after you get off terminal leave if you want to receive the full benefits available.