Archive for the 'Business' Category
Posted by Zenpundit on 9th March 2014 (All posts by Zenpundit)
cross-posted to zenpundit.com
The Union League Club of Chicago Building
Yesterday, I attended the 2014 Midwest Business & Markets Conference at the historic Union League Club of Chicago. While business conferences are far afield from my usual interests, the main draw for me was seeing Lexington Green speak about the book he co-authored with James C. Bennett, America 3.0
Michael J. Lotus (“Lex”) His book
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Posted in Anglosphere, Business, Chicagoania, Civil Society, Deep Thoughts, Diversions, Economics & Finance, Education, Entrepreneurship, Illinois Politics, Internet, Political Philosophy, Politics, Society, The Press, USA | 1 Comment »
Posted by Carl from Chicago on 8th March 2014 (All posts by Carl from Chicago)
I live in the River North area of Chicago, which is full of restaurants of every type and description. There is also intense competition among many of the smaller restaurant groups, since apparently some level of scale (5+ or more restaurants) is helpful and these restaurants tend to have very high levels of food quality and service, based on my experience.
When you interact with the bar staff, hostess, and server you can usually tell if you are working with someone who is “going through the motions” or someone “who is good at their job”. There are many subtle details that are much larger than “getting your order right” – they include knowledge about the food and presentation, recommendations based upon your input, and generally anticipating needs and solving problems without having to be prompted many times.
Recently I’ve come to the preliminary conclusion that many of the waitresses and servers in these higher end restaurant groups must have gone to college and are well educated. When you talk with them they are very sharp and quick and they seem to have the type of drive or energy that could make them successful in a variety of careers. I would never ask them directly because that’s none of my business and it could embarrass them.
This article form Bloomberg titled “College Graduates Taking Low Wage Jobs Displace Less Educated” confirms at least my anecdotal impressions here in Chicago.
She got a job as a hostess at Blackbird, a One Off restaurant, while pursuing a bachelor’s degree in Germanic studies and communications at the University of Illinois at Chicago in 1999. “The formality of classes, papers and grades did lend a hand in where I am today because I had a broader sense of cultures, interactions and interpersonal skills,” said Galban, who is now also a partner at the restaurant Nico Osteria, one of seven Chicago restaurants managed by One Off. Of the company’s more than 700 employees, more than 60 percent hold college degrees or higher, yet fewer than 10 positions require a degree, Galban said.
The willingness of college educated adults to take on these jobs will likely cause at least three side effects, one of which was the “main” topic of the Bloomberg article I linked to above:
1. These restaurants will be more competitive than typical restaurants, because the higher educated and higher skilled workers will drive customer satisfaction and drive efficiencies within the food and drink serving processes. As these workers move “up the chain” at the restaurants, they will also offer career paths for other college degree holders as well
2. Less-skilled workers will have less opportunities because they won’t be able to compete with these individuals. It would be a simple “screen” to give preference to individuals with a degree who apply for jobs, even if it isn’t a requirement of the job. In the past the assumption was that if someone “over-qualified” would work at your restaurant or business, they would leave immediately when a new opportunity arises, but in today’s stagnant economy (especially in Illinois) there don’t seem to be a lot of opportunities for them to “jump to”.
3. Since the cost of higher education is so high today, parents need to think of how they will feel when their liberal arts (or lackadaisical business) degree holding children are potentially serving them in a restaurant, and if this is worth the vast expense and financial impact of the degree that they are seeking
Another side effect to consider is that these restaurants are not just randomly seeking out applicants from the pool. Their employees are not only young, they are disproportionally above-average looking. Perhaps if you aren’t college educated you can make up for it in attractiveness.
Cross posted at LITGM
Posted in Business, Chicagoania, Education | 15 Comments »
Posted by Sgt. Mom on 26th February 2014 (All posts by Sgt. Mom)
(This afternoon I am working through my archives for materiel to post on the Watercress Press website blog, and I came across this post from … well, a while back. I thought it might be relevant, in these unsettled days and in light of various Boyz reminiscing about Tolkien and heroic days of yore. It might also serve as a departing point for a train of thought, especially when we need more inspiration than ever.)
I am not one of those given to assume that just because a lot of people like something, then it must be good; after all, Debbie Boone’s warbling of You Light Up My Life was on top of American Top Forty for what seemed like most of the decade in the late 70s, although that damned song sucked with sufficient force to draw in small planets. Everyone that I knew ran gagging and heaving when it came on the radio, but obviously a lot of people somewhere liked it enough to keep it there, week after week after week. A lot of people read The DaVinci Code, deriving amusement and satisfaction thereby, and some take pleasure in Adam Sandler movies or Barbara Cartland romances – no, popularity of something does not guarantee quality, and I often have the feeling that the tastemakers of popular culture are often quite miffed – contemptuous, even – when they pronounce an unfavorable judgment upon an item of mass entertainment which turns out to be wildly, wildly popular anyway.
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Posted in Arts & Letters, Business, Deep Thoughts, History, Lit Crit, Media, War and Peace | 4 Comments »
Posted by Sgt. Mom on 23rd February 2014 (All posts by Sgt. Mom)
I am a business owner. My partner and founder of Watercress Press has always intended that I should take over the business eventually … and as of this weekend, the papers have been signed. Oh, there are a couple of more things to be sorted out, and essentially I have been the active partner for more than a year … but here I start on the next big part of my life, as a business owner and raving capitalist. Although I do promise not to starve and flog the employees while chuckling manically and swan-diving into my pool of gold coins.
Too much. The blood spatters get everywhere after a good flogging, and the stains never come out.
This is by way of apologizing for no History Friday post from me. There was just too much going on, I didn’t have the time to sit down and focus on the post I was thinking about – Billy the Kid, a definite contrast to the last Wild West frontier character that I posted about on History Friday. I did manage to finish a chapter in the next book, and start another adventure in my reworking of a certain popular Wild West character, so the week hasn’t all been given up to real life in this present world.
Posted in Book Notes, Business | 24 Comments »
Posted by David Foster on 16th February 2014 (All posts by David Foster)
The project to Save the Willow Run Bomber Plant is 75% of the way to its fundraising goal, but still $2 million short.
In October 1942, Herman Goering mocked American claims about our weapons production capabilities:
Some astronomical figures are expected from the American war industry. Now I am the last to underrate this industry. Obviously the Americans do very well in some technical fields. We know that they produce a colossal amount of fast cars. And the development of radio is one of their special achievements, and so is the razor blade…But you must not forget, there is one word in their language that is written with a capital B and this word is Bluff.
(Citing the above quote in his memoir, Luftwaffe general Adolph Galland observed acidly, “Propaganda may be horrible, but bombs certainly are.)
The “astronomical figures” turned out not to be a bluff at all, of course, and the figures were turned into reality in large part because of the production techniques pioneered and perfected at places like Willow Run.
The Willow Run plant, which covered 63 acres, was designed for the single purpose of producing B-24 bombers…and produce them it did, once it got going, at the rate of one per hour. The genesis of the plant lay in a 1940 visit to Consolidated Aircraft, where the planes were then being built, by Ford Motor Company production VP Charles Sorensen–Ford had originally been asked by the government to quote on building some components for the bomber. After watching Consolidated’s process for a while, Sorensen asserted that the whole thing could be put together by assembly-line methods. (See the link, which is Sorensen’s own story about “a $200,000,000 proposition backed only by a penciled sketch.”)
Unused since 2010, the plant had been scheduled for demolition, but there is now a project to turn it into a museum that will be focused on science education and social history as well as aviation history–the Yankee Air Museum is to be relocated there–and the history of the plant itself. Astronaut Jack Lousma and auto-industry bad boy Bob Lutz are spearheading the effort; the additional funds need to be raised by May 1.
I hope the new museum will integrate its focus on science & technology and its focus on the war production story to also cover the past, present, and future of American manufacturing, and of manufacturing generally–manufacturing being something that is too little understood and too little appreciated (beyond the platitude level) in America today. For example, in this post, which is mainly about employee evaluation, the author says:
Today’s businesses drive most of their value through service, intellectual property, innovation, and creativity. Even if you’re a manufacturer, your ability to sell, serve, and support your product (and the design itself) is more important than the ability to manufacture. So each year a higher and higher percentage of your work is dependent on the roles which have “hyper performer” distributions.
This kind of drive-by assumption about manufacturing is frequently encountered in today’s business writings: the assumption that manufacturing is a field inherently lacking in creativity, and (strongly implied in the above quote) that “hyper performers” are not important in this area in the way that they are in sales, product design, and customer service. If the museum can help Americans to understand a little more about manufacturing and its importance, then that will be a valuable thing in addition to its contributions to aviation, WWII, and social history.
Some books that provide useful information and perspective on Willow Run:
Freedom’s Forge: How American Business Produced Victory in World War II, by Arthur Herman. An interesting overview of the WWII armaments program.
I Invented the Modern Age: The Rise of Henry Ford, by Richard Snow. A lot about the early history of the auto industry, with several pages on Willow Run.
My Forty Years with Ford, by Charles Sorensen. The whole book is very worthwhile. Sorensen gives considerable credit to Edsel Ford for the Willow Run project–Edsel committed $200,000,000 of Ford’s money to the project based only on a rough sketch, with no absolute assurance that government funding would be forthcoming–and indeed for the entire WWII armaments program at the company, Henry Ford himself having adopted what one might call a passive-aggressive attitude toward the whole thing.
It would be a shame to let the historical artifact that is Willow Run be lost–hopefully, the fundraising efforts over the next couple of months will be successful.
Posted in Aviation, Book Notes, Business, History, Management, USA, War and Peace | 5 Comments »
Posted by David Foster on 6th February 2014 (All posts by David Foster)
…but the woes at Sony Corporation remind me of a couple of my posts about the path this company has been taking.
From March, 2005:
The New York Times (3/13, registration required) quotes Sir Howard Stringer, the new chief executive of Sony, arguing for mutual benefit between his company’s electronics and entertainment divisions. At the Consumer Electronics Show last month, Sir Howard said, “A device without content is nothing but scrap metal.”
Following the chain of logic he seems to be developing, we could also argue that a car without fuel is scrap metal…and therefore, auto companies need to own oil companies. Or that computers are useless without software…so all computer manufacturers need to possess large software operations.
Randall Stoss, author of the NYT article, observes that Sir Howard’s remark is “a platitude beneath mention–unless, perhaps, one were a mite defensive about owning both a widget factory and an entertainment factory.” Stoss goes on to credit the success of the iPod (far greater than Sony’s competitive product) to the fact that Apple has not pursued synergies between device and content…
A company thrives when it has all that it needs to make a compelling product and is undistracted by fractiousness among divisions that resent being told to make decisions based upon family obligations, not market considerations.
From September 2012:
In his Financial Times article Why Sony did not invent the iPod, John Kay notes that there have been many cases in which large corporations saw correctly that massive structural changes were about to hit their industries–attempted to position themselves for these changes by executing acquisitions or joint ventures–and failed utterly. As examples he cites Sony’s purchase of CBC Records and Columbia Pictures, the AT&T acquisition of NCR, and the dreadful AOL/Time Warner affair. He summarizes the reason why these things don’t tend to work:
A collection of all the businesses which might be transformed by disruptive innovation might at first sight appear to be a means of assembling the capabilities needed to manage change. In practice, it is a means of gathering together everyone who has an incentive to resist change.
I’d also note that the kinds of vertical integration represented by the above mergers don’t exactly encourage other companies–which were not competitors prior to the merger but have become so afterwards–to participate in an ecosystem.
Posted in Business, Management, Tech | 19 Comments »
Posted by Michael Kennedy on 4th February 2014 (All posts by Michael Kennedy)
I have believed for some time that we were entering another Depression. I have previously posted about it.
The Great Depression did not really get going until the Roosevelt Administration got its anti-business agenda enacted after 1932. The 1929 crash was a single event, much like the 2008 panic. It took major errors in economic policy to make matters worse. Some were made by Hoover, who was a “progressive” but they continued under Roosevelt.
I posted that statement earlier and it got a rather vigorous rebuttal. I still believe it, however. I think a depression is coming soon. What is more, I am not the only one. Or even only one of two.
The second article preceded the election of 2012 but is still valid.
When employment hit an air pocket in December, most analysts brushed off the dreadful jobs number as an anomaly, or a function of the weather. They chose to believe Ben Bernanke rather than their lying eyes. It’s hard to ignore a second signal that the U.S. economy is dead in the water, though: on Monday the Institute for Supply Management reported the steepest drop in manufacturing orders since December 1980:
In January, only 51% of manufacturers reported a rise in new orders, vs. 64% in December. Not only did the U.S. economy stop hiring in December, with just 74,000 workers added to payrolls; it stopped ordering new equipment. The drop in orders is something that only has occurred during recessions (denoted by the shaded blue portions of the chart). The Commerce Department earlier reported a sharp drop in December orders for durable goods. In current dollars, durable goods orders are unchanged from a year ago, which is to say they are lower after inflation.
So, the economy stopped hiring, even at the poor pace the past five years have seen, but business also stopped buying.
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Posted in Big Government, Britain, Business, Health Care, Obama, Politics, Taxes, Tea Party, Urban Issues | 33 Comments »
Posted by David Foster on 23rd January 2014 (All posts by David Foster)
A commenter at a post on value stream mapping, at the Manufacturing Leadership Blog, says:
I saw a group of women who hated each other for over 20 years come to tears when they realized what the workflow was doing to their relationships.
Hopefully, outright hate isn’t all that common, but I do suspect that many painful relationship problems in organizations are caused by processes and incentive structures that create conflicts of a pointless, perpetual, and unresolvable nature.
Posted in Business, Human Behavior, Management | 7 Comments »
Posted by Michael Kennedy on 21st January 2014 (All posts by Michael Kennedy)
The catastrophic launch of Obamacare and its continuing problems has been decried as “Stalingrad for the Democrats.” I tend to agree but there is another issue coming soon that is “a cloud no bigger than a man’s hand.” It is Amnesty for illegal aliens and it is coming to a Republican Party near you.
Mickey Krause, one of the last blue dog Democrats thinks it will be a sellout.
The coming weeks will see the formal start of the GOP House leadership’s attempt to sneak an immigration amnesty through the Republican caucus and into law. We don’t know the exact details of the proposals, but we know enough:
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Posted in Business, Immigration, North America, Politics, Tea Party | 9 Comments »
Posted by Carl from Chicago on 20th January 2014 (All posts by Carl from Chicago)
The United States Postal Service (USPS) is in bad financial shape. The service is currently losing money and is unable to pay some required payments to the government for employee retirement benefits. While the USPS has retained its first class mail monopoly, it sends only a small percentage the ecommerce packages that are the backbone of the physical internet economy.
The real failure of the postal service, however, is encapsulated in the photo above. In our River North neighborhood, where the population density is high (local residents in high rise condominiums plus innumerable tourists) and the value of real estate is high, too, there is one institution that you can count on to not shovel their sidewalk or take care of their property. The US Postal Service.
The employees of the USPS are unionized and likely no one has the job of shoveling the sidewalk, or it isn’t in their job description. Thus it isn’t shoveled, and you need to trudge through it which becomes treacherous as the snow melts and re-freezes. Since many of the people who actually might want to use the postal service in this area are elderly, the dangerous sidewalks are even harder to defend.
They also used to have two mailboxes in the “drive up” section where you can pull your car up to the curb in front of the River North post office. Recently when I attempted to mail Christmas cards (we don’t like to leave them with the mailman in our condominium building because we’ve heard horror stories) at the post office, I couldn’t stuff them into the mailbox, because they reduced capacity down to a single mailbox. There were a few other potential customers milling around fuming as well, since the outdoor mailbox had apparently been jammed beyond capacity for some time.
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Posted in Big Government, Business, Chicagoania, Economics & Finance | 25 Comments »
Posted by Sgt. Mom on 14th January 2014 (All posts by Sgt. Mom)
Around the end of 2007 and beginning of 2008, I was working two days a week at a Tiny Bidness owned by a friend of mine, Dave the Computer Genius. I had known Dave off and on since 2002, ever since I had looked for a local computer tech to tell me what was wrong with my very first computer. I think that I found Dave through some on-line search, possibly through some local variant of Craig’s list. Anyway, he pronounced my computer well and truly dead, and sold me a rehabbed unit which even if rehabbed was still a better and more up-to-date one than the defunct unit, which I had gotten ten good years out of since buying it at the Yongsan PX. So, I referred Dave to my then-employer, the consultancy dealing in intellectual property (read – did marketing packages and a provisional patent for people who had invented a gadget), and later on he referred me to one of his clients, the ranch realtor, when I was job-hunting.
Dave did computer installation, training, and trouble-shooting – rather like a one-man Geek Squad – and having a nice collection of regular clients, he did pretty well at it. He talked once or twice of one of them, another Tiny Bidness – a little local publisher owned by Alice G. whom he insisted I would get on with like a house on fire. He promised that one of those days he would take me along when he went to her home/office to work on her computer system, and introduce us. He always thought that we should get together, since he thought we both had a lot in common. And so we did, eventually – although that wasn’t until six months after Dave died of a sudden heart attack.
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Posted in Arts & Letters, Business | 57 Comments »
Posted by David Foster on 27th December 2013 (All posts by David Foster)
Herman the German by Gerhard Neumann
This is the autobiography of a man who was born to a Jewish family in Germany, apprenticed as an auto mechanic, attended engineering school, moved to China in 1938, was interned by the British as an enemy alien in 1939, transferred to the American forces, joined Claire Chennault’s Flying Tigers, repaired the first Japanese Zero fighter to be captured in potentially-flyable condition, became a U.S. citizen by special act of Congress, and went on to run GE’s entire jet engine business, which he played a major role in creating. (The preceding may be the longest single sentence I’ve ever written in a blog post.) The book should be of interest to those interested in aviation, technology, management, social history, the WWII era, and/or China.
Gerhard Neumann was born in Frankfurt/Oder in 1917, where his father was owner of a factory that processed feathers and down. Gerhard’s parents were Jewish but nonpracticing–a Christmas tree was traditional in the Neumann home–and their approach to child-raising was closer to stereotypically Prussian than to stereotypically Jewish: ”You did exactly as you were told by your parents. There was no such thing as saying no to them!…You were not to have a hand in your pocket while talking to grown-ups…Showing any emotion in Prussia was considered sissyish. There was no kissing between parents and children–only a peck on the cheek before going upstairs punctually at nine o’clock; and there was absolutely no crying.”
On the other hand, Neumann could do pretty much what he wanted with his spare time. In 1927, at the age of 10, he rode his bike out to a grass strip where someone was giving airplane rides for 5 marks, which he paid with money from his piggy bank. His parents weren’t angry at him for taking this flight without permission; indeed, they were so entranced with his description of the way the town looked from the air that they soon took an airplane ride themselves! At the age of 13, Neumann bought a folding kayak and, with some camping gear and a 12-year-old friend, took long journeys on the Oder River, all the way to the Baltic Sea. Few parents in America today–or in Germany either, I’d bet–would now allow this level of independence to a 12- or 13-year old.
Neumann had no interest in the family feather business; he wanted to be an engineer. A 2- or 3-year machinist or mechanic apprenticeship was mandatory for admission to any German engineering academy: Neumann’s father asked the 10 cab drivers of Frankfurt/Oder to recommend the garage where they thought the boy would learn the most, and the answers were unanimous: Albert Schroth’s. So began Gerhard Neumann’s apprenticeship, which, other than the technologies involved, could have been something out of the Middle Ages. “In winter my hands were frozen purple. Wear work gloves? ‘What’s the matter, boy, are you a girl?’ When my hands were bleeding, Herr Schroth pointed to the large bottle of iodine in the backroom and mumbled something about faules Fleisch (lazy flesh.) No Band-Aids, no pitying, no time out.”
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Posted in Aviation, Business, China, Germany, History, USA, War and Peace | 7 Comments »
Posted by Sgt. Mom on 20th December 2013 (All posts by Sgt. Mom)
… or, haven’t I been to this rodeo before? Why, yes I have, and not all that long ago, either. First I called to mind was poor artless Paula Deen, celebrity cook-book author, metaphorically burned at stake in the marketplace of public opinion. But the Great Duck Dynasty Imbroglio of 2013 reminds me very much more of the Great Chick-Fil-A Ruckus of 2012, wherein some fairly mild published remarks by the CEO of the company sent the usual right-thinking suspects into a frenzy of shrieking like demented howler monkeys. Boycott, shun, divest and/or fire was the general ukase – for they are hateful hating bigots who shouldn’t be tolerated by truly tolerant people … and then the funniest thing happened. People went out and deliberately bought lunch, dinner and breakfast at their local Chick-fil-A outlet, to the utter chagrin of the usual right-thinking suspects. Chick-Fil-A nationwide had the best darned week they ever had, as far as sales went, and lines of hungry customers stretching for blocks.
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Posted in Americas, Business, Conservatism, Current Events, Human Behavior, Media, Uncategorized | 28 Comments »
Posted by Dan from Madison on 18th December 2013 (All posts by Dan from Madison)
Last weekend I took the family to Chicago for our annual Christmas weekend in the big city. We had a great time, as always. Some observations below the fold.
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Posted in Business, Chicagoania, Photos | 10 Comments »
Posted by Carl from Chicago on 15th December 2013 (All posts by Carl from Chicago)
ZIRP or “Zero Interest Rate Policy” has been in effect in the USA since late 2008. From that point forward, the effective interest received on money from CD’s, banks, and non-risk bearing debt is very low, especially when taxation is taken into consideration.
Recently I was standing at an ATM when I saw this receipt casually left on the ground. It showed over $300,000 left in a low or non interest bearing account. To me, this embodies how ZIRP has turned the world on its head.
When I was growing up, inflation was high and interest rates were high, too. I distinctly remember my grandfather having an argument with someone else when he said that interest rates would never go below 10% again (they were nearly 20% at the time). If you had any money, you had to put it to work to get the benefit of “compounding interest” which is basically interest earned on interest, which would make your assets grow quickly. In parallel, of course, inflation was making everything cost more, so you were probably treading water, but that is a different issue entirely.
In the age of ZIRP, there is no point instructing anyone about the advantages of compounding interest, because the effects are too small to be believed. In the portfolios I run for my nieces and nephews, they receive ZERO CENTS most months on the cash held in their account, and the cumulative year end totals are too small to receive an interest 1099 from the IRS. The SEC fee, which amounts to a few pennies per trade, actually is a larger cost, so I am just likely to ignore both elements.
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Posted in Big Government, Business, Economics & Finance | 16 Comments »
Posted by David Foster on 12th December 2013 (All posts by David Foster)
…quite a few of them, anyway
The above poster was apparently often found on the walls of high-school guidance counselors in the 1970s. So says Mike Rowe, who has proposed an improved version of the poster. Link.
via American Digest
Posted in Academia, Advertising, Business, Economics & Finance, Education, USA | 16 Comments »
Posted by Sgt. Mom on 9th December 2013 (All posts by Sgt. Mom)
Typical South Texas landscape – Taken north of Goliad
This last Saturday was the second day of Christmas on the Square in Goliad, Texas. I had a table there, as a local author, but the cold was so pronounced that the whole event was rather a bust … but it did mean that folding up and coming home early allowed some time for taking pictures on the way back. This is a part of Texas which overlies the Eagle Ford Shale formation
, and over the last five years I have noted a good many changes along the route, and in the small towns that we pass through on a semi-regular basis. Read the rest of this entry »
Posted in Business, Current Events, Entrepreneurship, Environment, North America, Uncategorized, USA | 14 Comments »
Posted by Jonathan on 22nd November 2013 (All posts by Jonathan)
It has taken a long time, but the price of hearing aids is in the process of falling dramatically. How has this happened? Technological innovation, of course, but there is more. There’s no shortage of technological innovation in U.S. health care. However, because third-party payers, that is, health insurers and governments, determine prices, there is no mechanism for customers to signal value to providers.
This is not the case for hearing aids: Although some states have mandated insurance coverage for hearing aids, this is usually limited to disabled children. The big market for hearing aids is seniors, and Medicare does not cover hearing aids.
This is another case of a phenomenon observed elsewhere by NCPA Senior Fellow Devon Herrick: Where patients pay directly for medical care, prices fall like they do in every other market.
(Via Leif Smith on Twitter.)
Posted in Business, Economics & Finance, Health Care, Medicine | Comments Off
Posted by David Foster on 18th November 2013 (All posts by David Foster)
Tyler Cowen, in his recent book Average Is Over, argues that computer technology is creating a sharp economic and class distinction between people who know how to effectively use these “genius machines” (a term he uses over and over) and those who don’t, and is also increasing inequality in other ways. Isegoria recently excerpted some of his Tyler’s comments on this thesis from a recent New Yorker article.
I read the book a couple of months ago, and although it’s worth reading and is occasionally thought-provoking, I think much of what Tyler has to say is wrong-headed. In the New Yorker article, for example, he says:
The first (reason why increased inequality is here to stay) is just measurement of worker value. We’re doing a lot to measure what workers are contributing to businesses, and, when you do that, very often you end up paying some people less and other people more.
The second is automation — especially in terms of smart software. Today’s workplaces are often more complicated than, say, a factory for General Motors was in 1962. They require higher skills. People who have those skills are very often doing extremely well, but a lot of people don’t have them, and that increases inequality.
And the third point is globalization. There’s a lot more unskilled labor in the world, and that creates downward pressure on unskilled labor in the United States. On the global level, inequality is down dramatically — we shouldn’t forget that. But within each country, or almost every country, inequality is up.
Taking the first point: Businesses and other organizations have been measuring “what workers are contributing” for a long, long time. Consider piecework. Sales commissions. Criteria-based bonuses for regional and division executives. All of these things are very old hat. Indeed, quite a few manufacturers have decided that it is unwise to take the quantitative measurement of performance down to an individual level, in cases where the work is being done by a closely-coupled team.
It is true that advancing computer technology makes it feasible to measure more dimensions of an individual’s work, but so what? Does the fact that I can measure (say) a call-center operator on 33 different criteria really tell me anything about what he is contributing the the business?
Anyone with real-life business experience will tell you that it is very, very difficult to create measurement and incentive plans that actually work in ways that are truly beneficial to the business. This is true in sales commission plans, it is true in manufacturing (I talked with one factory manager who said he dropped piecework because it was encouraging workers to risk injury in order to maximize their payoffs), and it is true in executive compensation. Our blogfriend Bill Waddell has frequently written about the ways in which accounting systems can distort decision-making in ultimately unprofitable ways. The design of worthwhile measurement and incentive plans has very little to do with the understanding of computer technology; it has a great deal to do with understanding of human nature and of the deep economic structure of the business.
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Posted in Book Notes, Business, Economics & Finance, Management, Systems Analysis | 14 Comments »
Posted by Jonathan on 12th November 2013 (All posts by Jonathan)
Listening to Rush today. He is brilliant on politics but not as good on economics.
He was advocating self-insurance for small businesses and individuals, in response to the Obamacare fiasco. He mentioned as an example that he had decided to self-insure a building (I think his home near a Florida beach) in response to his property insurer’s insistence on an extremely high deductible. He also said that he self-insures for medical costs.
Two problems with his analysis. One, property insurance covers buildings and building contents, so liability is easily estimated and is capped at replacement cost. Unlike with medical care there is no possibility of very large, unplanned expenses. Two, Rush is personally wealthy and can afford to pay any medical expenses out of pocket. For these reasons his argument has limited applicability for most people, who buy health insurance precisely because they would be unable to pay an outlier medical bill without experiencing significant hardship. The same point applies to many small businesses as well. These groups thus need real insurance to cover outlier medical expenses. A self-insurance quick-fix would be inadequate.
Posted in Business, Economics & Finance, Health Care, Obama | 6 Comments »
Posted by Jonathan on 6th November 2013 (All posts by Jonathan)
After a long absence from his blog, the always-thoughtful Corbusier posts some ruminations about his profession during the current period of economic recession and structural change in many industries. Long but worth reading.
Posted in Architecture, Business, Economics & Finance, Society | 8 Comments »
Posted by David Foster on 17th October 2013 (All posts by David Foster)
Here’s a new study from GE: The Age of Gas & the Power of Networks. I haven’t read it yet, but looks like it contains some useful data and some interesting thinking.
Posted in Business, Energy & Power Generation, USA | 10 Comments »
Posted by Sgt. Mom on 16th October 2013 (All posts by Sgt. Mom)
A Facebook friend posted a link to a blogpost regarding this story – which has apparently just barely made a dent in public awareness outside the local area.
Last weekend western South Dakota and parts of the surrounding states got their butts handed to them by Mother Nature. A blizzard isn’t unusual in South Dakota, the cattle are tough they can handle some snow. They have for hundreds of years.
Unlike on our dairy farm, beef cattle don’t live in climate controlled barns. Beef cows and calves spend the majority of their lives out on pasture. They graze the grass in the spring, summer and fall and eat baled hay in the winter.
In winter these cows and calves grow fuzzy jackets that keep them warm and protect them from the snow and cold.
The cows and calves live in special pastures in the winter. These pastures are smaller and closer to the ranch, they have windbreaks for the cows to hide behind. They have worked for cows for hundred of years.
So what’s the big deal about this blizzard?
It’s not really winter yet.
The rest is here.
(Crossposted at www.ncobrief.com, and at www.celiahayes.com)
Posted in Americas, Business, Current Events, North America | 11 Comments »
Posted by Trent Telenko on 6th October 2013 (All posts by Trent Telenko)
Secretary of Defense Hagal has recalled most Department of Defense (DoD) civilians back to work Monday. The legal reasons why were in the NY Times Sunday 6 Oct 2013 edition this morning.
The following is the fine print behind the “Mostly” –
“I expect us to be able to significantly reduce — but not eliminate — civilian furloughs under this process,” Mr. Hagel said.
Mr. Hagel warned that “many important activities remain curtailed while the shutdown goes on,” and he cited disruptions across the armed services.
Late Saturday, the Defense Department comptroller, Robert F. Hale, said that Mr. Hagel’s order would recall Pentagon employees who work in health care, family programs, commissaries and training or maintenance.
Additionally, the order will recall to work those civilian Pentagon employees whose jobs, if interrupted, would cause future problems for the military; those categories include contracting, logistics, supply and financial management.
While the numbers have not been finalized, officials estimated that only 10 percent of the furloughed employees would not be recalled, including Defense Department civilian employees who work in auditing, some in legislative and public affairs, and Pentagon employees who service other government agencies.
Most of DCMA will be back to work Monday, as will DFAS, DCAA and DLA.
The DoD Inspector General (I.G.), civilians in the various uniformed Service I.G. offices and DoD civilians involved in things like planning DoD assistance to disaster relief efforts are still going to stay home.
Posted in America 3.0, Big Government, Business, Civil Society, Current Events, Military Affairs, Miscellaneous | 3 Comments »