The Abstract Concept of “Work”

Once I was having a conversation with a friend after a few drinks and he said

What would the business world be like if it really was the way it appeared on soap operas?

On soap operas business is a clandestine, cloak and dagger operation.  You are forever opening drawers for obscure documents while the other guy isn’t there, thinking about conspiracies, and flirting / sleeping with one another.  People have large offices, secretaries, and complex relationships with everyone they encounter.

And very little actual work seems to get done.

When I was growing up everyone I knew had a job of some sort.  You started out mowing lawns and shoveling snow, and girls babysat.  Some people in rural areas (we weren’t near fields) de-tasseled corn, which could be a brutal job out in the hot sun.  When you were 16 you graduated into a new type of job, a more formal job with an actual boss on a payroll and with a paycheck, in retail or at a fast food restaurant or something like that.  You worked during the school year, and then you worked a lot during the summer, and you worked during spring break (if you could).  When you were back from college in the summer you worked too, or stayed on campus and found some sort of job there, instead.

Now kids don’t get jobs at nearly the same rate for a variety of reasons – they have a lot more homework than we did, and parents want them to focus on school as the highest priority.  Plus the minimum wage is higher now, and the retail and fast food jobs are often going to full-grown adults that need the work in this economy.  For whatever reason, I see a lot less kids (16-20) that seem to be potential full-time college student candidates doing actual work when I am out shopping or elsewhere in the type of jobs I used to work.

But instead there are many more TV programs that appear to show work.  The most prominent is “The Office”, which actually has many more truthful elements of actual work than the traditional soap operas.  The divide between management and staff is more obvious, and the staffers reflect their stereotypical personas (the semi-autistic or boring accountant, the pretty secretary, the beaten-down HR worker, the semi-optimistic sales staff, and those hangers on that have somehow survived rounds of layoffs but you can’t quite figure out what they do), while the actual workers are in the basement, moving paper with a forklift and having a culture of their own.

The general spirit of the office is the absolute minimum level of competence and business skills to keep the organization afloat, with a chimerical camaraderie of forced meetings and boring encounters.  There is a continuous focus on the head office and corporate, which is certainly realistic, since change do derive from the top often with little knowledge of what is happening “on the ground”.

Since many kids don’t have jobs or actual contact with formal managers, shows like “The Office” do in fact color their view of the traditional workplace.  While many kids can understand what is obviously real and what is obviously fake, the “accoutrements” of power (secretary, an enclosed office, a conference call relationship with corporate) seem relevant.  Certainly living in the “cube farm” is not a good fate, sitting at a communal table or small beige cube adjacent to obnoxious, dopey or deranged co-workers is to be escaped at all costs.

An abstract concept of “work” and “management” unhinged from “actual work” or “actual management” appears to be at its highest in the (wealthy) Arab world.  This excellent article in Bloomberg describes the job situation for young adults in Saudi Arabia.

Today, all three still live at home, get pocket money from their parents and are jobless in Riyadh, capital of the world’s largest crude oil exporter.  When the three Saudi men met each other in school 11 years ago, they dreamed that by the time they had reached their mid-20s, each would have a well-paid job, a house, a new car and maybe a wife

Most of the work in Saudi Arabia is actually done by guest workers or expatriates.  The “dirty” work of construction, domestics, etc… is done by fellow Arabs from countries that aren’t sparsely populated and endowed with natural resources, and the “thinking” work of managing and running businesses is done by expatriates from around the world.

The article goes on to explain how young adult Saudis don’t want to work in supermarkets, construction, or as cashiers.  They want the jobs that they see on TV – the managerial jobs, sitting behind a desk, in a climate controlled and first class office building.

“In my previous job, I used to sit at a desk in my own office,” he says. “I want the same standard of work.”  Abdullah, who has a high school diploma, says he has been offered “bad” jobs: as a waiter, security guard and cashier.

The interesting part of this is that the Saudis want those jobs without any sort of skills that would make them relevant in the wider, competitive world.  They have a concept of what “work” means and this abstract concept is completely unhinged from any sort of skill building or “work your way up from the bottom” mentality that could support it on a larger scale.

This is the ultimate abstraction of work; routine, office tasks with demanded accoutrements that have no bearing on the underlying economy or added value of goods or services.

Cross posted at LITGM

Hilarious Quote

I was watching the TV show “Metal Evolution” (now I am going to have to watch all the shows online, too) when I heard a quote so funny I almost had tears running down my face.  They had an interview with Gary Holt of Exodus and he said (on the topic of his band “selling out” to the record company)

If I had to do it all over again I’d just keep writing songs about killing people

$9 / Gallon Gas in Italy – And The Effect in the US

Recently Bloomberg had an article about Italian gas prices exceeding $9/gallon.

Austerity measures introduced by Prime Minister Mario Monti’s government have pushed Italian gas prices to the highest in Europe, an average of 1.82 euros per liter, or $9.17 per gallon, with taxes accounting for about 54 percent of the total,

The article goes on to talk about how this price increase impacts ordinary Italians just attempting to get around and go to their job.

The Italians hit hardest by higher gas taxes are those like teacher Cioni — working people who live in areas poorly served by public transportation.

Even in the US, where taxes on gasoline are high but do not comprise 54% of the total cost like they do in Italy, driving now requires actual trade-offs as you near $5 / gallon gas.

In the suburbs of Chicago you typically drive long distances during the normal course of the day. For instance it is over 30 miles from the Chicago loop downtown to Naperville each way. Since you probably will be driving around a bit when you get there, it is reasonable to think that you might burn 3-4 gallons of gas depending on traffic and mileage, along with $5 in tolls (depending on the route you take). If you figure that gas is $5 / gallon, then that round trip just cost TWENTY DOLLARS. Note that this analysis doesn’t consider the wear and tear on your car… this is just the incremental cost of the journey.

I remember growing up that $20 was a lot of money. You could live for a few days with $20 in your pocket (just the occasional fast-food meal, some gas, etc…). Now you spend $20 EVERY TIME YOU GET IN THE CAR.

This type of taxation does severely punish the “working” poor. It doesn’t punish the poor who aren’t working nearly as much, because they can take the laborious time to use whatever public transportation is available. The working poor, on the other hand, are essentially “on the clock” and if you are near or a bit above minimum wage you are probably taking home maybe $10 / hr after taxes. Thus the trip from Naperville (or a nearby suburb) to and from Chicago just took up TWO HOURS of your working time.

A family member who lives in Naperville talked about a neighbor who works at a popular (casual) restaurant in the city as a waitress and I started doing the math in my head… the money would have to be significantly better than from a local restaurant just to make up for the difference in gas prices and tolls alone.

I expect that over time gas prices at this level will significantly impact car-buying behavior.  When I purchased an Altima in 2010 (which I subsequently sold to a family member because it was too big for my parking garage and accumulated wear and tear) I bought a 4 cylinder engine, which made me seem like a minority on the highway because everyone else seemed to have a 6 cylinder.  However, the 4 cylinder engine (which is fine for a cruising car like the Altima, it isn’t a sports car after all) gets better gas mileage which will pay off very quickly with gas at $5 / gallon.

I expect that kids learning to drive will begin to associate driving with a very high marginal cost – i.e. each time you get in the car, money is flying out of your pocket.  When I started driving insurance costs were the big barrier, followed by the price of the car and then gasoline.  Thus once you bought and insured the car, you might as well drive it. Behavior that lasts a lifetime often begins when you are first starting out, so those that are starting driving today might view it as an occasional luxury or something to do as a necessity rather than as an activity in the normal course of life.

For the working poor, high gas prices tied to high taxes (especially in Europe) make their lives much more difficult because it cuts right against their take-home pay and often they need to drive to reach their jobs.  Since the poorer individuals often live far from where the jobs are located in the service sector (i.e. downtown Chicago is where a lot of night life is but the cheaper housing is often in the far-flung suburbs) this will limit their opportunities to local employers which could cut their opportunities significantly.

For younger people starting out, the incremental cost of a trip will make driving a much more “thoughtful” experience and trips will often be combined or deferred altogether.  Since habits you develop as a teenager often stay with you for many years or even a lifetime this could cause a seismic shift in behavior, away from driving.  Whether that is good or bad depends on your position; it certainly hurts the vitality of the economy because for most parts of America public transportation is not convenient, reasonably priced, or even available.

Cross posted at LITGM

Why Tomorrow’s Craven Politicians Will Save Us (Maybe)

Today governments across the United States are facing budget shortfalls caused primarily by making promises in terms of pensions and benefits to workers that no longer are supportable. Recently I was in California and I saw this sign in a bathroom at a popular tourist attraction.

The key concept to understanding how we got into this predicament is the word “craven”. Here is the official definition per Webster:

lacking the least bit of courage : contemptibly fainthearted

Politicians lacked the courage to stand up to public sector workers, predominantly the unionized ones like teachers, firefighters, and policemen, because negotiating with them seemed to be all downside:

1) If they are angry, they can go on strike, disrupting schools, hospitals and essential public services
2) They are voters (predominantly Democratic) and represent a (mostly) unified voting block that is prepared to petition to achieve their goals in the media (which is usually sympathetic to their cause, since they are mostly Democratic, too)
3) Many of them (Police, Firefighters, and to some extent teachers) present sympathetic postures to the public; fighting with them is a no-win situation (even if you win, you lose)
4) Their army of retirees often are still local and also vocal and organized and prepared to demonstrate as well, although they are not in a position to block essential services

Thus the “craven” route was simply to capitulate – write up promises to TODAY’s government workers and RETIREES and then just “kick the can” into the future to the date when those promises came due. Today’s politicians won’t be there when the bills come due (Daley most famously sold off Chicago’s assets, signed long term unaffordable deals for labor peace, and walked off into the sunset) so this fits their short term strategy to a tee.

However, in the near term, I think that politicians’ inherent “craven” behavior will work in REVERSE, giving us an opportunity to tackle the root cause of the problem. How do I come to that (preliminary) conclusion?

It is simple – there are really only two solutions available for politicians today (in places like Illinois, California, and Detroit, where it is literally collapsing) and in the near term in more well run or well funded places:

1) Raise taxes AND cut services drastically to pay for union benefits and pensions
2) grab a hold of the problem, cut payments to today’s workers and retirees and cut their benefits and costs, thus leaving more dollars for services TODAY and the opportunity to AVOID tax increases

So let’s say that you are a politician running for office in a few years – what do you promise constituents?  You have to promise #2 – that you won’t cut services today and won’t raise taxes or you won’t get elected.  I’d love to see people run for office on a platform of #1 and get elected – it won’t happen.  Now what will actually happen a lot is that politicians will promise #2 but do a variant of #1 to get elected (because it is VERY hard to take on the entrenched unions when you come into office) – but then the financials will collapse further and they will be FORCED into making a harder choice, or they will come up for re-election and be drummed out of office.

Soon the EASIER or “more” craven approach will just be to get elected on a basis of reducing government costs on the backs of existing workers and retirees and chopping compensation to avoid raising taxes or reducing services.  Thus the entire process that led to our current debacle will operate in reverse, with bad consequences and subsequent demonizing for government employees as the root case of the issue.

Government workers, especially unionized ones, will see many victories but a long term defeat on all these issues.  In the end sympathies won’t be enough to offset the crippling taxes and immense service cuts that are necessary to pay for past politician promises.  The politicians will side with the majority, who will have to reform the system, even though this reform will be rocky and filled with failures and vitriol.

Politically craven behavior, which dug this grave, will work in reverse.  This is a hope, at least.

Cross posted at LITGM