Posts tagged: economics
Interesting. Here are the trends, the full article has more details:
1) Old Trend: Expensive solar, surviving only on subsidies.
New Trend: Cheap solar, disrupting old industries.
2. Old Trend: The Latinization of America.
New Trend: The Asiafication of America.
3. Old Trend: The Chinese population bomb.
New Trend: The Chinese population bust.
4. Old Trend: Soaring U.S. CO2 emissions.
New Trend: Plummeting U.S. CO2 emissions.
5. Old Trend: College is becoming more and more important.
New Trend: College is no more important than before.
6. Old Trend: Americans drive more and more.
New Trend: Americans drive less and less.
7. Old Trend: Skyrocketing health care costs, skyrocketing deficits.
New Trend: Creeping health care costs, creeping deficits.
8. Old Trend: The BRICs are conquering the world.
New Trend: China is the only BRIC in the wall.
9. Old Trend: Active management rules the finance universe.
New Trend: Passive investment rules the finance universe.
10) Old Trend: China is buying up all our debt.
New Trend: China is selling off our debt.
Nicole Aschoff on the “Alt-Labor” movement, such as the Walmart and fast food strikes:
University of Colorado-Denver management professor Wayne Cascio has shown, through a comparison of Walmart/Sam’s Club and Costco, that low wages are not necessary for high profits and productivity. Costco employees average roughly $35, 000 per year ($17 per hour), while Sam’s Club workers average roughly $21, 000 per year ($10 per hour) and Walmart workers earn an average of less than $9 an hour. Costco also provides it workers predictable, full-time work and health benefits. However, contrary to popular assumptions, Costco actually scores higher in relative financial and operating performance than Walmart. Its stores are more profitable and more productive, and its customers and employees are happier.
Costco is not exceptional. Zeynep Ton, of MIT’s Sloan School of Management, has studied retail operations for a decade and argues that “the presumed trade-off between investment in employees and low prices can be broken.” “High-road” employers like Trader Joe’s, Wegmans, and the Container Store have all found ways to make high profits and provide decent jobs. Catherine Ruetschlin’s research shows that a modest wage increase—bumping up the average annual salary of Walmart or Target workers to $25,000—would barely make a dent in big retailers’ bottom line, costing them the equivalent of about 1% of total sales. Even if a company like Walmart passed on half the cost of the increase to customers, the average customer would pay roughly $17 more per year, or about 15 cents per shopping visit. And, considering most low-wage workers spend nearly their entire paycheck on necessities, the industry would see a boost in sales ($4 billion to $5 billion more per year) to its own workers. Fast-food companies are highly profitable. McDonald’s alone saw profits more than double between 2007 and 2011. They could easily send some of these profits downstream to franchise owners and workers.
So why do most big retailers and fast-food chains insist on a bad-jobs or “low road” model? There are a few reasons. MIT’s Ton argues that labor costs are a large, controllable expense, and retailers generally view them as a “cost-driver” rather than a “sales-driver.” Store-level managers are pressured by higher-ups to control labor costs as a percentage of weekly or monthly sales. And because store managers have no control over sales (or merchandise mix, store layout, prices, etc.) they respond to pressure from above by cutting employment or forcing workers to work off-the-clock when sales dip. Another factor is financialization—the increasing dominance of finance in the economy. Firms feel a lot of pressure from Wall Street to be a Walmart and not a Costco. As Gerald Davis has argued, the rise of finance and the dominance of “shareholder value” rhetoric have resulted in an emphasis on short-term profits that register in increased share prices and big CEO bonuses.
Full Story: Dollars and Sense:
This is encouraging, but the possibility of fast food companies switching to “less-costly, automated alternatives like touch-screen ordering and payment devices” is not an idle threat. I’ve seen something like this setup in the food court at the JFK airport. But as I wrote earlier, cultural issues could stop this from becoming widespread — it’s not clear that customers will settle for robots and touch screens over human beings. But I sure wouldn’t rule it out.
Zygmunt Bauman interviewed on the subject of the “precariat”:
The notion of precariat seems quite general and vague to many people. Who are therefore the precarians?
The “general” and “vague” character of the notion of precariat bothers people accustomed to the division of society into “classes” and, in particular, to the phenomenon of “proletariat” or its idea, which the concept of “precariat” should, in my conviction (but not only mine), replace in the analysis of social divisions. In comparison to its successor, proletariat appears indeed almost as an emblem of the “specific” and “concrete”…
How easy it was, when compared to precariat, to determine its content and limits… But the fluidity of composition is one of the features defining the phenomenon of precarity; one cannot get rid of that fluidity without making the notion of “precariat” analytically useless. […]
What issues do, in your opinion, differentiate precariat most distinctly from proletariat? To what extent can one connect the two notions? And finally: is precariat a social class?
Well, I have serious doubts about that. I would prefer to call precariat a social category. The mere similarity of situation is not enough to transform an aggregate of individuals bearing similar characteristics into a “class” – that is, into an integrated group willing to pursue common interests as well as proceeding to integrate and coordinate actions stemming from that will. If workplaces of the times of “solid modernity” were, irrespective of the kind of products manufactured, also the factories of social solidarity, liquid-modern workplaces are, irrespective of their business objectives, the producers of mutual suspicion and competitiveness.
Full Story: r-evolutions: Far Away from Solid Modernity (PDF)
David Graeber writes:
This is a profound psychological violence here. How can one even begin to speak of dignity in labour when one secretly feels one’s job should not exist? How can it not create a sense of deep rage and resentment. Yet it is the peculiar genius of our society that its rulers have figured out a way, as in the case of the fish-fryers, to ensure that rage is directed precisely against those who actually do get to do meaningful work. For instance: in our society, there seems a general rule that, the more obviously one’s work benefits other people, the less one is likely to be paid for it. Again, an objective measure is hard to find, but one easy way to get a sense is to ask: what would happen were this entire class of people to simply disappear? Say what you like about nurses, garbage collectors, or mechanics, it’s obvious that were they to vanish in a puff of smoke, the results would be immediate and catastrophic. A world without teachers or dock-workers would soon be in trouble, and even one without science fiction writers or ska musicians would clearly be a lesser place. It’s not entirely clear how humanity would suffer were all private equity CEOs, lobbyists, PR researchers, actuaries, telemarketers, bailiffs or legal consultants to similarly vanish. (Many suspect it might markedly improve.) Yet apart from a handful of well-touted exceptions (doctors), the rule holds surprisingly well.
Even more perverse, there seems to be a broad sense that this is the way things should be. This is one of the secret strengths of right-wing populism. You can see it when tabloids whip up resentment against tube workers for paralysing London during contract disputes: the very fact that tube workers can paralyse London shows that their work is actually necessary, but this seems to be precisely what annoys people. It’s even clearer in the US, where Republicans have had remarkable success mobilizing resentment against school teachers, or auto workers (and not, significantly, against the school administrators or auto industry managers who actually cause the problems) for their supposedly bloated wages and benefits. It’s as if they are being told “but you get to teach children! Or make cars! You get to have real jobs! And on top of that you have the nerve to also expect middle-class pensions and health care?”
Tim Maly writes:
One of my favourite recurring tropes of AI speculation/singulatarian deep time thinking is mediations on how an evil AI or similar might destroy us. […]
And all I can think is: we already have one of those. It is pretty clear to anyone who’s paying attention that 1. a marketplace regime of firms dedicated to maximizing profit has—broadly speaking—added a lot of value to the world 2. there are a lot of important cases where corporate profit maximization causes harm to humans 3. corporations are—broadly speaking—really good at ensuring that their needs are met.
I don’t think that it’s all that far fetched to suggest that maybe they’re getting better and better at ensuring their needs are met. Pretty much the only thing that the left and right in America can agree on is that moneyed influence has corrupted American politics and yet neither side seems able to do much of anything about it.
Mark Fisher describes the contemporary economy and the precarity it involves as a “Time War” in which more and more work of our time is dedicated to work:
To understand the time-crisis, we only have to compare the current situation with the height of punk and post-punk in the UK and the US. It’s no accident that the efflorescence of punk and post-punk culture happened at a time when cheap and squatted property was available in London and New York. Now, simply to afford to pay rent in either city entails giving up most of your time and energy to work. The delirious rise in property prices over the last twenty years is probably the single most important cause of cultural conservatism in the UK and the US. In the UK, much of the infrastructure which indirectly supported cultural production has been systematically dismantled by successive neoliberal governments. Most of the innovations in British popular music which happened between the 60s and the 90s would have been unthinkable without the indirect funding provided by social housing, unemployment benefit and student grants.
(via Bruce Sterling)
See also: Radical Atheism
The American Conservative, a magazine founded by Pat Buchanan, is running a report calling for an increase of the minimum wage to $10-$12 an hour, nation wide. The report wasn’t written by the magazine’s own staffers, it’s a report from written and originally published by a think tank called The New America Foundation, which I’ve generally associated more with progressive causes than conservatism.
I won’t go into the paper itself here, though I worry that small businesses might not be able to absorb that sort of brunt increase in wages, and I’m hardly a fiscal conservative. What’s interesting to me is this particle edge of the right that seems to be coming around to much of what the left has been saying for some time now (it reminds me of seeing liberals end up as conservatives during the Clinton years and following 9/11).
American Conservative has published a few other pieces that veer into this territory over the past few years, including an article saying that Hispanics don’t commit more crimes than whites, one on the revolt of the richand the co-architect of Reagonomics Bruce Bartlett’s article disavowing Reagonomics, saying that Paul Krugman was right and that the Republican Party has lost touch with reality.
Adam Davidson writes for the New York Times:
Throughout the campaign, President Obama lamented the so-called skills gap and referenced a study claiming that nearly 80 percent of manufacturers have jobs they can’t fill. Mitt Romney made similar claims. The National Association of Manufacturers estimates that there are roughly 600,000 jobs available for whoever has the right set of advanced skills.
Eric Isbister, the C.E.O. of GenMet, a metal-fabricating manufacturer outside Milwaukee, told me that he would hire as many skilled workers as show up at his door. Last year, he received 1,051 applications and found only 25 people who were qualified. He hired all of them, but soon had to fire 15. Part of Isbister’s pickiness, he says, comes from an avoidance of workers with experience in a “union-type job.” Isbister, after all, doesn’t abide by strict work rules and $30-an-hour salaries. At GenMet, the starting pay is $10 an hour. Those with an associate degree can make $15, which can rise to $18 an hour after several years of good performance. From what I understand, a new shift manager at a nearby McDonald’s can earn around $14 an hour.
The secret behind this skills gap is that it’s not a skills gap at all. I spoke to several other factory managers who also confessed that they had a hard time recruiting in-demand workers for $10-an-hour jobs. “It’s hard not to break out laughing,” says Mark Price, a labor economist at the Keystone Research Center, referring to manufacturers complaining about the shortage of skilled workers. “If there’s a skill shortage, there has to be rises in wages,” he says. “It’s basic economics.” After all, according to supply and demand, a shortage of workers with valuable skills should push wages up. Yet according to the Bureau of Labor Statistics, the number of skilled jobs has fallen and so have their wages.
Good comment from someone on Hacker News:
I think it is important to note that the fast-food jobs with comparable pay are low level managerial positions, not entry level ones. You can start working for minimum wage at a fast-food job without any previous experience and/or skills. These jobs require very little training, and allow employees to add value almost immediately (and well before promotion to the $15-$20 an hour positions).
Contrast this to the skilled manufacturing jobs which require up front experience. Though many blue collar fields offer entry-level positions with on the job training, apprenticeships, and opportunity for advancement, this doesn’t appear to be common practice in manufacturing. Why not? I think the main reason is that it is very hard for a low skill worker to add value to a manufacturing company. There aren’t any comparable entry-level positions that allow the employee to learn while still being productive.
Because of this, hiring an unskilled employee for the purpose of training them is a huge risk, since it requires a significant investment. And since this industry is already very unstable with razor-thin margins, it’s not something many employers seem willing to do, which is unfortunate.
So maybe the solution is coming up with better training programs, so that manufacturers can hire new employees without taking on such large risks?
It all started to make sense to me when I attended Learning Annex’s Wealth Expo earlier this year-a seminar where teachers of The Secret, the hosts of Flip This House, George Foreman, Tony Robbins and former Fed Chairman Alan Greenspan [pictured above in banner from Learning Annex website] purportedly taught the thousands in attendance how to take advantage of the current foreclosure boom.
Using language borrowed from today’s more money-centric New Age spiritualists, as well as the get-rich-quick books of the early 1900s ‘New Thought Movement’ on which these pyramid schemes are based (such as Elizabeth Towne’s The Science of Getting Rich or Napoleon Hill’s Think and Grow Rich), they encouraged their mostly black audience to get on the ladder to success by purchasing educational DVDs and wealth-building ‘systems.’
These courses all promised to teach the properly motivated American how to find homeowners down on their luck and approaching foreclosure, as well as how to buy those homes from under them and resell them at a great profit. What made the spectacle doubly outrageous were not the dancing girls or indoor fireworks; it was the fact that most of the participants were themselves desperate former homeowners, whose illnesses, divorces, fires, and floods had put them in to foreclosure, too. Get it? They were paying to learn how to feed on people just like themselves. […]
Participation in business or, in most of our cases, land or home ownership, means helping put those wheels of the credit industry in motion. And the more we push, the more momentum they gain, and the more influence they have over an increasingly large portion of our experience. Reality becomes defined by credit sectors, and our time is consumed more each day with wondering how we’re going to pay back what we’ve borrowed.
Every once in a while, though, we break the rules and get to see the possibility for another kind of economy. Whether it’s an alternative currency, an open source software solution, or the simple good faith gifts we make to one another for creating value in each other’s lives.