Category Archives: Society and the Economy

Money Under the Mattress

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document.write(" serif">Why are interest rates so low? Why is spending so low? Why is our infrastructure crumbling? And why, with all this, is there no inflation? In Monday's column, The Diabetic Economy, Paul Krugman tells us about the idea that low rates are like insulin for a diabetic, necessary to manage the symptoms of a chronic disease. That got me thinking about what this chronic disease might look like.

It's true that our infrastructure is crumbling. Both Paul Krugman and Bernie Sanders have been saying we need to spend more. Interest rates are low, which should mean that spending on infrastructure is possible, even desirable. But government (read Congress) doesn't want to spend, because that would mean higher tax rates. And everybody knows that you can't borrow: you have to balance the budget. So what about the little guy? Maybe he could borrow, and get our economy moving again. But how does the little guy borrow? On his credit card, at 21% interest. He borrows only when he is in denial.

If the government is broke, and the little guy is broke, where is all the money? And what is investment? Who is investing? And in what?

We have come to look at investment from the side of the investor, without asking what the invested money does. We ask only how safe is this? and what is the return? Banks used to offer savings accounts which returned interest. Then the banks in turn would make loans to entrepreneurs who wanted to make something happen in the real economy. But as anyone with a bank account knows, that is not how it works today. So what happened?

Enterprises got larger. They issued stock: part ownership of the enterprise. The stock market provided a way to trade stock. It was a means of exchange. But in the last fifty years the financial world has changed. Finance has become “the financial industry”, a purposefully confusing rag-tag of banks, investment banks, venture capital and private equity companies, hedge funds, and insurance companies which issue contracts on wagers.

The underlying motive is of course to make money, but for whom? How is the money made? And what is produced?

The answer is that nothing is produced. The money is made by privatizing the profit and socializing the risk. In other words, by skillfully separating risk from profit. (Fraudulently, in my opinion. See or read The Big Short, the movie made from the novel by Michael Lewis.). And who makes the profit? An ever-smaller cadre of top managers. Fiduciary duty appears to be a thing of the past.

The result is that money is siphoned out of the real economy, the economy that makes the wheels go around. It is siphoned into private coffers, whence it seeks to find “investment” that makes a return for itself. Then that return goes right back into the coffers, without changing a thing in the real world. Is it surprising that this hoard money is having trouble finding a real home?

Through history, what has happened to that other means of exchange – money – when the people doing the trading lose confidence?

Weimar Germany. Inflation. Money loses its value. When people lose confidence in a shared convention, it doesn't work anymore.

We are witnessing a similar phenomenon in the financial world. The “smart people” are manipulating money to produce money for themselves, leaving the real world starving for investment. In this they have been spectacularly successful. (See Bernie Sanders for details.) But the world – the real world – is losing confidence in finance. The vast hordes of cash held by the top 0.1% of individuals (and companies!) have nowhere to go. Chinese money is bidding up real estate in California and Vancouver. North American money is fleeing North America for the tax shelters of the world, or begging countries with stable currencies to take their money at minus 0.8%.

What now? We have to look with fresh eyes at what investment means. Sure, it is return on money we park somewhere. But the real meaning is in what the money does when it is parked. Does it produce something? Does it change our future? Look no further than Elon Musk. He used his stake in PayPal to start Tesla. He hasn't shut down Tesla yet because he wants to make half the cars in America electric by 2020. He used his stake in Tesla to start SpaceX. SpaceX is taking over the work of the Space Shuttle. SpaceX just landed a booster on a barge. And SpaceX is going to colonize Mars. Purpose. Humanity is moving ahead.

Bottom line: money under the mattress serves no one. It is if it didn't exist.

Ignorance, Incompetence, and Arrogance

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document.write(" serif;">Three Good Men

Two good men died last month. From opposite sides of the office, they left us with the same message: it is important to actually know what you are doing. There is another good man who died in 1988.

Robert Ebeling was an engineer at Morton Thiokol, the company that made the solid rocket boosters for the space shuttle. On his way to watch the shuttle launch, he told his daughter, “The Challenger is going to blow up. Everyone's going to die.”

It was January 28, 1986. I was flying a B-767 (ship number 612, registration C-GAVF) between Toronto and Vancouver. The Captain was S.R. (Rod) MacDonald. I was the First Officer. It was my leg. We heard about the Challenger disaster when we were over Winnipeg, listening to the news on one of the ADF radios. I can still remember how stunned we felt, how sad for our fellow aviators.

Andy Grove was the tough and brilliant manager who founded Intel in 1968 with Gordon Moore and Robert Noyce. In a 2010 article he wrote for Bloomberg Businessweek, he said, “But what kind of a society are we going to have if it consists of highly paid people doing high-value-added work—and masses of unemployed?”

He wrote when we were still reeling from the Great Recession. Even now, six years later, the people in the trenches have not recovered. The “recovery” part of the economy has gone mostly to the top 1%.

But income distribution is only part of the story. In the same article, Andy Grove also said this about exporting jobs to fatten the bottom line: “Not only did we lose an untold number of jobs, we broke the chain of experience that is so important in technological evolution.”

Richard Feynman died at 69, in 1988. He was a Nobel physicist, but he was also one of the great teachers of the last century. A member of the Rogers Commission which investigated the Challenger disaster, he famously squeezed a rubber O-ring in a C-clamp and put it into a glass of ice water. When he removed it and undid the clamp, the O-ring did not spring back – it kept its distorted, squeezed shape.

The shuttle solid rocket boosters were built in sections. The joints were sealed with large O-rings. The shuttle had never been launched at such a low temperature. That's what Bob Ebeling was thinking about when he talked to his daughter that day. He had spent the previous (week) trying to convince managers at both Morton Thiokol and NASA to postpone the flight.

The other shuttle disaster was Columbia, on February 1, 2003. It disintegrated on re-entry because a few thermal tiles were missing. They had been knocked off during launch. Pilots do a walkaround before every flight. These pilots were not allowed to do a space-walk to inspect the vehicle before re-entry. From safe seats in Houston, managers took control. Seven astronauts paid with their lives. For the curious: William Langewiesche published his Columbia's Last Flight in the November, 2003 Atlantic Magazine. (William is the son of Wolfgang Langewiesche, who wrote the wonderful how-to-fly book Stick and Rudder in 1944). It is a good read and worth the time.

Andy Grove said, “we broke the chain of experience.” But it is worse than that. We are losing knowledge. In this day of the internet, where we can theoretically teach ourselves anything we want to learn, knowledge is actually disappearing.

As a pilot I study accidents, trying to learn and survive. Recently there has been another tragedy. The Board has not completed its study, but from what I (and many other pilots) know already, the cause(s) were well known to the trade. For me, that is the tragedy of the tragedy. It happened because trade knowledge was not being passed on.

It gets worse yet. In aviation, we are well into to age of robots. Fly-by-wire was introduced into commercial aviation in the Airbus A320 in 1988. Knowledge and skill have been coded with varying degrees of success. The hard-earned legacy of many crashes and many pilots' lives lies hidden on a chip. Today's pilots (still critical to survival) may or may not understand the code or (increasingly) their job.

Why?

Andy Grove, in the article mentioned above, put it succinctly and with more than his usual tact: Our fundamental economic beliefs, which we have elevated from a conviction based on observation to an unquestioned truism, is that the free market is the best of all economic systems—the freer the better. Our generation has seen the decisive victory of free-market principles over planned economies. So we stick with this belief, largely oblivious to emerging evidence that while free markets beat planned economies, there may be room for a modification that is even better.

Ideology blinds us, making learning – true learning – more vital than ever.

A very old friend – we have known each other since kindergarten – recently took up the subject of learning. He is retiring gradually from the practice of medicine, and he is re-examining the mathematics and science he learned forty-five years ago. Recently he showed me his derivation of the number e. It would be an exaggeration to say that I now understand e, but he has taken me parsecs closer. He himself, through his efforts, now owns the number e in his heart and soul.

This kind of learning is possible in our age, but even with the ubiquitous internet we have not yet figured out how (Although Sugata Mitra is getting warm).

So there is hope. But so far I see more loss than gain. Knowledge is leaking away.

The Cycle We Have to Break

There is a tragedy. We don't want to assign blame or upset the apple-cart, so we don't learn from our mistakes. Managers, once again, become arrogant and complacent. Engineers have to feed their families. They keep their mouths shut. When teachers are leaned on, they are already paid so little they are more likely to leave the profession entirely. But not all of them. Some stand up and say what needs to be said. Thank you, Andy Grove. Thank you, Bob Ebeling, And thank you, Richard Feynman.

Post-Election Campaigns

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document.write(" serif">The election of Barack Obama in 2008 and Justin Trudeau in 2015 have this in common: their election has motivated certain media to wage personal campaigns against them after their election to office. These campaigns are not directed at government policy or at the office of president or prime minister, but personally at the duly elected holder of the office.

In the USA it has been Rupert Murdoch's Fox News. In Canada it is the National Post. (Although it must be noted that, as noted in Ryan Lizza's A House Divided, in the December 14 issue of The New Yorker, in the USA the Freedom Caucus (a group of republican representatives) has played an important role in campaigning against the president.)

Perhaps my history is weak, but I cannot remember the president being openly and consistently disrespected before President Obama came to office. And here in Canada the same thing is occurring since Prime Minister Trudeau's election in October.

Montreal's English language newspaper, The Gazette, was bought by Postmedia Network, Inc. Then a few weeks ago, the political section was replaced by a piece of the National Post, Canada's right-leaning national newspaper. Even the page design and typeface are identical to the Post.

On the front page of this section on December 1, the headline is All Show and No Tell at Summit, and John Ivison's comment piece touts Brad Wall, Saskatchewan's premier, as a future leader of the Conservative Party who could take on Trudeau in the 2019 elections, saying that he has emerged as the national voice of the new conservatism – reasoned, market-based argument that doesn't necessarily provoke two-thirds of the population to reach for their revolvers.

On the front page of this section on December 10, there is a charming photo (shot for Vogue Magazine) with the Prime Minister embracing his equally charming wife, Sophie. His hands are clasped over her rear end. She is wearing an Oscar de la Renta dress valued at $5700 provided by Vogue). The headline is A hands-on politician.

My point is that in a democracy, there are elections. People are elected to office to lead, and once in office are expected to do so. And the voters, having elected the leader, are then expected to respect the office, and save their misgivings until the next election.

But (especially since the infamous Citizens United decision by the US Supreme Court), rich people and corporations expect that they will have, in effect, more than one vote. They feel that they know better than the rest of us what is good for the country. They tilt the playing field, just as the banking industry preys on poor people by charging 21% interest on credit cards. That rate used to be called usury. Any economics textbook will explain the relationship between loan interest and risk. And yet the default rate on credit cards in no way justifies 21%. It's just how banks make money. In each case the tilting of the playing field undermines the public confidence in capitalism. For more on how the distortion of democracy and capitalism works, and what results, check out The fall of Jersey: how a tax haven goes bust, in Tuesday's Guardian.

The media (and elected officials who have been bought by the rich) undermine both democracy and capitalism by waging campaigns against the elected.

Lowest Common Denominator

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At the airport, there are two security lines. There is one where you have to take off your shoes, and another where you do not. Yes, you guessed it: for the second you need elite status.

It shouldn't be surprising that an airline, a corporation, would divide humanity into two classes. It is the invisible hand of the market at work.

In today's New York Times, Josh Barro, in Facing Elite Bloat, Airlines Move the Goal Posts, writes about his elite fall from grace. It seems that now plebes contend with not only the elite and the super-elite, but even higher orders. Remember how we used to speak of the 99% and the top 1%? And how now, more often, we refer to the top 0.1% or even the top 0.01%? Well, this elite thing has done so well for the airlines they are now facing elite bloat, where some plebes have invaded the bottom tier.

Their first response was to add classes to top the top elite, perhaps platinum, diamond, kryptonite, and unobtanium. But that didn't fix things. As Josh Barro writes, “But mostly, (the airlines) have dealt with the problem by devaluing the lowest tier.”

Does that feel familiar? It probably does if you have a job, or if your degree is not from an elite university, or if your annual income is less than $1M. It certainly does if you are a tradesperson, or a nurse, or a teacher. You know, one of those people who has to rely on union seniority or tenure to have a chance in the marketplace.

Yes, it is as true in politics as it is in marketing – we have discovered a common denominator lower than greed: feeling superior.

So before you vote next time, ask yourself a question: do I feel superior to anyone? If you do, chances are someone has been pulling your chain.

Nothing for Humanity

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Our society has made a u-turn. Our democracy has left behind the vision of the Founding Fathers. Our obsession with the moral fibre and hard work of the individual has morphed subtly into a passion for making as much money as possible.

In today’s column, Inequality is a Choice, Nicholas Kristof reports that the Wall Street bonus pool in 2014 was roughly twice the total annual earnings of all Americans working full time at the federal minimum wage.

Perhaps it is time to ask about the purpose of our work. Is it to make as much money as possible? Enough to feed our family? Or should there also be a non-financial component to our work? Should we, as in friendship and love, be thinking about how our work might benefit others?

Oh, I know. I am naive and an idealist. I have enough money to live on, so I have the luxury of having such thoughts. But I have never forgotten how, as a young man, I felt embarrassed and even shamed when a much-respected older friend asked, What is your exit strategy? That's the only way you'll make money out of this.

We were speaking of a venture I had started, and of course he was right. But his cynical realism hadn't appeared overnight. A sickly youth, he had used his time bedridden with rheumatic fever to read the entire library at the British estate where he was put up. He remained an autodidact and became an inventor. He left us many innovations, but as a pilot, what is important to me is that in the late 1920's he successfully flew the first inertial navigation system. The accelerometers were weights and springs. The integrators were vacuum tube circuits.

He never saw a penny from the invention. It was too soon, and nobody understood it. A generation later ICBM's provided the motive power for the idea. There was no other way to steer the missiles.

He made a modest living by designing and building devices which were the spawn of more modest ideas. According to the doctors, he was living on borrowed time because his heart had been damaged by the rheumatic fever. He lived into his nineties. He did sell his company. I believe he had a good death.

I am not the first to point out that Wall Street, which began as a legitimate instrument for capital formation, now produces nothing that benefits society. Nor am I the first to ring alarms when CEO's make four hundred times the average wage at their companies. But perhaps there is method to this madness. Perhaps this Wall Street bonus pool and these CEO salaries are the heroin which blunts the pain of uselessness. These rich folk, for the moment, are in a pleasant haze of denial. But truth settles on us all, sooner or later. Many of them will not have a good death.

What is Not Politics

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The New York Times, Sunday, December 7, 2014

Two articles in today's New York Times caught my eye: Energy Firms in Secretive Alliance With Attorneys General, and Thomas Friedman's column How ISIS Drives Muslims From Islam. The first describes how State Attorneys General submit to Congress letters written for them by energy  executives, and the second how a growing number of Muslims, sickened by ISIS, are turning from Islam to Christianity or atheism. In the latter, Friedman describes how Dr. Alyaa Gad, an Egyptian doctor living in Switzerland, started a hashtag which translates as why we reject implementing Shariah. She said, I have nothing against religion, but I am against using it as a political system.

Bingo, I thought. And the energy people are using capitalism as a political system.

Quebec, Canada

I have lived in Montreal for most of my life. Quebec politics are interesting, although they are perhaps slightly to the left of the mean in the USA. We have single-payer health care, for example. But what I wanted to bring up was that René Levèsque, the founder of the Parti Québecois, was instrumental in bringing in some of the best campaign finance law in North America. We felt the benefit in last April's provincial election, when Pauline Marois, the Premier and head of Levèsque's Parti Québecois, was ousted in a drubbing that surprised everyone. She had become demagogic, and no amount of money could save her from the voters.

Don't get me wrong. Quebec is not perfect, nor is Canada. A leftist, government knows best system breeds an entrenched civil service. It is sometimes not pretty, and it gets really nasty when it comes to software. Hint: Obamacare liftoff. But on the whole, I am content – or at least resigned. Because politics is politics.

Back in the USA

My wife grew up in the USA. Our kids and grandkids are there. Even I spend several months of the year there, visiting them. I am the only one in my family who is not a citizen and can't vote down south. But that doesn't stop me from stupefaction when I consider that in the USA, thanks to Citizens United, a corporation is, in effect, a super-citizen. Capitalism is great, and I love the openness to innovation it makes possible, but it is not a political system.

Management: Blinded by Success

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Blinded

We have become very good at management – so good that we have set it (and ourselves) on a pedestal. But management is not a panacea. We throw it at every problem, expecting the usual success. More and more we are encountering intransigence as we attempt to solve problems with measurement and money.

Two of the most pressing problems facing us today are health care and education. The cost of the former is out of control. The quality of the latter is declining and testing isn't fixing it.

The reason is straightforward: health care and education require a relationship between individuals – one person helping another. True, there is more to it than that – but the basic requirement remains. Ask anyone whose life was changed by a good teacher.

Atul Gawande

I am a huge fan of Dr. Atul Gawande. He writes like a dream, takes me into his world of medicine and surgery, and seriously addresses the problems facing his profession. But his most recent article Big Med (the New Yorker, August 13) took me into new territory. He describes how hospitals (including his own) are forming into conglomerates, and compares the management of these conglomerates with that of The Cheesecake Factory, a large and successful restaurant chain.

I devoured the article with my usual fascination and perhaps a touch of trepidation. The next day, I brought it up with one of my sons, who had also read it. He had been horrified, he said, both by the idea that health care could be “managed” like a restaurant chain, and by the “creepy” remote monitoring (by closed-circuit TV) of doctors on the job.

We had a lively discussion. In hindsight I can see my son brought me around to his point of view.

Finland

For the last decade the Organization for Economic Cooperation and Development (OECD) has been ranking countries in educational achievement using PISA tests. (Program for International Student Assessment). Finland has consistently ranked at or near the top. What is its secret? Respect for teachers.

The Finnish position on education is the opposite of the North American (especially the U.S.) position. There are tests, but they are not standardized. Teachers make and give tests to see if the student has learned and if they themselves have taught. Teaching is a higher-prestige occupation than medicine or the law. Teachers must have a degree, but it is not in education. The degree itself (at least an M.A. with a thesis) is the license to teach. When asked what might make them leave the profession for, say, business, Finnish teachers cite not higher pay, but loss of autonomy.

Management or Collegiality?

As recently as a generation ago, doctors and teachers could and did operate alone: the private practice and the one-room schoolhouse. Since then huge advances in technology have made that impossible. So much knowledge is available today that health outcomes are compromised if the patient's medical history is not instantly available to the specialist. Learning is limited if the teacher cannot back up her teaching with the Khan Academy and Coursera and learn from these herself. As Dr. Gawande points out, doctors (and teachers) must continue to learn from each other.

All this argues for collegiality. Good management can make sure fresh food isn't wasted at The Cheesecake Factory and it probably has a role running schools and hospitals. But as Finland's example shows, it is counterproductive when used to control doctors and teachers.

Why is this so? And why now, more than even a decade ago?

Financialization

Financialization. The word is not in the dictionary, at least not yet. But there it is in Nicholas Lemann's Transaction Man, the excellent and revealing article about Mitt Romney's background in the October 1, 2012 issue of The New Yorker. With financialization – financial “products”, hedge funds, and private equity – management has been taken to a new level where, effectively, only money matters.

Of course, money is called productivity and efficiency among other euphemisms. But what it means in practice is that human interaction, energy, and invention are now virtual qualities at best, and at worst ignored altogether. Is it any wonder that in North America and especially in the U.S.A. health care and education have the highest costs in the world and some of the worst outcomes?

Human Potential

George Romney told his son, who idolizes him, that “there's nothing as vulnerable as entrenched success.” During Wednesday night's debate Mitt himself said his goal was to maximize the potential of each individual. How ironic is it that the son's policies and politics – the real policies, not the slight-of-hand wordplay visible Wednesday night – are systematically dismantling his cherished management and stifling each individual's God-given gifts, effectively fulfilling his father's prophecy?

Mitt Romney may, in his heart of hearts, believe in the sacred gifts of each human being, and even in the absolute necessity of their being channelled into paths that benefit society as a whole. It is, alas, probably too late for him to see how his actions are undermining his belief. That is for us to see and correct.

Mitt the Spider

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Watching Landings

 

You’re at the local airport. You watch landings, because pilots always do. Today, because there is a lot of traffic and you're not pressed for time, you watch for awhile. Twenty, maybe thirty landings go by. What do you see? Fifty percent (this is a flight school strip) touch down halfway down the runway. One or two touch down in the last 1000 feet.

What do you take away from the experience?

Gossip, certainly – if you're standing there with fellow pilots. Comfort, possibly – if you feel you can do better than most of what you're watching. Or perhaps chagrin, if the reverse is true and a recent example of your own work sticks in your craw.

But there is a more important take-away: forming an opinion or evaluation by discerning and comparing.That is the dictionary definition of judgment. And the aviation version of judgment is more practical: if I find myself in this situation, can we do it?

The we in the last paragraph refers to you and your airplane. You learn skills and you memorize your airplane's limitations. You are a team.

The situation is whatever pickle you're going to get into on your next flight. Can I land on a 2000-foot runway?

You look up the Landing Distance Required in your Flight Manual or Pilot Operating Manual. For my N-Model Bonanza I find 1600-2000 feet (no wind, 75°F. or less, 2000 feet pressure altitude or less). So we can do it, right?

Not so fast. The runway at my local airport is just under 4000 feet long. I consistently turn off on the center taxiway, but not without some braking. I have a bit too much speed over the fence and I float too long. So I'm not quite ready for that 2000-foot strip. My airplane is, but I am not.

Here is another clue. My POM also lists Landing Distance Required for a Short Field Landing. Same configuration, but the over-the-fence speed is 5 knots less. Instead of 1600-2000 feet, the required distance is 1200-1400 feet. Add five knots and add five hundred feet! Nope: my energy management – hey, my hands and feet, if you get right down to it – are not good enough yet.

Why not, you may ask? After all, I have been a pilot for 45 years. Well, two things: first, I'm 68 years old; and second, after I retired from airline flying I didn't touch a yoke for six and a half years. So I had to write exams and do a lot of re-learning. Now I'm learning the hands and feet again.

In short, for the moment my airplane is better than I am.

Hours, Experience, and Judgment

How do we discern and compare on the road to developing pilot judgment? First, look at the one or two Bottom Guns who touched down in the last 1000 feet. “Good enough,” they say. I guess so, if their airplane can stop in that distance. Then the fifty percent who touched halfway down. “Plenty of runway left. No sweat.” These guys are like me. Their airplanes are better than they are. It's just a matter of how much better.

What's missing? A path to learning judgment.

Experience is measured in hours. Judgment, theoretically, comes from experience. But it is not automatic. Hours of flight or even hours of practice take you nowhere unless they are accompanied by some discernment and comparison. Neither the Bottom Guns nor the halfway-down-the-runway pilots are safe trying to land on a 2000-foot runway. But do they know that?
Spiders are kind to their own. Well, story except for the kinky Black Widow, who eats her husband after sex.

Spiders are very good at controlling the populations of lesser insects – gnats, for example.

Above all, spiders dine in style. Pheasant under glass has nothing on them. Have you noticed? A fine, strapping exoskeleton gets stuck in a beautiful, geometric web whose strands are stronger than steel. There is no rush, no baring of teeth or ripping of flesh. No blood on the floor.

The spider, epicure and medical professional, injects a magic potion under the shiny shell. The guts and muscle of the beautiful captive are reduced, sautéed and flambéed. Only then does the spider dine – elegantly and unhurriedly.

After the meal the prize remains. The beautiful prey is still there, intact and whole, framed in the skyscraper web. Its value seems undiminished.

But it will move no more, except when the wind pulls at the strands binding it. The soul is long gone.

So too does private equity provide for its own.

What’s in it for Me?

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I admire Maureen Dowd and enjoy her columns, but she is off track on this one (Playing Now: Hail to the Chiefs – New York Times, Sunday, September 9, 2012).

She does, however, speak for us.

We live in a market-driven society that has come to expect service. I'm paying. You deliver. We have become puffed up with the importance of our money.

But education doesn't work that way. Good health care doesn't work that way. And – this was the President's point – democratic government doesn't work that way.

Just before the line Ms. Dowd satirizes – the election four years ago wasn't about me. It was about you – the President had the courage and the leadership to remind Americans that “We, the people, recognize that we have responsibilities as well as rights.” He goes as far as to say that “freedom without a commitment to others . . . . is unworthy of our founding ideals.”

President Obama is right. We won't get out of the mess we're in unless each of us can turn to a fellow citizen who has done good work and say, “Welcome home. You did that. You did that.”

We can't demand good work. We can't demand good teaching, good health care, or good government. No matter how much money we have, we can't put the “good” in any of these. Paying is not enough, and the Market is not a leader.

So perhaps Ms. Dowd has done all of us a service by putting a voice to our selfishness. The voice rings hollow in a society largely emptied of respect for good work and of motivations other than money. But perhaps Ms. Dowd was satirizing us and not the President?

Work is Dead

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Hello, Grandmas and Grandpas. Ever wonder why your kids are living at home? Or why, when they do make money, it's one-shot, scavenger deals that pick away at the edge of the economy? Our kids – gleaners, snatching the crumbs?

For an answer, take a look at the corporate executive. No, not the entrepreneur, still in charge of the company he founded twenty years ago. No, not even that new political god, the small business owner – he (or she) is so busy with cash flow that there is no time for vision. I am talking of the CEO of a publicly traded company, hired by the Board of Directors and responsible to the shareholders.

The job of this CEO is to systematically devalue work.

Why, you ask? Remember – the time horizon for a CEO is the next quarterly report, which is never more than three months away. He could spend his time dreaming a vision for the future. But – especially in these hard, competitive times – he doesn't dare. The bottom line has to look better three months hence and his only choice is to cut costs. So he merges, divests, moves work offshore, and fights unions. He cuts costs, because that seems to be the only way he can protect the shareholders.

But work, and workers, are more than just a cost to the company. They are also its most important asset. A generation ago workers were loyal, dedicating their life's work to the company that kept a roof over their heads and food on the family table. That loyalty is long gone. Today every worker is stressed as his salary and benefits suffer the Death of a Thousand Cuts. He can't quite voice it, but he knows his company thinks he is replaceable and essentially worthless.

So we have the Occupy movement and We are the 99%. We have to do something to stop this race to the bottom. But what?

We might start by asking Who are the Shareholders?

As I wrote March 18, the shareholder is most likely a hedge fund, which owns a stock, on average, for twenty-two seconds. The decision to buy and sell the stock is made by a computer algorithm.

So the Board exercises its fiduciary duty and hires a CEO, who in turn exercises his duty to the shareholder, who turns out to be no one, a chimera, a moving target.

Our work, our careers, are being devalued by an algorithm, for the profit of a very few. Sadly, no one else is in control.