Rethinking $15 an Hour

Walmart and the Fast Food joints pay low and the taxpayers make up the difference:

The researchers note that the largest classification of temporary manufacturing production workers—assemblers and fabricators—earn a median wage of $10.88 an hour, compared to $15.03 for those hired directly by the manufacturers.
Half of all manufacturing production workers hired through temporary staffing agencies are enrolled in at least one public assistance program – a rate just below the 52 percent of fast-food workers who rely on public assistance.

In effect people making $15 pay taxes to those making less. so the boss can pay them less.  One nice effect of $15/hour minimum wage is workers lose many of those benefits, so they might make more working, but they lose welfare payments because they now make too much.  All in all, if true sounds good.  A one-off burger joint has higher expenses than McD, but at $15 and hour, at least wages will be the same.  (But McD will go robot and a local place needs people power.)

I stopped eating at burger joints a long time ago, even small specialty ones, since the meat is dry, no fat, not like the good old days.  Fat is healthy and flavor.  Hope to see dribbly greasy burgers make a comeback, with health meat.

Anyway, the solution is not $15/hr min wage, which is solely designed to give lower level government workers a huge wage increase (after which their betters in govt will get a bump up too), the solution is to get rid of minimum wage laws,  corporate welfare and personal welfare thereafter, so market prices drive market decisions.

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President of China Visits Tacoma

That's no joke.  The connection is he'd been there before, and set up a sister-city relationship with Fuzhou.  But perhaps there is more...  Seattle-Tacoma is doing a San Francisco-Oakland thing, with white-collar work in Seattle, and blue collar work in Tacoma.

With port work moving to Tacoma, and UW labor studies ensconced in Tacoma, the future belongs to the real economy of Tacoma as opposed to the false economy of F I R E in Seattle.

Who knows, we'll see.

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Labor and Capitalism

Listening to the travails of pacific northwest fisheries folk, and the conflicts among the “stakeholders”, the sport fishermen were at once lamenting how hard they are hit by the decisions and how little in fact their “give-backs” help the overall problem.  Why don’t the big players give back more?

Well, this is capitalism.  There reason there are big players is that, under capitalism, through usury economic power is concentrated in ever fewer hands.  There may be many “stakeholders” at the table, but ultimately, any route you take to press your case, it is the monied folk who decide.  It may be a judge giving the ruling, or a committee, or a tribe, but finally, it is the money people who dictate.

Once the rivers ran silver with fish, and there was no shortage.  But we decided we needed to have cheap electricity to subsidize Boeing and crowd out any other good ideas in transportation.  Big dams, built with bonds, tax the locals, profits to the bankers. Usury facilitates this.

The Austrian School of Economics proposes a solution: just as there are more forests in the American Southeast than the Pacific Northwest, and as many lightening storms, the Southeast does not get the catastrophic forest fires for a simple difference: the Southeast forests are privately owned.  The Northwest forests are government owned.  Indeed, those Northwest fires all halt when they arrive at the privately owned fruit orchards.

So too the fisheries.  Just as we can plot out the coordinates on a stretch of land and assign its ownership to an individual, so to could we with a stretch of ocean.  “Get off my lawn” will never be heard, but trespassers would be known by radar.  Indeed, we are already there with international patrols of fisheries to keep poachers out of treaty seas.  In private hands expect fish to be protected just as trees and fruit are in private hands.

But the anarcho-capitalists tend to ignore the capitalist problem in their theory. In fact, those orchards are now all huge businesses, as are the forests in the Southeast.  The fisheries now are also in very few hands.  Either way, as long as the patterns and practices of capitalism are enforced as law, then we will have power concentrating in ever fewer hands, people no matter how brilliant still unable to get the policy right, even if they wanted to (and one assumes they don’t, just take it all now.)

No?  Then you tell me why we have expensive, poor food, vast unseen pollution, dwindling resources and compromised ecosystems?  Terrorists?  Wrong person as president?  Chinese currency games?

Once a family could be supported with a fishing boat and the fisheries were aplenty.  Then came the easy credit which allowed those who borrowed first and most the ability to buy up the means of production and swamped the smaller players with subsidized scale and in time prohibitive regulations, regs the small players could not comply with cost-effectively.  Get big or get out, as the Feds say.

Just as the “roll-up” (the capitalists word for it) of the local pet shop, gas station, stationery store, pharmacy, doctors office, grocery, hardware store ad infinitem was capitalized into Petco, Office Depot, CVS, HMO, Safeway, Lowes... so was fisheries and farming.  Now we have farmed fish and GMO corn, both deleterious to our bodies, economy and ecology.  

Fighting back is hard to do, but it starts with neither giving nor taking interest (usury), but starting your own business.  And as a part of that business, extend asset-backed no interest credit to your customers.  Much better than going to war for the capitalists, as is required from time to time (by capitalism).

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What Happened? I Was There...

I got a raise to $1.81 an hour, and the gal who had been there two years longer was making 1.72 an hour. She was outraged.  I had quit work for 3 months to ski, and came back in April of 1972.  Nixon had taken us off the gold (lite) standard in 1971, and inflation was kicking in.  It was a brand new world.  She got her raise eventually, they started with the new hires.  Incidentally, this was a Catholic hospital kitchen, a Catholic Hospital started by a Saint who founding a couple of dozen of these in major cities in USA.  Before 1972, there was no such thing as anyone going bankrupt over hospital bills...  if you could not pay, it was written off as charity.  Some dead rich person had paid.

The middle class started disappearing in earnest in the late 1970s.  Massive inflation started eating away at the standard of living for most Americans.  Yet much of this was covered up by access to debt.  Credit cards, creative mortgages, student loans, and auto debt all allowed Americans to continue acting as if prosperity was only an American Express card away.  Credit card debt outstanding is now back up to $900 billion, a number last seen during the Great Recession before the great deleveraging.  

There was no such thing as a student loan before 1970.  You worked summers and made enough to pay tuition and live the rest of the year.  And you actually got an education...  you did not get out of college with a BA unless you could speak another language.  Can't cut it?  Don't graduate (or more likely,  don't go... plenty of good jobs without a college education.)

There were auto loans, but you'd have a car paid off in three years max.  Yes, there were 30 year mortgages, but houses were cheap.

So yes, there were some loans at interest...  but that was the least of your expenses in life. You entire life otherwise was usury-free, on credit

To review:  mal-credit is what banks issue with no asset backing and at interest (usury)

Bene-credit: asset backed time-to-pay at no interest (usury).

In the neighborhood the pharmacy, grocery, gas station, florist, cabbie, hardware store, and so on all allowed you to buy on interest-free credit and pay at the end of the month (since people were paid once a month.)  Your clothes and appliance were bought at a department store, where there too you just signed your name and on big ticket items, GE gave you six months to pay, if you needed it.  As a kid I walked into stores and charged things to my parents.  Never interest.  The whole world worked this way.

Before lending credit destroyed our economy, the extractors (miners, farmers) extended usury-free credit to manufacturers, manufacturers to wholesalers, wholesalers to retailers, and retailers to their customers.  Almost the entire economy ran on no-interest (usury) bene-credit, except for the rare-in-a-lifetime house or car purchase.  (And these were often creatively financed.)

This entire bene-credit regime was made possible by labor, who extended credit to their employers for up to 30 days before being paid.

What happened, is all of that family business and unitive and creative finance was crowded out by EZ Cheep credit made possible by the crime of usury, on steroids, since the banks do not even bother to have assets to back their loans.

We haven't lost this.  Amazon is a customer of mine.  It takes in money immediately and pays me up to 60 days later, which means they are ahead about $20 billion on any given day.

The best fix for this problem is a New Labor Movement, which charges industry what workers are worth, since workers lend hard assets, their labor, to make this criminal regime possible.

Honor Labor.

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Capitalism vs Free Markets with Co-ops

After yesterday's lesson below on how labor is the source of original credit in an economy, we can now appreciate how Marx was on to something about workers owning the means of production.  This too is loopy, but no more so than management owning the means of production as in capitalism.

If not labor nor management, then who?  Well, of course, the customers. The right form of business organization is the co-op, which is customer-owned.  In Seattle we have REI, Group Health, PCC, and plenty of co-op housing.  Recreation, health care, food and housing to name a few, and all far more robust than their "investor owned" competitors.

We had an excellent labor movement in the USA until it was hijacked by govt, but it is now time to return to a labor movement that negotiates with the professional managers who run the co-op for its customers.  Given what labor brings to the table, credit, this understanding may lead to a more equitable distribution of the profits of the operations.

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Longshore Action

On Feb 17, 2015, at 6:40 AM, Steve wrote:

On another point, I noticed that there is a labor dispute holding up cargo at the ports on the west coast but did not see your insight on these events on your hbhblog. I would love to hear your input and am wondering what the main issues are in the dispute as well as what products are being affected. How does an exporter/importer handle the customer service on our end when these delays happen and we are exporting to another country and there is a hold up like this?

Thanks,

Steve

I suppose as one dealing with the topic of international trade, the West Coast Port action would be a topic I would cover.  Over the last 40 years, I've seen these a few times, but they are not a problem if you follow what I advise: never go for volume at the small business (specialty) level in international trade.

As an importer, when your sales are in the millions, you are still buying minimum order quantities... instead of a full 20' or 40' (heavens forfend!) you have one minimum order on the books, one in production, one on the factory loading dock, one on the way to the port, on being loaded CFS (LCL), one on a ship on the ocean, one being offloaded in a port, one in the warehouse...  etc...  so, what happens when there is a port action?  One small shipment gets tied up, the rest are diverted to Vancouver BC, and brought in-bond through Blaine.

This too will pass.  We manage these problems with MOQ, this being just one of many reasons for dealing in MOQ quantities.

On the export side, the same thing.  There are $50,000 FCL containers full of produce rotting on the docks.  We'd have a $1200 shipment, prepaid, at risk.  Over a year, we could eat that loss, as could our overseas customer....  And we can wait this out.

But but but... you lose economies of scale!  No such thing at the small business level. The reason I am teaching is what is taught by trade development and accredited programs is for big business, but directly harmful to small business.

As to what is going on, the longshoreman are a real unions (as opposed to government"unions"), which means they are essentially anti-fascist.  The Stevedore companies are trying to cut longshoreman compensation and relax safety rules, to fatten their profits and expand fascism.  The longshoremen aren't having it.

At the 1982 Longshoreman Master Contract Negotiations I was at the table on management side ( I can be soooo mercenary).  The strike issue was unfunded pension liability.  Leaders were bought off, the issue went away, and peace was restored, but the union took a hit.  I hope union militantism is making a comeback.

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West Coast port Slowdowns

Taking a Ferry from the Seattle waterfront to Bremerton to do a bit of mushroom foraging in the forests around Seabeck, I was curious at the Seattle Waterfront crowded with container ships and grain ships lying at anchor.  Was this the result of the new alliance between Seattle and Tacoma?  No... Longshoreman work slow downs...The ILWU's job actions, which have already crippled operations at the ports of Seattle and Tacoma, now threaten to do the same in Los Angeles and Long Beach. Together, these four ports collectively handle nearly 80% of all containerized cargo at West Coast ports. The job actions began soon after a PMA offer responding to the ILWU's demands during contract negotiations last week.

The labor-orchestrated slowdowns come at a critical time in negotiations for a new coast-wide labor contract, and threaten to stem the flow of cargo during the final holiday season push. "Although the existing congestion has had ripple effects throughout the supply chain, it is the ILWU slowdowns that now have the potential to bring the port complex to the brink of gridlock," Gates said. "The ILWU's orchestrated job actions are threatening the West Coast's busiest ports and potentially billions of dollars in commerce. It is essential that the ILWU return to normal operations, as promised, so that we can continue meaningful negotiations in a productive environment free of union-staged slowdowns that are disrupting terminal operations at our largest ports."

I am a longshoreman, but mercenary as hell, so I was on the management side of the 1982 West Coast Master Contract negotiations in San Francisco, representing the small unionized import company I was managing.  If the longshoreman want the best deal, now is the time to do it.  We live in a false economy, so they need to cut the best deal that they can, when they can.  My sympathies are with the longshoreman.  It won't take long to get management to cry uncle, and there are not others who can do this highly technical work.  Honor labor!

But what about the small importer who has foods held up?  The small importer ought to have his minimum LCL orders spread out in the supply chain so he can manage these kinds of risks.  We never go for volume in logistics at the small biz level, always frequency of minimum orders.

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Robots Work For Me

And they ain't $15 an hour.  The progressive program is micro-housing and minimum wage.  And what does it get?



Finding somebody to help, and then someone knowledgeable. I like it.


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Poverty Draft & Veterans Benefits

One benefit of being a veteran is the leadership experience as an attractive resume point, nationwide jobs preference programs, massive training programs, all leading to better jobs prospects after time in the service.  Or not:

As of September 2012, 736,000 veterans were unemployed and the jobless rate for post-9/11 veterans was 9.9 percent, with young male veterans (ages 18 to 24) experiencing an unemployment rate of 18.1 percent.

The unemployment rate in USA is reported as around 5.5%, so veterans are running about double, and young veterans nearly four times.

How come?  Is the fact of the matter military experience makes people undesirable as employees?  Or is it just officers get the experience benefit and the grunts, no?

Since we now have a poverty draft, the young should know these figures, if any think they will escape poverty by joining the military.  They might, but the odds are they won't.

If you really want to be all you can all be, start a business, the most revolutionary act an American can perform.

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Mish Gets Libertarian Advice Wrong

Of course I am no libertarian, but Mish entertained a question as to whether a "Trust Fund Baby", an adult whose family is supported by a trust fund and therefore no one works, prefers to spend time together (I wonder what that is like, spending all your time together), a libertarian, who finds under Romney/Obamacare he is legally entitled to $600 in welfare payments.

Two points jump out:

1. Two teens still at home.

2. "The trust fund makes the money, not him."

Mish turns to a mentor, Pater Tenebrarum (Father Darkness?) who in turn cites Ayn Rand.  Eeeew! And the advice is in essence, take the money and run.  You paid in, so take out what you can get.

It's not that simple.  People and corporations ought pay in as little as possible, do everything within the law, like Boeing and Apple and Google, to pay no taxes whatsoever, because there are no instances when taxes are used to do good.  In every instance taxes go malinvestment which in turn distorts the market and leads to the terrible uneven distribution we see daily.

On the other hand it is foolish to run afoul of the tax laws, however wrong, even Jesus paid his taxes, although he performed a miracle to do so.  The lesson is if you pay taxes, it is another example of a miracle.

So to navigate whether to take government money, we first need to understand only end-users, consumers, pay taxes.  Business cannot pay taxes.  When you buy a Hershey chocolate bar, you have paid all of Hershey's taxes (as well as all of their expenses).  All costs including taxes are paid by end users.  (If a company goes bankrupt, the taxes it paid borne by the end-users, the receivers of the bankrupt firm).  In this case paying as little as possible becomes a competitive advantage, you lose unless you play.    All of this talk of "business paying their fair share" is pointless drivel.

The point is to wherever you find yourself in the flow of funds, you leverage it to the good. Let's look at some examples.

Now, taxing government payrolls is too a pointless exercise (why not just pay them net?) until we come to the business tax laws.  Your average federal paycheck is about $80k, and taxes may be about $20K, so $60K net say.  In that case that funny money $20k could be pre-tax dollars to invest.... instead of giving it to Uncle Sam in taxes, use $20K to start a business, and reduce your income to the Same $60k take-home anyway.  Of course your taxes are now based on $60K, not $80K, so maybe now you have $13K in taxes, but you make have built untaxed equity in a business in excess of the $13K in taxes.  Consult a CPA about where that sweet spot is for you ($80k is average, half make above that, so $200K is nothing special for mid-level ministers of funny walks, etc.)

Of particular interest to me is the "marketing dollars" the Feds distribute to businesses looking to build export markets.  Now this is money taken in taxes and then given back to businesses that are building markets worldwide.  Here is the problem in this instance:

1. It is directed to a very specific activity - essentially advertising.

2. It is putatively for all USA business but as a practical matter designed only for large USA business.

So here is the deal, if you do not use the money, it will be used by big business.  You can only use the money on market-building.  Here is the problem, as a practical matter it can only be used by big business, but  I F ,   if, you know how the game is played, you can work the program to where legally you can take advantage of it.  In this instance, you are building your business and starving evil big business of the limited funds.  But it is like Odysseus sailing past the Sirens, you have to be strapped to the mast during a certain phase or the programs will drive you mad and your business will crash.  One reason I teach is to show people how to get this money, and most importantly, when, and how to leverage it properly.

There are programs that are just hoaxes, like Foreign Trade Zones which get you nothing except paperwork, and payroll work subsidies that get you headaches.  yes some programs you ought to just steer clear of.

But now to the Trust Fund Baby.  We are all trust fund babies, we fly in planes in an industry that has never turned a profit since the Wright Brothers got that bicycle to launch.  A classic example of socializing costs and privatizing "profits" the airline industry is an example of convention, not markets.  Not to pick on the airline industry, just one example of countless instances of which we are "heirs" to investments we do not paid for, we did not earn.  Indeed, USA borrows half of what it spends, so we are all welfare queens as well.

Mish takes Father Darkness's lead in pointing out all taxation is theft, so any and all restitution is acceptable.  Take the money and run.  Fair enough analysis. Except...  we are all also thieves.  So grab from the booty and run?  The USA economy, and imperial economy depends on our ability to terrorize others who cannot be bribed into paying us tribute.  That is imperialism.  We cannot get away from the reality is little girls are set on fire overseas so we can have free junk here.  We call it collateral damage, or "the price we pay" but it is not rare, Madeleine Albright said expressly a half million dead Iraqi children is worth it.  (Razia did not die after being set on fire by USA troops.)  We invaded their countries on a false pretense, but with the express goal of having them pay for their occupation and our hegemony.  This hegemony is the basis for Chinese loans to us, that we can credible repay from imperialism what we borrow form the Chinese so we can have pointless junk that crowds out a more authentic life.  We are all as guilty as hell of that, and there is probably not less than 100, not 50, not ten here who are not guilty.

So as I pointed out above, the salient points are trust fund, no work, two teens...  free "money."  Well, the trust fund is a state creation to achieve a stable cadre of regime-adherents.  The fund is strictly limited as to in what it can invest.  One gets trapped into a pas-de-deux with the regime.  Next, managing assets would be work in its own right, but here again, expressly forbidden by the regime rules.  So the funds in the trust are as solid as the state (in fact support the regime goals) and at the same time deny us the good of the beneficiary being obliged to come out and compete with the rest of us.  The kids of these adults will never know from example of what it is to struggle and produce. The Trust Fund is an evil government entity.

So the $600 a month in welfare payment to an independently wealthy family is indeed odd.  The money comes from imperial oppression, if not taken it will likely end up in the war profiteers accounts, so what to do?

We are all trust fund babies in some sense and we will all be "getting" social security at some point. Social Security is a welfare payment to a trust fund baby when you get it, so we are all faced with the fellow to which Mish refers.

So what to do?  For my part, I have decided I will take the money, but not "run" with it.  Since these payments all rely on USA imperialism, I've targeted the funds to a group that removes UXO around the world, particularly Vietnam.

I tried to find a charity that does this, but charities (NGOs) are government chartered entities that usually end up doing far more damage than good (see "Africa").  Eventually I found a private company that can sally forth with $10,000 to remove mines, ex-minelayers who repent of their evil.  This is serious work, not for starlets and princesses, fronting NGOs, who more often simply, as Father Darkness advises, take the money and run.  So my social security checks will go to the UXO removal company, which actually removes UXO, by people who are healed by removing UXO.  I rather dig ditches for rice and beans in Mexico than accept USA welfare.  (I am assuming the ditches are not far from the ocean, and there is beer with the rice and beans.)

What is left is working at building what is good, directing what targeted funds are around you to good rather than let it go to bad, and direct "untargeted funds" to the people upon whom we've imposed for the provision of the money in the first place (say, Laotian farmers.)  Then you are closer to the free market, and are closer to surviving come what may.

And also, along these lines, it pleases me to no end to see the poor using their EBT cards in the most upscale grocery stores, buying the finest free range meats and organic produce.  the last thing they should be buying is Cheetos and Coke, and in so buying upscale they support the small farms in their effort to recover farming in USA.  Smile encouragingly when you see the mom with the screaming kid stocking up on pate and paying with her EBT card.  Offer to carry out her bags (not to worry, the store has plenty of help for that.)

The bottom line is entrepreneurs never take risks. Whatever your circumstances, work with it.  There are no times in history when things were just right.  Previous generations left us work for us to do.  We've got to get out of imperialism, and each of us can work in a relatively free market, by our practices.

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Microsoft Layoffs - Two Steps Forward, One Back

For Microsoft, a company of 180,000 to lay off 10% of its workforce is news.  But wait, 12.500 of those 18,000 come from the just-acquired Nokia company.

The cuts will begin with a first wave of 13,000, with the vast majority of employees whose jobs will be eliminated being notified over the next six months, according to a memo from CEO Satya Nadella.

Well, so in essence about 5500 Microsofters are actually out.  some will get rehired, some will start companies.  Those who start companies will benefit the rest of us as opposed to remaining redundant at Microsoft.

What strikes me as Human Resource Madness is to announce the jobs will be eliminated "over the next six months."  No!  You give people their severance checks at 4:59 pm Friday night, tell them to clear out their desks, take away their keys and have security escort them to the door.  Have a nice weekend!

Then at 5:01 pm you send out a press release.  Done!

I though Microsoft had world class human resources folks.

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This Pope On Politics and Economy - What To Do

Right wing and anarcho-capitalist (internal contradiction) Catholics are criticizing this Pope for most of what he says on economics.  It is unseemly, like the demons who screamed in fear as Jesus approached.

“Our world economic system can’t take it anymore,” says the Bishop of Rome in an interview with La Vanguardia. “I’m no illumined one. I didn’t bring any personal projects under my arm.” “We are throwing away an entire generation to maintain a system that isn’t good,” he opines with respect to unemployed youth.

Yes, capitalism is over, done with, like the Soviet system, and yes, we have thrown away two generations of entrepreneurs.  The people who depend on new business to have their sinecures funded, social security, pensions, etc, have denied the formation of the economy that might have funded the promises made.  Sort of condign punishment coming, slow motion.

As opposed to the Pope, I have a plan, a personal project.  As I survey the working parts of the economy, the imbalance between small and big business is a clear manifestation of the damage done by the federal "get big or get out" mandate.  Small business needs to be promoted, but this cannot be a Government project, for the Government has already done to small business what it has done to the American Indian and "health care."  Although I am not going to worry about that, I do advise we collective elect to end all that.

For my part, my classes have always been focussed on start-up and small business.  Over the last 30 years what I have seen is the atrophy of the innate sense to trade small and grow, and the learned skill of selling.  So my curriculum is beginning to emphasize these two points:

1. The MOQ FOB - it has always been in my curriculum, but what was once a reality noted is now an imperative to be restored, a lack to be addressed.

2. Trade Show Booth Management - the trade show is the World Cup of the business.  The booth is the match.  The business activity is directed to the upcoming show, and capitalizing on lessons learned from the last show afterwards.  There is so much to this, it is often farmed out to experts at the small business level. But to farm it out, to farm anything out, you must be a good consumer of that which you wish to farm out.  If you know nothing about trade shows, you can hardly judge anyone who is running trade shows for you.  And people who are working for you without any standards come back from trade shows with a stack of business cards and call those "trade leads." So I am cobbling together several start-ups ready, willing and able to sell worldwide into one trade-show-booth-as-working-seminar, this one the first:  http://www.johnspiers.com/Export_Agriculture/Advanced.html

The result - supply for nascent demand, the means to discover new markets, to grow a small business.  The bad news is we are imbalanced as to small business vs large, the good news is a start-up is automatically leveraged, has exponential value since it is rare.  The payoff will come with the changes apres-deluge, when property "values" drop to zero, and taxes go to 90%.  Those were the golden days of small business last century. They are coming back.

The Pope goes on, after decrying fundamentalism (extremism), and lauds radical (roots) revolution:

 For me, the great revolution is going to the roots, recognizing them and seeing what those roots have to say to us today. There is no contradiction between [being a] revolutionary and going to the roots.

See, when your education includes vocabulary, you can communicate ideas.  We pay more for an education for each American in the USA than it cost to educate this Pope, but we get miserable results.  But back to the point, radical and revolution.  So far so good.

I know that something could happen to me, but it’s in the hands of God. I remember that in Brazil they had prepared a closed Popemobile for me, with glass, but I couldn’t greet the people and tell them that I love them from within a sardine tin

And something probably will happen to him, because such voices don't get the mic long.  And the next Pope will go back to the bullet-proof security.  The blood of martyrs, etc...

Now to his views on economics, that sends the right wing crazy:

It’s proven that with the food that is left over we could feed the people who are hungry. When you see photographs of undernourished kids in different parts of the world, you take your head in your hand, it incomprehensible. I believe that we are in a world economic system that isn’t good.  ...
The economy is moved by the ambition of having more and, paradoxically, it feeds a throwaway culture. Young people are thrown away when their natality is limited. The elderly are also discarded because they don’t serve any use anymore, they don’t produce, this passive class… In throwing away the kids and elderly, the future of a people is thrown away because the young people are going to push forcefully forward and because the elderly give us wisdom. They have the memory of that people and they have to pass it on to the young people. And now also it is in style to throw the young people away with unemployment. The rate of unemployment is very worrisome to me, which in some countries is over 50%. Someone told me that 75 million young Europeans under 25 years of age are unemployed. That is an atrocity. But we are discarding an entire generation to maintain an economic system that can’t hold up anymore, a system that to survive must make war, as the great empires have always done. But as a Third World War can’t be done, they make zonal wars. What does this mean? That they produce and sell weapons, and with this the balance sheets of the idolatrous economies, the great world economies that sacrifice man at the feet of the idol of money, obviously they are sorted. This unique thought takes away the wealth of diversity of thought and therefore the wealth of a dialogue between peoples. 

Whew!  Exactement!  Today all famine is state-sponsored, the desired result of state interventionism.  Young and old are thrown away, exactly, I've been watching the last two generations be sucked into FIRE (Finance, Investment, and Real Estate), in essence pointless rearranging of the deck chairs, and the computer "revolution" in which massive resources are martialled to keep straight who owns what chairs and where the are located, on the Titanic.  And a war based economy is exactly right: droning wedding parties to terrorize people into giving up their resources is necessary to fund USA empty pensions.  And this regime crowds out the division of labor that would emerge if we did not cheer on the human sacrifice of the war economy (thank you for your service!).

Bankrupt balance sheets, division of labor, proper definition of wealth, wow...  someone else out there thinks like I do.

Well understood globalization is a wealth. Poorly understood globalization is that which nullifies differences. It is like a sphere in which all points are equidistant from the center. A globalization that enriches is like a polyhedron, all united but each preserving its particularity, its wealth, its identity, and this isn’t given. And this does not happen.

Whoa...  spot on!  Then he is asked about independence movements -

All division worries me. There is independence by emancipation and independence by secession. The independences by emancipation, for example, are American, that they were emancipated from the European States. The independences of nations by secession is a dismemberment, sometimes it’s very obvious. Let’s think of the former Yugoslavia. Obviously, there are nations with cultures so different that couldn’t even be stuck together with glue. The Yugoslavian case is very clear, but I ask myself if it is so clear in other cases. Scotland, Padania, Catalunya. There will be cases that will be just and cases that will not be just, but the secession of a nation without an antecedent of mandatory unity, one has to take it with a lot of grains of salt and analyze it case by case. 

Exactly.  Why should Ireland fight for freedom only to return to under the British boot?  I am keen on Scottish independence, but the pro-independence people seem to have a program of "worse than English" rule.  If Scotland were to be emancipated from England, then they would have free markets and grow in peace, prosperity, wealth.  But no one is talking freedom as a part of Scottish independence.

And on participation in politics -

Maybe they talk about the same problems but with a new music, and this I like, this gives me hope because politics is one of the more elevated forms of love, of charity. Why? Because it leads to the common good, and a person who, [despite] being  able to do it, does not get involved in politics for the common good, is selfish; or that uses politics for their own good, is corrupt.

Ouch.  As an anarchist, this is challenging.  But anarchy is politics, too.  I myself refuse to participate in politics because I am one of those who would use politics for my own good.  I am no better than the criminals we have in office, except that I know better than to claim looking out for #1 is holy.  Anarchy keeps people like me out of power, and we are legion.

I wonder if the Pope is warming up to condemn interest?

Here is the Pope's dive, Mina Mazzini -


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Forbes Covers & Russia/China Gas Analysis Wrong

The world billion is on the June 16 cover.  I suppose it is an element they discovered must be on a cover to get optimum sales.  If so it is promoting personal accumulation as opposed to commonwealth.

This edition has some puzzling stories... A safer cigarette.  Oh.

And how a woman became the head of General Motors.  Well, we know how, General Motors is run by the government and a woman was put in charge.  There has never been a woman in charge before because opportunities are restricted in capitalism.  Putting a woman in charge just means a bit of theatre before it is run into the ground.

Forbes should do a story on how both the Mustang car and Marlboro cigarette were designed by men to be targeted to women.  And imagine that.  Women were not attracted to either.

In a free market there would be the optimum amount of women running whatever companies, because there would be no bar to women running car companies.  And then perhaps we'd see women designed cars.

Another very odd piece is Steve Forbes steps put of character to mock the Putin/China gas deal.

Putin is naturally spinning the pact as an “epochal event,” but in truth it’s really no big deal. Divide that $400 billion by 30 years and you get an annual average of $13 billion. The size of the global economy today is almost $80 trillion. Seen in that context the contract rates barely a footnote. AT&T’s proposed acquisition of DirecTV merits more attention.

Whew, the head spins.  Let’s see if we can find some borders:  we are comparing one deal to the entire earth's economy...  how is that enlightening?  And then comparing an early stage industrial material input (gas) to a final stage consumer service output (TV shows.)  Somehow, we are to equate a $400 billion gas deal with a $50 billion TV deal.  This is good analysis?

Let’s do a more sensible analysis.  Instead of comparing the presumed productivity of couch potatoes watching Seinfeld re-runs to Russian energy in China, let’s get some sort of benchmark by looking at what USA does with energy inputs.  So we head over to the go-to guys on energy, the American Petroleum Institute, with its headquarters in hell, but has pretty accurate records, and we find as to its studies...

They do not capture any forward linkages (i.e., the economic impact on production in sectors that use oil and natural gas as an input). 

Man, we need that info.  Someone should do it.  Sounds like a masters or Phd thesis.   But what this API report does have is this...

The industry’s total impact on US GDP was $1.2 trillion, accounting for 8.0 percent of the national total in 2011. 

So the USA national total was about 15 tril in 2011.  Given the 8% figure above, the multiplier effect for energy usage in USA is roughly 12.5 times.

So let’t take 400 billion Russia/China deal and see what that is worth in supporting economic activity over thirty years...I get five trillion dollars.

OK, let’s take it yearly, like Steve does.  13 billion times 12.5 equals $162.5 billion, per year.

China’s GDP in 2013 was about nine trillion in dollars, so using a USA benchmark,  this single deal adds $162.5 billion, or roughly 2 % to the economy in terms of productive value.  OK, does not seem like much, but 2% of an economy is no small thing.  And one deal out of how many?  Out of what trend?  And then reverse the impact, take that same amount away from Europe, to where the gas was earmarked before the stupid "sanctions", and ask how is Europe going to maintain its welfare state obligations with yet another input source lost?

  But we need to find a Chinese benchmark for how much leverage China gets out of energy.  I suspect China applies energy more directly, with less wastage in USA, getting more bang for the buck. This is another thesis for a masters degree.  I won't do it, but Forbes should have, instead of comparing Russian gas to China as opposed to people watching TV in USA.  

And for those 2014 graduates who are now heading into unemployment with a crushing debt, here is Steen Jakobsen - 

After close to 30 years of doing this job I am realizing that energy is everything in explaining growth, investment, sentiment and market returns.
Understand energy and its marginal price of production and its delivery and you have the keys to predicting the world.

That means top analyst Steen got his start in the mid-1980s, and he is just coming, end-of-career, to this realization about oil and energy.  I was already informed on this while in high school in the 1960s, as the anti-fascists made clear the American war in Vietnam was about the oil in the Spratly and Paracel Islands (over which Vietnam and China are contending today.)  With the switch to the poverty draft for the military, and the destruction of the labor unions by gutting the manufacturing base,   USA no longer has any pro-freedom, anti-fascist movement.  So the word does not get out at the beginning of one's career.  One advantage of taking down the capitalist patterns and practices would be to revive manufacturing and a labor movement in USA.  

So graduates, ask questions, take take the "truth" apart.  When Peter Drucker was in his youth before WWII in Austria, he had read all about the struggles to create the Panama Canal, to shorten northern hemisphere shipping times.  In all those histories, he did not ever read whether it paid off.  Did it have the intended economic result? The purpose was an economic result, but no one had ever bothered to see if it was achieved.  So he studied that and wrote it up.  Look at the facts, and ask the most obvious question.  This will most likely get you into trouble, especially if no one has answered it.  If an obvious question has not been asked, expect some powers that be do not want the answer out there.

But ask and answer the question, and way you go.  Drucker was no one special in his youth, indeed, he considered himself a bystander.  But his questions got him in front of all sorts of top people last century, including Sloan at General Motors, for which he did an efficiency study.  His questions turned Drucker into the premier biz thinker of the 20h century, and Drucker a mere sociologist.

And people who had him in class thought he was ever so boring.  He probably was.  Most of his books are dreadully so, but two I liked a lot, Innovation and Entrepreneurship and Adventures of a Bystander. Very readable and enlightening.

And incidentally, in Innovation and Entrepreneurship, Drucker lays out why entrepreneurs NEVER take risks. His argument is perfectly sound, which sent me off on the trail leading to banks lending off-sheet credit, and now with unlimited credit, needed to introduce the idea of risk to trap people into debt, which is how we got to where we are today.

Innovation and Entrepreneurship

Adventures of a Bystander



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Honor Labor: $15 An Hour Minimum Wage

If you were raised in Washington State, when you think of unions, your first reaction is Honor Labor.

There were walk-outs and strikes this week around the USA for a $15 an hour minimum wage.  Just as the republicans use war on people brown or darker to win elections, the democrats are going after small businesses.  $15 an hour will wipe out the small businesses in USA, and the WalMarts of the world will simply get a tax credit of some sort to make up the difference.  This is the get big or get out imperative of USA economic policy.

The Labor Movement was once in essence an anti-fascist movement.  With capitalism comes usury and aggregation of money and power to ever fewer people, who maintain control by amalgamating ever bigger business and ever bigger government into one, the definition of fascism.  Labor put a check on that.  Jimmy Hoffa was the last of the anti-fascist labor leaders, and when we went off the quasi-gold standard, he got in the way of a tidal wave of fascist potential.  First prison, and when he did not learn his lesson - Whack!  Welcome to USA.

When we had a real labor movement, mayors and governors and presidents greenlighted thugs to crack heads on labor organizers and strikers.  What does it tell you when today those politicians embrace the $15 an hour initiative?  So now we are treated to a labor movement populated by hirelings of big biz/big govt putting a halo on greasing the skids for more big biz, big govt and less small biz.

Like Author Yang who could not make the connection between his father starving to death and the communist policies, Americans cannot see the connection between the unemployment check they are receiving and the fact they are unemployed.  It is too easy to think you get the check because you are unemployed, when in fact you are unemployed because of the check.

The millions who are thus bought and paid for do not want any change. They are afraid of change. Mothers of six children cash their $180 stipend every month and go on a binge of department-store buying, movies, … candies, radio, and even sometimes a car. It’s amazing how much you can get in the way of luxury if you just do without the necessities.

Labor leaders once said things like this. They were anti-fascist.  Not a peep from labor anymore.  Fascism has triumphed in USA.  We need an anti-fascist labor movement again.

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Competing On Design: Sweatshirts

Here is a story on a designer sweatshirt maker that is making many right moves, but I think will fail pretty quickly for some pretty classical errors.  These are errors I warn against when I teach the better way of proceeding. he called in designers for his Sweatshirt, which is a very good idea. 

For starters, it appears to weigh more than two pounds. The fabric, which is 100% cotton, feels about three times thicker than most sweatshirts. And ribbed paneling along the shoulders and sides help create a tailored look, eliminating the boxy silhouette of most hoodies. Bayard said he spent about eight months designing it with the help of former Apple engineer Philipe Manoux and world-renowned pattern designer Steve Mootoo.

 Obviously the design is valid, since it is selling well, at $89.  I notice College Logo hoodies are in the $60 - 80 range, so if these are obviously nicer quality, the price should attract, and it does.  

The zip-up hoodie, made by San Francisco startup American Giant, costs $89. It had been on the market for 10 months when a December 2012 Slate article declared it "the greatest hoodie ever made" and suddenly sales exploded.

Now this is dangerous.  A blip from a news article, and sales jump.  An increase due to an article is usually not sustainable.    Careful about meeting such demand.

“We are absolutely throttled down on manufacturing,” Winthrop said. “We are maxing out all of our capacity at all of our factories. As much as they can give us, we are taking.”

Now this is fine since they are using subcontractors, who are probably delighted to get the work.   And farming the work out means they are not investing in plant and equipment.  Very good. But next, the model is business to consumers, which I question...

The company advertises that it’s “bringing back American manufacturing” and pledges to never outsource jobs overseas. It can afford the higher labor costs in the U.S. because it is a direct-to-consumer business and therefore avoids expensive overhead associated with brick-and-mortar stores.

Four problems here.  1. Nobody cares where clothes are made. There are no studies showing peoples' preferences depend on where something is made.  Sure, no end to surveys that SAY people prefer made in USA, but when it comes to actually buying, they contradict themselves in action.  American Apparel advertises made in USA as well, but plenty of importers out sell them.  If you spend time promoting what no one cares about, then you are wasting time and money.  

2. Manufacturing clothes in USA is still a big business, look at where your tshirt is made.  But it is the cheap stuff made here (see American Apparel).  Quality is made overseas since it is management intensive plus the duties and restrictions cause producers to have their expensive stuff made overseas, as anti-trade barriers in cotton goods are by weight, not cost.

3. A promise to never outsource overseas is extremely unwise, when Federal policy is get big or get out, and having regs directed at ruining specifically you can and will be written.  Here they do it to lettuce growers. People go overseas to stay in business, not to save money.  The fourth problem relates to brick and mortar, but let's let them expand first....

“One of the great unspoken, dirty secrets about the apparel industry is that brands for the last 40 years have been investing a tiny amount in the product to sustain huge marketing and huge distribution costs,” Winthrop said. “In American Giant’s case, we do almost the exact opposite of that.”

So above they say their model is business to consumer and here they reveal a "secret."  Whole lotta errors here, and one of the biggest mistakes you can make in business, indeed life, is to believe your own PR.  First wholesale (business) to consumer is a bad idea since online sales are only about 6% of retail sales in USA.  That means this company will miss about 94% of their potential market. 

The "dirty secret" described relates to the specialty market, not the Walmart model.  It is no secret, since everyone already knows it.  Everyone knows the model, and yet 94% still prefer to walk into brick and mortar.

Specialty brick and mortar are constantly looking for such things as new sweatshirts, a luxury version.  Now someone will come along and offer a $400 retail version, but the quantities will be very low.  Sine the quantities are low, the markups are high to cover the costs of all those involved.  At $400, Saks will sell through.  The vendor to Saks will make more money doing less work that American Giant.  Just because you can sell X at $89 does not mean you cannot sell Y at $400.  And no assurance you'll make more profit at X than Y overall.

Of course higher price slows down demand, demand is a problem with which American Giant contends.  Further, as a start-up, their brand would be associated with Saks and Neiman, etc, not a bad association as the company moves forward.

Companies that have a higher revenue in relation to lower production are easier to finance than otherwise.

By eschewing those leading retailers, he is also denying himself steady feedback that is valid and reliable, upon which he could build his company, like a Nike.

The opposite of the "dirty secret" is what Walmart does.  So here we have a specialty product being sold on the Walmart model.

What goes on is not a  secret, dirty or otherwise, it has been around about 5000 years, not 40,  it relates to about 20% of the market, not 80%, what they claim is secret is well-known and beneficial, and their response is to adopt the Walmart model.  My guess is if and when American Giant gets to numbers that interests Walmart, having proven the Walmart model is good for their sweatshirt, Walmart will put their version of the same thing on Walmart  brick and mortar shelves AND the Walmart website.   At $59, same quality, made overseas.

Looking ahead, Winthrop said he plans on sticking to the basics: t-shirts, jackets, hoodies and sweatpants.
“When we think about next year, just being in stock — not expanding the product mix — but just being in stock will be a huge lever up for us,” he said.

Sitting duck.  He should be wholesaling to specialty retailers and working on new designs.  Fine if they are just tshirts, sweatpants, etc, if that is what customer feedback says.  My guess is he'll stock up as demand wanes, because the news article plug is a lightning that will not strike twice.  

My predictions as to who will make it has been pretty good over the last decade.  I wish all small businesses good luck and success, but some moves are deleterious.  Not too late to change the model, but the mantra needs to be "our opinion does not matter" and get in front of the opinions that do matter, 94% of the market, the brick and mortar specialty stores, at a higher price.

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In Defense of Unions

I can put on my resume both being a longshoreman (B) and busting a longshore house.  I've been a teamster too.

The Austrian Economists fancy themselves value-neutral scientists, but I part company with them on unions, upon which they get very emotional.  To many of them, unions are the bogeyman.

Here the esteemed Gary North slams, http://www.lewrockwell.com/2014/04/gary-north/state-of-the-unions-bad/ and North's nemesis in Austrian Econ, Mish, agrees.

Now, first one distinction must be made.  Back in my labor relations days, "house unions" were anathema, and pretty much an illegal practice with the NLRB.  Today, government unions are house unions, so they are a non-starter in any discussion of unions, as you will see.

I listened recently to a young professor present his first book in which he entitled "What Unions No Longer Do." I blogged that here... his thesis was unions closed the wage gap.

Elsewhere here I have said:

 Unions are private associations and government should have no part in their activities.   There is no such thing as an outrageous union demand, only outrageous management concessions.    People say, "there are unions, therefore there are problems."  In fact, "there are problems, therefore there are unions."  Well managed companies are not unionized, because the treat workers fair.  The best place in the world to make autos right now is Detroit.  There is no place on earth with so much talent and skill concentrated from auto design down to factory assembly.

And all of this misses the one key reason for unions: they grew as an organic anti-fascist movement.  Unions are the only check on fascism...  not academia, not government house unions(of course), not military... not religion, not medicine, not business... everyone of those actually welcomes fascism when it gets down to it.

As capitalism formed when the religious authorities went slack on the usury questions, so "interest" cold be reintroduced and capital could aggregate, the state and usurers could join to form gargantuan enterprises that crushed all in their path, especially the journeyman (paid daily.)  Whereas at least communism has anarchy as its end game, capitalism necessarily ends in fascism.

The decline of unions in USA is not good thing, because we have decline but no improvement in management.  Things are not getting better.  And we can track the decline in unions and the rise of fascism in USA.

When Hoffa was whacked, he was working against fascism.  After that and PATCO, union leadership simply sold out.  So fascism has grown unabated.  Small business is oppressed under fascism, but they are not organized and militant like unions must be.  When labor rediscovers its anti-fascist roots, we'll get some freedom back.

Honor labor.

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Honor Labor

Last week I took in a lecture at the University on what unions no longer do.  The engaging speaker was a sociologist whose work focussed on income equality.  He noted how unions helped wage equalization among minorities, women and immigrants, and sadly, with the decline of the unions there is a decline of this effect.

In the Q&A, there was lamenting at the decline in unions, fear at the assault on government unions, and anxiety for the $15 min wage issue.  I was disheartened, no concrete plan to revitalize the union movement.  The speaker averred we should forget about industrial unions since those jobs are never coming back.

Although wage equalization (to the degree it effects justice) is a good thing, the core benefit of unions is anti-fascism.  To completely ignore that aspect was well, I guess, why unions are in decline.  If you have no idea why you exist, you are unlikely to persist.

If you follow the history of the unions, they grew as the state and industry began to meld, the very definition of fascism, the state and industry as one.  As industry and the state began to destroy the person, the family, etc, workers fought back.

Government worker unions are house unions, so any discussion regarding them ends there.

But as to reviving the good of unions, it is only if and when they recover their core rationale of anti-fascism that they will revive, and contrary to the assertion of the good professor, manufacturing will return as well.  Fascism engenders false economies, and anti-fascism will rebalance the economy.

Instead, from the commanding heights of labor, we get calls for single-payer health care and minimum wage.  We do not need a fascist minimum wage economy.  We need a renaissance in the labor movement.

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Watch Robots Eliminate Skilled Labor

This company does not allow videos to be embedded, but it is fairly amazing what can be done, see in this 2 min video...

So that skilled butcher is out of work, on a mass assembly line.  But he is in demand at higher wages where specialty meats are concerned, where natural beef is to be slaughtered and the products sold on design, not price.

Sorting work, unskilled labor... here again, people are freed up for more productive pursuits.



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All Hail Robotization!

By replacing a million workers with robots, the world gets wealthier if the replaced workers become self-employed.



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Why We Need Robots to Replace High-paying Jobs

Since China has a desperate labor shortage, they are moving way ahead of USA on robot factories.

In USA, we need to promote eliminating high-paying jobs by replacing them with robots, the sooner the better.  We'll know we are on our way to auto-industry recovery when there is not a single manufacturing job making cars in USA.  Of course, part of the process will be to repudiate all of the pensions, but anyone who ever expected to live on a pension was simply being self-delusional.

Here is why we need to replace factory work with robots.  Anyone can do the repetitive factory work.  In fact any robot can do it.  What only a creative, thinking person can do is develop new products.

For example, in a country that has been pretty much freed of "high paying employment" some gals not working on a production line came up with an invisible bike helmut.



The Invisible Bicycle Helmet | Fredrik Gertten from Focus Forward Films on Vimeo.

People who seek high-paying jobs robots can do deny the rest of us the good of their creativity.  The settle for "high pay" in betrayal of the rest of us.   The charitable thing to do is let them know now, there will be no pension.  Therefore, get busy creating something new and valuable.

We need to get rid of "high-paying jobs" because the people who seek them deny the rest of us the good of their creativity.

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