Investment and Finance

“Death by HR” Released as Audiobook

Death by HR Audiobook Cover

“Death by HR” Audiobook Cover

After much work with narrator Joe Farinacci (who did such a good job with Avoidant) the Amazon/Audible audiobook of Death by HR is finally for sale at these links:

Amazon
Audible

Death by HR: Progressive Dirigisme Takes Over the US

Unhappy college grad working at Starbucks

Unhappy college grad working at Starbucks

Labor lawyers and labor economists have historically been supported by labor unions and their cooperating Democratic legislators, who fund labor-leaning academic institutions. As a result, HR degree programs and faculty begin with a bias toward the labor laws and union-style thinking of academics in the field.

Social scientists generally lean left. Industrial Relations (IR), the field of labor-management studies, also leans sharply left.[1] Social science professors are overwhelmingly Democrats.[2] And the faculty in most HR degree programs are similarly biased, which means the typical new graduate from these programs has been indoctrinated to accept the necessity and essential fairness of the labor laws and regulations they will be expected to help enforce in their postings in private industry or government agencies. While we have seen that these new graduates tend to be tempered by exposure to real workplace life and management influence, they retain their political affiliations and continue to lean toward progressive causes and regulations.

Verdant Labs’ survey of political affiliation by occupation based on FEC campaign contribution reports doesn’t separate out HR staffers, but does cover HR execs and similar functions:

HR Executives 66% D, 34% R
Compliance Officers 72% D, 28% R
Administrative Manager 70% D, 30% R[3]

It’s easy to see why people whose careers involve administering government rules would tend to support the party that maintains that even more regulations are useful and necessary, because no one would want to work at something useless or even counterproductive. People who want to work long hours and enjoy the freedom to run risky but successful enterprises aren’t likely to be found in HR degree programs. This political tendency is valuable in cooperating with government overseers, but can cause HR staff to overlook the need for the organization they work for to improve productivity and compete with overseas firms not so hampered.

What is the leftist tendency? It is the view that people’s economic decisions are to be supervised and regulated by the state for the common good. Communists and Socialists took the simplistic extreme form, taking direct ownership of the means of production—factories, farms, and businesses — to be managed by the workers collectively or the larger state. Every country that tried this failed eventually because it turns out self-interested management by owners is vastly more productive, and no collective can decide as well as an owner with direct access to local and market information.

The leftist fallback position — after millions of deaths and multiple failures of true Communist and Socialist states — has been to leave property and the means of production in private hands, but thoroughly regulate and control what the owners may do with it. This leaves at least some incentive for owners to produce and invest in production facilities, but puts many important investment and employment decisions in the hands of a political body — a legislature, or agencies given power to oversee employers. And while some socially-harmful decisions (like pollution of the common air and water, discrimination against black people in employment and accommodation, and tolerance of dangerous working conditions in mines and factories) are thereby prevented, many other decisions are made poorly by collective bodies with little or no knowledge of local conditions. The freedom of both worker and employer to balance their interests and negotiate the most favorable contract is often limited by rigid labor regulations, as when workers who would like to work more hours to make extra money are not allowed to do so.

Union labor views were an offshoot of the socialist ideal, where the management of a business — the employer — is viewed as the enemy of the workers, constantly trying to cheat and enslave them. Enlightened managers, of course, have a much broader interest in the health and welfare of employees, and know that respect for their needs and independence makes for a happier, more productive, and loyal workforce ideal for long-term competitive advantage. But the cartoonish 1930s views of oppressive, wealthy capitalists still live on in many minds.

The labor laws dating from the progressive New Deal era embody the dirigisme (French for top-down direction of the economy) of that era, and are still with us, though many reforms have taken place. The US is now a patchwork of different labor regimes in different industries, as some unionized manufacturing has become less so, while public employee unions have grown in strength and power. Meanwhile, “right to work” laws in some states limited private sector union power and encouraged more foreign investment like the auto plants now dotting the South.

To see the negative results of heavy regulation of labor, one only has to look at parts of Europe that went all-out to protect and micromanage employment by heavily regulating hiring and firing. As an example, look at France — a highly-developed mature economy with heavy regulation of labor and so much legal job protection that employers are reluctant to hire any long-term employees for fear they can never be let go. Youth unemployment hovers around 25%, and the economy has been stagnant for decades. The BBC reports:

France has a lot going for it. It has “an enviable standard of living”, according to the Organisation for Economic Co-operation and Development (OECD). “Inequality is not excessive and the country has come through the [financial] crisis without suffering too heavily,” it says….

But all is not well. Unemployment is high and the government’s finances are weak. “France’s fundamental economic problem,” the OECD says, “is a lack of growth.” The latest figures for economic activity (gross domestic product or GDP) for the first quarter of the year show growth of 0.5%. That’s better than was expected though it’s probably best described as reasonable rather than strong. The longer term picture is more downbeat.

So what is the French economic problem? The most obvious social and economic evidence that something is amiss is unemployment. About three million people are unemployed—10.2% of the workforce. That compares with a figure of 4.3% across the border in Germany. The rate in France is almost the same as the average for the eurozone. That really is nothing to be proud of when you consider that the average reflects some jobless nightmare stories such as Spain and Greece. The French figure is also the second highest among the G7 leading developed economies. Youth unemployment is a particular problem, as it is in a number of other European countries. Almost one in four of those under 25 who want a job don’t have one.

The government’s finances are also in indifferent shape. France is also in the throes of an EU procedure that tries to impose discipline on governments’ finances. The annual budget deficit and the accumulated government debt are both higher than they are supposed to be under the rules…. Behind the problems lies persistently weak economic growth. Gross domestic product per person—a rough and ready indicator of average living standards—grew more slowly between 1995 and 2007 than in any other OECD country (mainly the rich nations) except Italy [which also overregulates labor.]

By the end of last year, economic activity was only 2.8% up from its peak level at the onset of the financial crisis. Why then is France struggling? Many younger people get work on a short-term basis only…. The view of many, including the OECD and the European Commission, is that the labour market is at the heart of the problem, though it’s not the only factor. That reflects a persistent complaint from business: that it’s too expensive to hire workers and to fire them or lay them off if they need to. France is a prime example of what is known as a “dual labour market”: insiders have higher pay, job security and often promotion prospects, [while] others, especially younger people, get only short-term work or none.

The OECD says in its assessment of the French economy: “To reduce the duality of the labour market, the procedures for laying off employees, particularly those on permanent contracts, need to be simplified and shortened…. France ranks among the countries with the strictest legislation of dismissal for open-ended and temporary contracts.” The cost of labour to employers in France also includes social security contributions that are higher than in most other countries. There is a catalogue of other issues, including welfare, that is alleged to discourage people taking low-paid work, and extensive regulation of business. The result, it is argued, is a persistent unemployment problem….

President Hollande has accepted the case for labour reform, and his Labour Minister, Myriam El Khomri, has introduced legislation intended to address some of the things that business voices say make it too expensive to take on new workers. The reforms would: lower existing high barriers to laying off staff; allow some employees to work more—far more—than the current working week, which is capped at 35 hours; give firms greater powers to cut working hours and reduce pay. That has met protest and the provisions have been amended in response. One supporter of reform said it was turning into a “veritable catastrophe”.[4]

Compared to France, the US has a free and dynamic labor economy,[5] but the signs of the Eurodisease are starting to show — an inflexible labor market with few professional openings for young people. The common joke about children returning to live in their parent’s basements is becoming a way of life for many. Increasingly, new college graduates are forced to take low-paying, unskilled jobs in service industries when they find work at all:

Recent college graduates are ending up in more low-wage and part-time positions as it’s become harder to find education-level appropriate jobs, according to a January study by the Federal Reserve Bank of New York.

Jeanina Jenkins, a 20-year-old high-school graduate from St. Louis, is stuck in a $7.82-an-hour part-time job at McDonald’s Corp. that she calls a “last resort” because nobody would offer her anything better.

Stephen O’Malley, 26, a West Virginia University graduate, wants to put his history degree to use teaching high school. What he’s found instead is a bartender’s job in his home town of Manasquan, New Jersey.

Jenkins and O’Malley are at opposite ends of a dynamic that is pushing those with college degrees down into competition with high-school graduates for low-wage jobs that don’t require college. As this competition has intensified during and after the recession, it’s meant relatively higher unemployment, declining labor market participation and lower wages for those with less education….

“The underemployment of college graduates affects lesser educated parts of the labor force,” said economist Richard Vedder, director of the Center for College Affordability and Productivity, a not-for-profit research organization in Washington.“Those with high-school diplomas that normally would have no problem getting jobs as bartenders or taxi drivers are sometimes kept from getting the jobs by people with college diplomas,” said Vedder…

The share of Americans ages 22 to 27 with at least a bachelor’s degree in jobs that don’t require that level of education was 44 percent in 2012, up from 34 percent in 2001, the study found. The recent rise in underemployment for college graduates represents a return to the levels of the early 1990s, according to the New York Fed study. The rate rose to 46 percent during the 1990-1991 recession, then declined during the economic expansion that followed as employers hired new graduates to keep pace with technological advances….

“College graduates might not be in a job that requires a college degree, but they’re more likely to have a job,” she said. Less-educated young adults are then more likely to drop out of the labor market. The labor participation rate for those ages 25 to 34 with just a high-school diploma fell four percentage points to 77.7 percent in 2013 from 2007. For those with a college degree and above, the rate dropped less than 1 percentage point, to 87.7 percent.

“At the complete bottom, we see people picking up the worst types of jobs or completely dropping out,” Beaudry said. The share of young adults 20 to 24 years old neither in school nor working climbed to 19.4 percent in 2010 from 17.2 percent in 2006. For those ages 25 to 29, it rose to 21.3 percent from 20 percent in that period, according to a Federal Reserve Bank of Boston report in December.

Those with the least education have trouble securing even the lowest-paid jobs. Isabelle Samain looked for work in Washington from April until September of last year. As prospective employers continually passed over her applications, the 40-year-old mother of two from Cameroon realized she was missing out because she lacked a U.S. high-school diploma. “I don’t even remember how many places I applied,” Samain said of the “frustrating and discouraging” search. Samain passed the General Educational Development test in December and recently started working at Au Bon Pain in Washington for $8.50 an hour for 36 hours a week.

A year-long survey ending in July 2012 of 500,000 Americans ages 19 to 29 showed that 63 percent of those fully employed had a bachelor’s degree, and their most common jobs were merchandise displayers, clothing-store and cellular phone sales representatives, according to Seattle-based PayScale Inc., which provides compensation information….

The share of recent college graduates in “good non-college jobs,” those with higher wage-growth potential, such as dental hygienists, has declined since 2000, according to the New York Fed study. Meanwhile, the portion has grown for those in low-wage jobs paying an average wage of below $25,000, including food servers and bartenders.[6]

The Party of Government perpetually campaigns on “doing something” about the problems of the little people. Meanwhile, the agencies of the administrative state, like all bureaucracies, keep busy and justify their growth by proposing additional and extended regulations. When regulations address a real problem—some externality requiring private parties to be restrained from damaging a common good or harming each other through force or fraud—there is an optimal point where the additional costs of more regulation are greater than the likely benefit. In labor regulation, the pols and regulators rarely consider the collateral damage they are doing by narrowing the freedom of contract—labor laws are always behind the curve of technology and custom, impeding creative solutions that both employer and employee would benefit from.

This “it’s always good to do more” mindset results in laws that are simply propaganda exercises, like the Lily Ledbetter Fair Pay Act of 2009, which extended the statute of limitations for equal pay suits to make it a bit easier to file suit against ongoing patterns of pay discrimination against women.[7] Unequal pay for women was actually outlawed in 1963 by the Equal Pay Act, but Democratic politicians in pursuit of women’s votes continue to promote the “pay gap” myth and then offer to “do something” about this imaginary unfairness. Each time they pass a new law or regulation, one might expect improvement in the unfair situation they claim to be addressing, yet the problem remains for the next election, when they will promise to fix it again.

The latest example of harming many by ratcheting up the regulations is the Obama administration’s enlargement of the number of employees covered by the Dept. of Labor’s overtime regulations under the Fair Labor Standards Act (FLSA), increasing the salary limit for exemption from $23,660 to $47,476 per year, which vastly increases the number of workers covered. At first glance, this sounds good for those employees — time-and-a-half for overtime, baby! But that ignores the likely response of managements to the new rules:

If an employer could pay Jim, a frontline manager at a retail store, for a 50-hour workweek—40 hours at his regular hourly rate and 10 hours at time-and-a-half—or, instead, pay Jim and Jane 25 hours each at straight rates, what would the employer do?

Unless the business is a philanthropy, or unless Jim exhibits pure brilliance in directing rank-and-file employees to stock shelves, the employer is going to choose lower labor costs over higher ones.

This is precisely the question raised by, and the likely effect caused by, new overtime rules under the Fair Labor Standards Act (“FLSA”). Given the basic economics of the workplace, the new rule—which raises the salary threshold under which an employee is entitled to overtime—is just as likely to create less work for individual employees as it is to increase the amount of overtime American employees collectively earn.[8]

The required estimate of costs of the new regulation was lowballed, pulled out of thin air by the DoL under orders from the union-friendly administration to further cripple nonunion businesses by increasing their costs. Independent calculations of the cost were more realistic:

How reliable are projections from the Department of Labor about the cost of the President’s ambitious new extension of overtime entitlements to salaried workers ….? The “administration refuses to allow others to check its math. The Florida Department of Economic Opportunity, the state agency that I lead, in August requested the specific data and methodology the Labor Department used to calculate its estimates. Our request was denied.” So the department went ahead with its own analysis. “The rule will supposedly cost $2 billion the first year. Our math shows $1.7 billion for Florida alone.”[9]

Even House Democrats found the new rules damaging:

It’s not clear whether the Obama administration’s forthcoming edict on overtime will apply to legislative staffers, but House Democratic leadership decided it would be prudent for their members to at least gesture toward the spirit of the controversial rule by preparing for compliance. Now “the rule is creating administrative headaches” and more:

“We don’t have a set-hour kind of situation here; some kids work 12, 14, 16 hours a day, weekends, and I feel terrible that I cannot afford to give raises to the staff,” Rep. Alcee Hastings (D-Fla.) told Bloomberg BNA Feb. 11.

With $320,000 slashed from members’ representational allowances (MRAs) over the past four years, “I don’t see how we could pay overtime” for the “17 or 18 people that each of us is allowed to have—that’s problematic for me,” added Hastings, a senior member of the House Rules Committee.

Some members fear that an overtime mandate will result in having to send staffers home at 5 p.m., leaving phones unanswered and impairing constituent service. “Most members are of the sentiment that it’s impractical to be paying overtime,” said former Virginia Democratic Rep. Jim Moran, now a lobbyist, who suggests that members choose to close one of their district offices or reduce constituent correspondence to adjust to a smaller staff number.

If only there were some way for the U.S. Congress to influence federal labor law![10]


[1] “The data suggests that the ratio of Democratic-to-Republican voter registration among participants in IR is roughly 10 to one. I find a similar ratio when looking at those who have made contributions to Democratic and Republican candidates for office. I also show that Democratic lopsidedness at the three mainstream IR journals becomes more extreme at the higher stations (officers and editors, as opposed to ordinary members and authors). Also, I analyze the content of the 539 articles for union support and regulation support; the mainstream IR journals are overwhelmingly pro-union and pro-regulation.” From article “The Left Orientation of Industrial Relations,” by Mitchell Langbert, Econ Journal Watch, Vol 13, No. 1, Jan. 2016. https://econjwatch.org/articles/the-left-orientation-of-industrial-relations
[2] “Daniel Klein, one of the authors [of the study] and a professor of economics at George Mason University, said that it demonstrated ‘solidly’ that most social science professors are ‘leftist and statist, and that they have a narrow tent.’” From “Social Scientists Lean to the Left, Study Says,” by Scott Jaschik, Inside Higher Ed, Dec. 21, 2005. https://www.insidehighered.com/news/2005/12/21/politics. Also see: “Economists’ policy views and voting,” Daniel B. Klein and Charlotta Stern, Public Choice 126:331-342, 6 Dec 2004. http://econfaculty.gmu.edu/klein/PdfPapers/KS_PublCh06.pdf
[3] “Democratic vs. Republican occupations,” Verdant Labs chart, 2016. Data source: FEC campaign contribution data. http://verdantlabs.com/politics_of_professions/
[4] “What is the French economic problem?” by Andrew Walker, BBC World Service, 29 April 2016. http://www.bbc.com/news/business-36152571
[5] French leftists sniff at the US and its Anglospheric cousins because the US economic model (the “Anglo-Saxon model”) is more liberal—less protectionist and dirigiste. The cultural backdrop is the French intellectual distaste for crude money-making and égoïste neglect of collective opinion. See https://en.wikipedia.org/wiki/Anglo-Saxon_model
[6] “Low-Wage Jobs Displace Less Educated,” by Katherine Peralta, Bloomberg, March 12, 2014. http://www.bloomberg.com/news/articles/2014-03-06/college-grads-taking-low-wage-jobs-displace-less-educated
[7] https://en.wikipedia.org/wiki/Lilly_Ledbetter_Fair_Pay_Act_of_2009
[8] “Deep Impact: New Overtime Rules Will Change Work, Not Overtime Pay,” by Mark A. Konkel and Barbara Hoey, Inside Counsel, August 31, 2016. http://www.insidecounsel.com/2016/08/31/deep-impact-new-overtime-rules-will-change-work-no
[9] “Lowballing the cost of junior-manager overtime,” by Walter Olson, Overlawyered, November 19, 2015. http://www.overlawyered.com/2015/11/lowballing-the-cost-of-junior-manager-overtime/
[10] “Overtime Brings House Democrats Woe,” by Walter Olson, Cato at Liberty, April 13, 2016. http://www.cato.org/blog/overtime-brings-house-democrats-woe


Death by HR: How Affirmative Action Cripples OrganizationsDeath by HR: How Affirmative Action Cripples Organizations

[From Death by HR: How Affirmative Action Cripples Organizations,  available now in Kindle and trade paperback.]

The first review is in: by Elmer T. Jones, author of The Employment Game. 

Corporate HR Scrambles to Halt Publication of “Death by HR”

Nobody gets a job through HR. The purpose of HR is to protect their parent organization against lawsuits for running afoul of the government’s diversity extortion bureaus. HR kills companies by blanketing industry with onerous gender and race labor compliance rules and forcing companies to hire useless HR staff to process the associated paperwork… a tour de force… carefully explains to CEOs how HR poisons their companies and what steps they may take to marginalize this threat… It is time to turn the tide against this madness, and Death by HR is an important research tool… All CEOs should read this book. If you are a mere worker drone but care about your company, you should forward an anonymous copy to him.

 


More reading on other topics:

Jane Jacobs’ Monstrous Hybrids: Guardians vs Commerce
The Great Progressive Stagnation vs. Dynamism
Death by HR: How Affirmative Action is Crippling America
Death by HR: The End of Merit in Civil Service
Corrupt Feedback Loops: Public Employee Unions
Death by HR: History and Practice of Affirmative Action and the EEOC
Civil Service: Woodrow Wilson’s Progressive Dream
Bootleggers and Baptists
Corrupt Feedback Loops: Justice Dept. Extortion
Corrupt Feedback Loops, Goldman Sachs: More Justice Dept. Extortion
Death by HR: The Birth and Evolution of the HR Department
Death by HR: The Simple Model of Project Labor
Levellers and Redistributionists: The Feudal Underpinnings of Socialism
Sons of Liberty vs. National Front
Trump World: Looking Backward
Minimum Wage: The Parable of the Ladder
Selective Outrage
Culture Wars: Co-Existence Through Limited Government
Social Justice Warriors, Jihadists, and Neo-Nazis: Constructed Identities
Tuitions Inflated, Product Degraded, Student Debts Unsustainable
The Morality of Glamour

On Affirmative Action and Social Policy:

Affirmative Action: Chinese, Indian-Origin Citizens in Malaysia Oppressed
Affirmative Action: Caste Reservation in India
Diversity Hires: Pressure on High Tech<a
Title IX Totalitarianism is Gender-Neutral
Public Schools in Poor Districts: For Control Not Education
Real-Life “Hunger Games”: Soft Oppression Destroys the Poor
The Social Decay of Black Neighborhoods (And Yours!)
Child Welfare Ideas: Every Child Gets a Government Guardian!
“Income Inequality” Propaganda is Just Disguised Materialism

The greatest hits from SubstrateWars.com (Science Fiction topics):

Fear is the Mindkiller
Mirror Neurons and Irene Gallo
YA Dystopias vs Heinlein et al: Social Justice Warriors Strike Again
Selective Outrage
Sons of Liberty vs. National Front
“Tomorrowland”: Tragic Misfire
The Death of “Wired”: Hugo Awards Edition
Hugos, Sad Puppies 3, and Direct Knowledge
Selective Outrage and Angry Tribes
Men of Honor vs Victim Culture
SFF, Hugos, Curating the Best
“Why Aren’t There More Women Futurists?”
Science Fiction Fandom and SJW warfare

More reading on the military:

US Military: From No Standing Armies to Permanent Global Power
US Military: The Desegration Experience
The VA Scandals: Death by Bureaucracy

Death by HR: The Great Enrichment to the Great Slackening

We’re going to talk about the Great Slackening and Human Resources (HR’s) role in damaging team effectiveness, and thus hamstringing business productivity and growth. But first we need to see the even bigger picture: the Great Slackening comes after a long period of powerful growth and change which started in Europe but swept most of the world, transforming stagnant, poverty-and-disease-ridden societies into a thriving, world-spanning technical civilization — the Great Enrichment. We refer to the culture that laid the foundation for this miracle as Western Civilization — though it’s not especially Western now as many elements have been adopted in the East.

The Great Enrichment - from Economic Growth: Unleashing the Potential of Human Flourishing

As wealth has grown, those protected from life’s harsher lessons by being born to great wealth and privilege have turned to sabotaging the very freedom and free markets that created that wealth — but that is nothing new in the world, where it has long been folk wisdom (“clogs to clogs in three generations”[1]) that the first generation of family wealth is generated by driven and productive founders, the next by not-so-driven conventional maintainers, and by the third generation, wealth is dissipated and pampered decadents run the family business into the ground if they are still in charge. Something similar happens to entire cultures unless leadership transfers to newer and hungrier elements as older generations grow wealthy and forget hunger, and the Great Slackening can be viewed as the consequence of the clinging to power of a wealthy elite who unconsciously act to keep down threats to their status from the new fortunes that might arise if free enterprise is allowed to grow unchecked.

Human status is relative, and those unwilling to work hard to keep their already-high status tend to rely on keeping down threats from nouveau riche others, which requires nothing more than political contributions and unthinking support of the status quo administrative state, which will happily regulate away threats of competition. This is certainly bad for hard-working, newly-middle-class strivers, but it’s also bad for society as a whole, stifling those who might have created the new technologies and businesses of a brighter future.

Economist Deirdre McCloskey has written some great books summarizing the culture that produced the Great Enrichment. Her latest, Bourgeois Equality: How Ideas, Not Capital or Institutions, Enriched the World,[2] recaps the cultural features that allowed billions of people to escape poverty in the last few centuries. Her paper “The Great Enrichment: A Humanistic and Social Scientific Account,” summarizes:[3]

From 1800 to the present the average person on the planet has been enriched in real terms by a factor of ten, or some 900 percent. In the ever-rising share of places from Belgium to Botswana, and now in China and India, that have agreed to the Bourgeois Deal — “Let me earn profits from creative destruction in the first act, and by the third act I will make all of you rich” — the factor is thirty in conventional terms and, if allowing for improved quality of goods and services, such as in improved glass and autos, or improved medicine and higher education, a factor of one hundred. That is, the reward from allowing ordinary people to have a go, the rise at first in northwestern Europe and then worldwide of economic liberty and social dignity, eroding ancient hierarchy and evading modern regulation, has been anything from 2,900 to 9,900 percent. Previous “efflorescences,” as the historical sociologist Jack Goldstone calls them, such as the glory of Greece or the boom of Song China, and indeed the Industrial Revolution of the eighteenth century in Britain, resulted perhaps in doublings of real income per person—100 percent, as against fully 2,900 percent since 1800.

What needs to be explained in a modern social science history, that is, is not the Industrial Revolution(s) but the Great Enrichment, one or two orders of magnitude larger than any previous change in human history. If we are going to be seriously quantitative and scientific and social we need to stop obsessing about, say, whether Europe experienced a doubling or a tripling of real income before 1800, or this or that expansion of trade in iron or coal, and take seriously the lesson of comparative history that Europe was not unique until 1700 or so. We need to explain the largest social and economic change since the invention of agriculture, which is not the Industrial Revolution, not to mention lesser efflorescences, but the Great Enrichment.

In explaining it, I have argued, it will not do to focus on capital accumulation or hierarchical exploitation, on trade expansion or class struggle. This is for two sorts of reasons, one historical and the other economic…. Historically speaking, neither accumulation nor exploitation nor trade or struggle is unique to the early modern world. Medieval peasants in Europe saved more, in view of their miserable yield-seed ratios, than did any eighteenth-century bourgeois. Slave societies such as those of the classical Mediterranean could in peaceful times see a doubling of real income per person, but no explosion of ingenuity such as overcame northwestern Europe after 1800. The largest trade until very late was across the Indian Ocean, not the Atlantic, with no signs of a Great Enrichment among its participants. Unionism and worker-friendly regulation came after the Great Enrichment, not before. Thus world history.

Economically speaking, capital accumulation runs out of steam (literally) in a few decades. As John Maynard Keynes wrote in 1936, the savings rate in the absence of innovation will deprive “capital of its scarcity-value within one or two generations.” Taking by exploitation from slaves or workers results merely in more such fruitless capital accumulation, if it does, and is anyway is unable to explain a great enrichment for even the exploited in the magnitude observed, absent an unexplained and massive innovation. The gains from trade are good to have, but Harberger triangles show that they are small when put on the scale of a 9,900 percent enrichment. Government regulation works by reducing the gains from trade-tested betterment, and unions work mainly by shifting income from one part of the working class to another, as from sick people and apartment renters to doctors and plumber. Thus modern economics.

What then? A novel liberty and dignity for ordinary people, among them the innovating bourgeoisie, gave masses of such people, such as the chandler’s apprentice Benjamin Franklin, or the boy telegrapher Thomas Edison, an opportunity to innovate. It was not capital or institutions, which were secondary and dependent. It was the idea of human equality. Egalitarian economic and social ideas, not in the first instance steam engines and universities, made the modern world. One history of Western politics,” writes the political philosopher Mika LaVaque-Manty, citing Charles Taylor and Peter Berger (he could have cited most European writers on the matter from Locke and Voltaire and Wollstonecraft through Tocqueville and Arendt and Rawls), “has it that under modernity, equal dignity has replaced positional honor as the ground on which individuals’ political status rests.”

Out of common-law Northern European traditions, then, came the rule of law and equal treatment of all, at first just landholding men, but then every citizen of all stations, sexes, and races. Hard-won freedoms and respect for the individual gave each person enough security in their person and property to motivate them to work harder, since they could retain the fruits of their labors and hope to advance themselves and their heirs with less fear of theft by the powerful. This is related to the decline of the “Culture of Honor” (which relied on aggression and violence to maintain individual property and status) and its replacement by the “Culture of Dignity,” which replaced violence and theft with the rule of law and property rights.[4] No longer could a higher-status warrior simply kill and confiscate the property of a lesser-status person who had blocked his path or insulted his status; disputes were resolved peacefully by compromise, or taken to court to be judged by law.

Now there have been many earlier civilizations which had the rule of law and at least some theoretical rights for citizens — those who weren’t slaves, at least. But until the 17th century, no Great Enrichment occurred because kings, nobles, clergy, or warriors could rewrite contracts and restrain trade as needed to keep others from rising to threaten their power. As McCloskey says:

Liberty and dignity for all commoners, to be sure, was a double-sided political and social ideal, and did not work without flaw. History has many cunning passages, contrived corridors. The liberty of the bourgeoisie to venture was matched by the liberty of the workers, when they got the vote, to adopt growth-killing regulations, with a socialist clerisy cheering them on. And the dignity of workers was overmatched by an arrogance among successful entrepreneurs and wealthy rentiers, with a fascist clerisy cheering them on. Such are the usual tensions of liberal democracy. And such are the often mischievous dogmas of the clerisy.

But for the first time, thank God—and thank the Levellers and then Locke in the seventeenth century, and Voltaire and Smith and Franklin and Paine and Wollstonecraft among other of the advanced thinkers in the eighteenth century—the ordinary people, the commoners, both workers and bosses, began to be released from the ancient notion of hierarchy, the naturalization of the noble gentleman’s rule over hoi polloi. Aristotle had said that most people were born to be slaves. “From the hour of their birth, some are marked out for subjection, others for rule.” Bishop (and Saint) Isidore of Seville said in the early seventh century that “to those unsuitable for liberty, [God] has mercifully accorded servitude.” So it had been from the first times of settled agriculture and the ownership of land. Inherited wealth was long thought blameless compared with earned wealth, about which suspicion hung. Consider South Asia with its ancient castes, the hardest workers at the bottom. And further east consider the Confucian tradition (if not in every detail the ideas of Kung the Teacher himself), which stressed the Five Relationships of ruler to subject, father to son, husband to wife, elder brother to younger, and—the only one of the five without hierarchy—friend to friend. The analogy of the king as father of the nation, and therefore “naturally” superior, ruled political thought in the West (and the East and North and South) right through Hobbes. King Charles I of England, of whom Hobbes approved, was articulating nothing but a universal and ancient notion when he declared in his speech from the scaffold in 1649 that “a King and a Subject are plain different things.”

The ability to freely question old ways, and to improve a trade or production process by innovation then drive out the old ways of doing things — and the old fortunes — by outcompeting them, trading the new products to distant lands, is what started the Great Enrichment off with the bang of the Industrial Revolution. Printing, steam power, mass production, standardized parts, and engineering science made it possible to innovate, spread the new ideas broadly and preserve them in libraries around the world, and invest the profits from innovation into even more innovation. The explosive growth of productivity allowed billions of people to escape hardscrabble rural subsistence farming for urban living and increased the number of people wealthy enough to think about science, art, and design instead of short-term survival.

Thomas Piketty’s Capital in the Twenty-First Century[5] (2013) was a best-seller promoting a fashionable theory that the rate of return on capital had been greater than economic growth in recent years, which automatically increased concentration of wealth and therefore inequality. Seized on by redistributionists to justify new taxes on wealth and new subsidies for the poor, it seemed to mechanistically explain increasing inequality as the result of automatic processes which could be counteracted by redistribution without harming the engine of growth.

Piketty’s explanations were disputed, and MIT economist Matthew Rognlie demonstrated that most of the excess capital accumulation — the enrichment of the wealthy — that Piketty had discussed came from outsized real estate price increases around the world, due primarily to elite control over land development that artificially increased the scarcity and price of prime real estate, notably housing.[6] A more recent paper from the IMF demolished Piketty’s claim that inequality increased in step with excess capital accumulation. Piketty’s theories were no longer as useful to promote larger government, since government control of real estate development and regulation of other economic sectors like energy and healthcare began to look like the sources of the increasing inequality. The heretical notion that it was control by the elites of the commanding heights of government that was actually raising prices and squeezing out the middle class began to spread….

Is the Great Enrichment over? Certainly it continues to expand into newly-opened territories like China and India, where the old Communist Party and Indian bureaucracies are giving ground to freer enterprise and mass movement of rural folk into the cities is transforming life. But in the developed countries which once led the world in innovation, countervailing forces of regulation and central planning are slowing and stopping growth.

This is now being called the Great Stagnation, or as I’m calling it in its corporate form, the Great Slackening. The rise of the administrative superstate in the US and the EU has given the already-powerful a tool to suppress threats from below, and under the guise of protecting the people, it’s making the people poorer and more dependent while limiting their freedoms.



[1] Clogs to Clogs in Three Generations https://en.wiktionary.org/wiki/clogs_to_clogs_in_three_generations
[2] Bourgeois Equality: How Ideas, Not Capital or Institutions, Enriched the World, by Deirdre McCloskey, Univ. of Chicago Press, 2016.
[3] “The Great Enrichment: A Humanistic and Social Scientific Account,” by Deirdre Nansen McCloskey, 2016. http://deirdremccloskey.org/docs/pdf/McCloskey_ASSA2016.pdf
[4] See “Men of Honor vs Victim Culture,” by Jeb Kinnison. https://substratewars.com/2015/09/09/men-of-honor-vs-victim-culture/
[5] Capital in the Twenty-First Century by Thomas Piketty, 2013. See https://en.wikipedia.org/wiki/Capital_in_the_Twenty-First_Century
[6] “Deciphering the fall and rise in the net capital share,” by Matthew Rognlie. March 19, 2015 Brookings Papers on Economic Activities. https://www.brookings.edu/bpea-articles/deciphering-the-fall-and-rise-in-the-net-capital-share/


Death by HR: How Affirmative Action Cripples OrganizationsDeath by HR: How Affirmative Action Cripples Organizations

[From Death by HR: How Affirmative Action Cripples Organizations,  available now in Kindle and trade paperback.]

The first review is in: by Elmer T. Jones, author of The Employment Game. Here’s the condensed version; view the entire review here.

Corporate HR Scrambles to Halt Publication of “Death by HR”

Nobody gets a job through HR. The purpose of HR is to protect their parent organization against lawsuits for running afoul of the government’s diversity extortion bureaus. HR kills companies by blanketing industry with onerous gender and race labor compliance rules and forcing companies to hire useless HR staff to process the associated paperwork… a tour de force… carefully explains to CEOs how HR poisons their companies and what steps they may take to marginalize this threat… It is time to turn the tide against this madness, and Death by HR is an important research tool… All CEOs should read this book. If you are a mere worker drone but care about your company, you should forward an anonymous copy to him.

 


More reading on other topics:

Death by HR: Good-Enough Cogs vs Best Employees
Death by HR: EEOC Incompetence and the Coming Idiocracy
Jane Jacobs’ Monstrous Hybrids: Guardians vs Commerce
The Great Progressive Stagnation vs. Dynamism
Death by HR: How Affirmative Action is Crippling America
Death by HR: The End of Merit in Civil Service
Corrupt Feedback Loops: Public Employee Unions
Death by HR: History and Practice of Affirmative Action and the EEOC
Civil Service: Woodrow Wilson’s Progressive Dream
Bootleggers and Baptists
Corrupt Feedback Loops: Justice Dept. Extortion
Corrupt Feedback Loops, Goldman Sachs: More Justice Dept. Extortion
Death by HR: The Birth and Evolution of the HR Department
Death by HR: The Simple Model of Project Labor
Levellers and Redistributionists: The Feudal Underpinnings of Socialism
Sons of Liberty vs. National Front
Trump World: Looking Backward
Minimum Wage: The Parable of the Ladder
Selective Outrage
Culture Wars: Co-Existence Through Limited Government
Social Justice Warriors, Jihadists, and Neo-Nazis: Constructed Identities
Tuitions Inflated, Product Degraded, Student Debts Unsustainable
The Morality of Glamour

On Affirmative Action and Social Policy:

Affirmative Action: Chinese, Indian-Origin Citizens in Malaysia Oppressed
Affirmative Action: Caste Reservation in India
Diversity Hires: Pressure on High Tech
Title IX Totalitarianism is Gender-Neutral
Public Schools in Poor Districts: For Control Not Education
Real-Life “Hunger Games”: Soft Oppression Destroys the Poor
The Social Decay of Black Neighborhoods (And Yours!)
Child Welfare Ideas: Every Child Gets a Government Guardian!
“Income Inequality” Propaganda is Just Disguised Materialism

The greatest hits from SubstrateWars.com (Science Fiction topics):

Fear is the Mindkiller
Mirror Neurons and Irene Gallo
YA Dystopias vs Heinlein et al: Social Justice Warriors Strike Again
Selective Outrage
Sons of Liberty vs. National Front
“Tomorrowland”: Tragic Misfire
The Death of “Wired”: Hugo Awards Edition
Hugos, Sad Puppies 3, and Direct Knowledge
Selective Outrage and Angry Tribes
Men of Honor vs Victim Culture
SFF, Hugos, Curating the Best
“Why Aren’t There More Women Futurists?”
Science Fiction Fandom and SJW warfare

More reading on the military:

US Military: From No Standing Armies to Permanent Global Power
US Military: The Desegration Experience
The VA Scandals: Death by Bureaucracy

Sisters of Perpetual Grievance: Gender Pay Gap

Pay Gap - Whitehouse.gov

Pay Gap – Whitehouse.gov

The Party of Government continually promises to fix problems that don’t exist to portray themselves as warriors for social justice. One of the most mainstream of these myths is the gender pay gap, which aggregates pay for all full-time workers to show women making about 78% of what men earn and implies that women are being paid less for the same jobs throughout the economy. Millions of diverse types of worker and employment are lumped together to come up with a simple number that is assumed to be the result of systemic discrimination.

No matter how many times this is debunked, government and partisan propaganda repeats the lie to justify more affirmative action and labor laws to raise women’s pay and reduce job requirements. When it’s pointed out the discrepancy comes largely from voluntary choices made by women — to take off years for childrearing, to work in clean and safe environments, to work with people rather than machines and physical tasks — labor partisans claim that there must be systematic discrimination holding down wages in female-dominated professions like childcare.

Ask anyone who manages people in a large corporation, and you’ll discover that whatever minor pay discrepancies exist, corporate compensation schemes only allow limited differences. Men and women at a single company with the same jobs and performance are paid pretty much the same, with the minor differences related to preferences — men push harder for higher pay (and longer hours), while women on average value social relationships and shorter, more flexible hours. Some activists seem to imply that those who work too hard are implicitly making worklife too competitive for women, and that all workers should be made to work less so that those with childcare and family responsibilities can be paid the same.

A free market in labor will always have discrepancies, with competition for and relative scarcity of experienced and driven workers in certain demanding fields winning them higher compensation than those in low-skilled, pleasant jobs. It happens that more men end up in the dirty, difficult, demanding fields and sacrifice personal lives and family to outshine competitors; changing that would mean changing culture and human nature, forcing equality of outcome on a complex system that has rewards and sacrifices more important than mere financial compensation.

The pre-feminist world, say prior to 1960, tended to block women who wished to succeed in professional fields. It’s good that this has changed — more women and more men who wanted to take roles not conforming to rigid gender stereotypes have been able to do so, and net welfare has increased as a result. Yet politicians seek to raise wishful thinking about “having it all” as a woman to a public policy goal — that labor regulation should force employers to hire set ratios of women and minorities regardless of fit and productivity, and pay the mother who works 30 hours a week the same as the driven young father who wants to rise to the top by working 60-hour weeks. This is part of the recipe for Euro-stagnation that is gradually damaging US growth, and forcing HR departments to act as the social engineering arms of the Federal EEOC and Dept. of Labor.

The EEOC intends to muscle private companies to comply, starting with their Jan. 29, 2016 announcement[1] that all companies with more than 100 employees would be required to report compensation broken down by race, gender, and ethnicity:

“Too often, pay discrimination goes undetected because of a lack of accurate information about what people are paid,” said Jenny Yang, the chairwoman of the Equal Employment Opportunity Commission, which will publish the proposed regulation jointly with the Department of Labor. “We will be using the information that we’re collecting as one piece of information that can inform our investigations.”

…“Bridging the stubborn pay gap between men and women in the work force has proven to be very challenging,” said Valerie Jarrett, a senior adviser to Mr. Obama, noting that the median wage for women amounts to 79 percent of that for men. “We have seen progress, but it isn’t enough.”

And it will never be enough, since the Party of Government actually doesn’t want their poll-tested issues to ever go away. While discrimination on a small scale still happens — individual managers and some small backwater companies still discriminate — on the whole women are given a fair shake and accommodated in today’s corporate world. Pretending that millions of woman can get big raises for their current jobs by voting in Party of Government politicians is too valuable to give up as an election issue. The problem must be kept alive forever, even when all of its real aspects have been dealt with as much as a free market in labor — and an efficient economy with freedom of choice for companies and workers — allows.

Ashe Schow, a sharp feminist writer who doesn’t buy the party line, says:

I’ve written extensively on how the gender wage gap would be more accurately referred to as the “gender earnings gap,” because the gap is due mostly to choices women make and not discrimination.

But now you don’t have to take my word for it, you can listen to Claudia Goldin, an economics professor at Harvard University. Goldin spoke to Stephen Dubner, the journalist behind the popular podcast “Freakanomics,” in a segment about what really causes the gap.
As one can imagine, Goldin comes to the same conclusion that I and many others have: That the gap is due mostly to choices men and women make in their careers and not discrimination.

“Does that mean that women are receiving lower pay for equal work?” Goldin asked after listening to clips of President Obama and comedienne Sarah Silverman claim that women earn 77 cents to the dollar that men earn. “That is possibly the case in certain places, but by and large it’s not that, it’s something else.”

That “something else,” is choice — in the careers that women take, the hours they work and the time off they take. Dubner asked her about evidence that discrimination plays a role in the gap, to which Goldin responded that such a “smoking gun” no longer exists.[2]

Walter Olson of Overlawyered points out how the EEOC’s collection of data might benefit law firms who can use it to back up lawsuits, with the inevitable costly settlements enriching the law firms and further reducing corporate freedom to work with individual employees to tailor working conditions, hours, and compensation:

Aside from driving a high volume of litigation by the EEOC itself, the scheme will also greatly benefit private lawyers who sue employers, including class action lawyers. An employer might then weather the resulting litigation siege by showing that its numbers were good enough, or not. Would today’s Labor Department and EEOC policies look much different if the Obama administration frankly acknowledged that it was devising them with an eye toward maximum liability and payouts?[3]

A study[4] of recent graduates in STEM fields demonstrated how disparate pay could quickly be generated by different preferences in these supposedly logical fields:

One year after they graduate, women with Ph.D.s in science and engineering fields earn 31 percent less than do men, according to a new study using previously unavailable data.

The pay gap dropped to 11 percent when researchers took into account that women tended to graduate with degrees in fields that generally pay less than fields in which men got their degrees.

The rest of the pay gap disappeared when the researchers controlled for whether women were married and had children.

“There’s a dramatic difference in how much early career men and women in the sciences are paid,” said Bruce Weinberg, co-author of the study and professor of economics at The Ohio State University. “We can get a sense of some of the reasons behind the pay gap, but our study can’t speak to whether any of the gap is due to discrimination. Our results do suggest some lack of family-friendliness for women in these careers.”

“Family-friendly” means less focused, less demanding work. In science and engineering, focus is critical — a worker who is obsessed by the work and spends night and day thinking about a problem undistracted by children and social responsibilities is vastly more likely to achieve a breakthrough or a rigorous, clean, innovative design before the competition. Multitasking and the interruption of concentration by family schedules and set break times reduces productivity, especially in fields like programming where long and intense focus is required for the best work product. Not all jobs in these fields require this obsessive focus and many peripheral and support jobs can allow time for family life and other interests, but these jobs tend to pay less as well. To demand to be paid the same amount for them is to cheat the hard worker who is motivated to temporarily sacrifice much of the enjoyment of a well-rounded life for the sake of the task and who may be doing so to build the record of outstanding performance needed to build the base of a long career. And it should surprise no one that far fewer women are interested in that kind of unbalanced, unsocial, driven existence, even for short periods. The report goes on to say:

The importance of helpful family policies is supported by the fact that single and childless women tended to have less of a pay gap than those who were married and those who had children. About equal percentages of men and women were married or partnered. And more men than women in the study (24 versus 19 percent) had children. But it was the married women with children who saw the lower pay.

“Our results show a larger child-gap in salary among women Ph.D.s than among men,” Weinberg said.

“We can’t tell from our data what’s going on there. There’s probably a combination of factors. Some women may consciously choose to be primary caregivers and pull back from work. But there may also be some employers putting women on a ‘mommy track’ where they get paid less.”

The researchers had data, not previously available to scientists, on 1,237 students who received Ph.D.s from four U.S. universities from 2007 to 2010 and were supported on research projects while in school.

This data included federal funding support the Ph.D. graduates received as students, the dissertations they wrote (this told researchers what scientific field they studied) and U.S. Census data on where they worked and how much they earned one year after graduation, as well as their marital and childbearing status. Names and identifying characteristics were stripped from the data before the scientists had access to it.

Results showed clear differences in what men and women studied, with women clustered in the lower-paying fields. Overall, 59 percent of women completed dissertations in biology, chemistry and health, compared to only 27 percent of men.

Meanwhile, men were more than twice as likely to complete dissertations in more financially lucrative fields like engineering (45 versus 21 percent), and were 1.5 times more likely to study computer science, math or physics (28 versus 19 percent).

….Once they graduate, the differences between men and women with Ph.D.s continue. While industry tends to pay the largest salaries, women are more likely than men to work in government and academic settings. In fact, women in the study were 13 percentage points less likely than men to work outside of academia and government.

Women tend to choose more sociable, more supportive work environments, in fields that pay somewhat less. It is likely this is in part not only their conscious preference, but a kind of luxury afforded by the remnants of traditional gender roles — while free not to follow those roles, most men and women still have them embedded in their plans and goals, and the goal of the family with a male primary earner and female caretaker and secondary earner is now the most common. In that context, a woman’s choice of lower compensation jobs and fields makes perfect sense as part of her strategy.



[1] “Obama Moves to Expand Rules Aimed at Closing Gender Pay Gap,” By Julie Hirshfeld Davis, Jan. 29, 2016 New York Times. http://www.nytimes.com/2016/01/29/us/politics/obama-moves-to-expand-rules-aimed-at-closing-gender-pay-gap.html
[2] “Harvard prof. takes down gender wage gap myth,” by Ashe Schow, 1/13/16 Washington Examiner. http://www.washingtonexaminer.com/harvard-prof.-takes-down-gender-wage-gap-myth/article/2580405
[3] “EEOC pay reporting: the better to sue you with, my dear,” by Walter Olson, 2/1/2016 Overlawyered. http://overlawyered.com/2016/02/eeoc-employers-must-report-pay-numbers-to-us/
[4] “Young women in STEM fields earn up to one-third less than men: Marriage, kids and scientific fields chosen explain gap, study finds,”
by Jeff Grabmeier, May 10, 2016, Ohio State University News.
https://news.osu.edu/news/2016/05/10/stem-gap/


Death by HR: How Affirmative Action Cripples OrganizationsDeath by HR: How Affirmative Action Cripples Organizations

[From Death by HR: How Affirmative Action Cripples Organizations,  available now in Kindle and trade paperback.]

The first review is in: by Elmer T. Jones, author of The Employment Game. Here’s the condensed version; view the entire review here.

Corporate HR Scrambles to Halt Publication of “Death by HR”

Nobody gets a job through HR. The purpose of HR is to protect their parent organization against lawsuits for running afoul of the government’s diversity extortion bureaus. HR kills companies by blanketing industry with onerous gender and race labor compliance rules and forcing companies to hire useless HR staff to process the associated paperwork… a tour de force… carefully explains to CEOs how HR poisons their companies and what steps they may take to marginalize this threat… It is time to turn the tide against this madness, and Death by HR is an important research tool… All CEOs should read this book. If you are a mere worker drone but care about your company, you should forward an anonymous copy to him.

 


More reading on other topics:

Death by HR: Good-Enough Cogs vs Best Employees
Death by HR: EEOC Incompetence and the Coming Idiocracy
Regulation Strangling Innovation: Planes, Trains, and Hyperloop
Captain America and Progressive Infantilization
The Great Progressive Stagnation vs. Dynamism
FDA Wants More Lung Cancer
Corrupt Feedback Loops: Public Employee Unions
Jane Jacobs’ Monstrous Hybrids: Guardians vs Commerce
Death by HR: How Affirmative Action is Crippling America
Death by HR: The End of Merit in Civil Service
Death by HR: History and Practice of Affirmative Action and the EEOC
Civil Service: Woodrow Wilson’s Progressive Dream
Bootleggers and Baptists
Corrupt Feedback Loops: Justice Dept. Extortion
Corrupt Feedback Loops, Goldman Sachs: More Justice Dept. Extortion
Death by HR: The Birth and Evolution of the HR Department
Death by HR: The Simple Model of Project Labor
Levellers and Redistributionists: The Feudal Underpinnings of Socialism
Sons of Liberty vs. National Front
Trump World: Looking Backward
Minimum Wage: The Parable of the Ladder
Selective Outrage
Culture Wars: Co-Existence Through Limited Government
Social Justice Warriors, Jihadists, and Neo-Nazis: Constructed Identities
Tuitions Inflated, Product Degraded, Student Debts Unsustainable
The Morality of Glamour

On Affirmative Action and Social Policy:

Affirmative Action: Chinese, Indian-Origin Citizens in Malaysia Oppressed
Affirmative Action: Caste Reservation in India
Diversity Hires: Pressure on High Tech<a
Title IX Totalitarianism is Gender-Neutral
Public Schools in Poor Districts: For Control Not Education
Real-Life “Hunger Games”: Soft Oppression Destroys the Poor
The Social Decay of Black Neighborhoods (And Yours!)
Child Welfare Ideas: Every Child Gets a Government Guardian!
“Income Inequality” Propaganda is Just Disguised Materialism

The greatest hits from SubstrateWars.com (Science Fiction topics):

Fear is the Mindkiller
Mirror Neurons and Irene Gallo
YA Dystopias vs Heinlein et al: Social Justice Warriors Strike Again
Selective Outrage
Sons of Liberty vs. National Front
“Tomorrowland”: Tragic Misfire
The Death of “Wired”: Hugo Awards Edition
Hugos, Sad Puppies 3, and Direct Knowledge
Selective Outrage and Angry Tribes
Men of Honor vs Victim Culture
SFF, Hugos, Curating the Best
“Why Aren’t There More Women Futurists?”
Science Fiction Fandom and SJW warfare

More reading on the military:

US Military: From No Standing Armies to Permanent Global Power
US Military: The Desegration Experience
The VA Scandals: Death by Bureaucracy

Free Trade, Specialization, and Economic Dynamism

Futuristic City - Coruscant

Futuristic City – Coruscant

Why do large companies exist? Some industries like film production used to be vertically integrated — that is, most aspects of production were completed by direct employees of the studio, with even screenwriters and actors under long-term contract. This allowed the studio to put together productions rapidly and under direct control, shooting on their own lots and cranking out enough product to keep costs down and quality up. Vertical integration kept down the costs of negotiating with each supplier / worker and guaranteed availability of unique resources, like the services of major stars and expensive soundstages.

The Hollywood studio system has since been broken up, and many productions are completed by dozens of business entities handling separate parts of the project. Agents and producers package projects and a thriving ecosystem of specialized contractors do much of the work; at the end of every special-effects blockbuster film you’ll see dozens of firms credited.

Big companies stay vertically integrated when a new product or industry takes off and there is limited support from outside contractors, or when legal and regulatory burdens make it difficult to reliably contract out parts of the work. In countries where influence with the government is the only way to operate without harassment, large firms that have apparently unrelated businesses under one ownership — conglomerates — are the most successful form. In South Korea, these firms (called chaebol[2]) were seen as national champions and had the political pull necessary to survive in a corrupt, influence-peddling environment; improvements in transparency and the curbing of corrupt influence after the Asian debt crisis of 1997 resulted in reform of the chaebol system and broke up the ownership of large segments of the Korean economy, which has improved the country’s growth record and competitiveness.

Mature industries with highly-developed contract labor markets tend to outsource many more functions, which lowers the carrying costs for the industry as a whole — an in-house special effects division, for example, will either be over- or under-utilized much of the time, and it’s a natural evolution from seeking outside business for slack periods to being spun off as an independent concern when there are large numbers of independent special effects firms with different areas of expertise. As a contracting market develops, it then becomes practical for even a small team to start their own firm, further atomizing the market.

The classic pamphlet “I, Pencil”[3] explains the story of the simple graphite-leaded wood pencil’s production as a mute symphony of coordination and cooperation by suppliers and producers who have organized spontaneously under the free market system to produce a product not one of them fully understands. All of its component materials and the machines needed to manufacture the pencil come from different suppliers who have developed the constituents independently, specializing in, say, the paint for the exterior, or the rubber eraser. Time and many instances of contracts fulfilled lead to trust between suppliers, and competitive markets hone each supplier’s quality and price to hold down the cost of the completed product.

What happens when trade barriers go up? Say the best producer of rubber pencil erasers is in Malaysia, and a protectionist Congress slaps a high tariff on products from Malaysia….

The price landscape the US-based pencil manufacturer sees changes when Malaysian erasers leap in price because of the new tariffs, and a US-based supplier now appears to offer a better deal on erasers, so the manufacturer orders from them instead. Unfortunately the unfamiliar supplier has a lower quality product at a higher price, and the pencil manufacturer and the new eraser supplier spend days negotiating payments and terms. The resulting pencils have to be priced higher and consumers notice the erasers don’t work very well, and begin to consider other brands of pencil instead….

Relatively free trade allows multinational networks of the best and most-efficient suppliers to capture the benefits of specialization globally. The world’s auto industry, for example, benefitted greatly in the end by combining innovations from Japan, Germany, and the US, and modern autos manufactured anywhere today source parts from multiple countries — which becomes most noticeable when, for example, the dangerous failure of airbag components made in Mexico by major supplier Takata of Japan spreads to include recalls of upwards of fifty million cars from at least twelve different car companies[4]. Atypical disasters aside, the availability of low-cost and reliable components from overseas has brought US-manufactured cars up to increasingly-high global standards and allowed US final assembly plants to remain competitive despite their higher labor costs.

When trade barriers are lowered, there is often short-term pain for less-competitive, formerly-protected industries, as there was for the US auto giants in making the transition to a global market. But high trade barriers and closed markets mean higher prices and a lack of competition to keep the domestic industry honest — and if the protected products are a large component of national consumption and a capital good necessary for other industries as well, like autos and trucks, the entire economy of the protectionist country will grow more slowly and become less competitive in international trade. A return to high trade barriers for the US, like the Smoot-Hawley Tariff Act of 1930,[5] would lower the quality and raise the prices of many US-made goods, making them less competitive in global trade even if no other countries retaliated by raising their tariffs. Just because there are still countries with high tariff and other barriers doesn’t mean the US, as one of the greatest beneficiaries of the global free trade system, should also shoot itself in the foot. In the 1930s countries stumbled into a worsening Depression by such short-sighted actions which harmed everyone, and contributed to the strains resulting in WWII.

Similarly, it is damaging when any government acts to limit or over-regulate trade between its citizens and its companies. The US Constitution addressed the issue of trade barriers between the various States by giving the power to regulate “interstate commerce” to the Federal government, intending to prevent the kind of tariffs and barriers that Britain had used to benefit their own industries at Colonial expense from springing up between the States.

Today France is in the throes of strikes and disorder as its Socialist government tries to reform its labor regulations to allow for a freer market in labor.[6] Current regulations there make it so difficult to fire or lay off employees that companies do everything they can to avoid hiring regular full-time employees, and most young people are forced into the undermarket of contract and temporary labor to gain employment. Youth unemployment rates over 20% in many parts of Europe are crippling their career development, in large part due to overregulation. Entire economies grow more slowly when special-interest regulation favors the few insiders who already have secure positions over the young outsiders.

Trade liberalization and the global spread of freer markets produced the greatest improvement in global living standards the world has ever seen, the Great Enrichment, with higher living standards than ever dreamed of for middle classes in the developed world, and billions of people lifted out of poverty outside it.[7] The increasing prosperity and health of these populations defused the population bomb that was supposed to have produced famine and war by the late 1970s.[8] Technological innovation and capitalist investment fed more people and found more resources and energy at lower prices. Growing wealth created a demand for clean air and water, and a supply of new emissions and cleanup technologies that have improved the local environment of every country that has completed the transition to both democratic governance and capitalism. The countries that tried to maintain their centrally-planned economies were outcompeted, and every one has either given up central planning or collapsed into poverty.

But the temptation to control an organic free-market economy to benefit special interests is always waiting, and those special interests (whether private industries or public employee unions) are good at funding campaigns and lobbying legislators to have laws written in their favor. US courts have been all too willing — since the Supreme Court’s 1937 “Switch in time that saved nine,” which bowed to to FDR’s desires[9] — to allow Congress and state legislatures to regulate private contracts and trade by presuming that any regulation which had a ”rational basis” was constitutional. This great expansion of opportunities for graft resulted in the growth of an overbearing administrative state, a permanent shadow government of tenured bureaucrats and administrators who are so protected by Civil Service and public employee unions that there is no accountability and only limited desire to serve the public who pay all the bills. Meanwhile, the economy grows more and more slowly as some industries like banks are bailed out and protected while others are harassed by regulators. Small businesses and community banks are crippled by costly regulatory requirements and labor rules like the ACA, while costs rise in every sector heavily regulated by governments — those sectors (healthcare, education, banking…) lobby for special loans and subsidies. Young people are told they must go to college, taught that government and nonprofit services are the most moral career choices, then saddled with student loan debt and a slack labor market when they graduate — if they graduate.

Let’s imagine for a moment that a Freedom of Contract Amendment exists — a freedom implied by common law and precedent until 1937, but smothered by Progressives eager to mold the people toward a scientifically-managed, centrally-planned future — which as we have seen does not work. People would be free to sell their labor under any terms they wish. Other than Civil Rights Act protections against discrimination, employers would be free to seek out the best employees for their teams and organize them and pay them however they wish. The impossibly complex jumble of fringe benefits and 401Ks and stock plans and options created by complicated tax incentives goes away when the tax system is simplified. It’s a dream, right? Freedom to achieve without being “helped” by a politician with his or her hand out for a contribution, or sued by a lawyer wanting to retroactively apply antiquated 1930s labor regulations designed for factories to your white-collar employees…

The future doesn’t come with thousands of pages of laws and regulations dating back to the last century and designed to hold a tottering status quo in place. It comes out of individual striving and new technologies, and an American people free to mold themselves as they wish. The access to all of the world’s knowledge we now have via the internet means education can be flexible and nearly free for those who are motivated, and trapping our children in failed urban schools or mediocre and left-wing public universities wastes their time and our tax money.

[Note that the current mechanism for negotiating and implementing “free trade agreements” looks very much like the dysfunctional process now used to write new laws — opaque, lengthy, written by committees and tailored to special interests. That’s certainly not a good thing, and opens the process to corrupt bargaining. I’m defending the general principle of free trade here, and often these deals are mixed, a net positive for the US economy while containing many objectionable parts.]

[1] https://en.wikipedia.org/wiki/Vertical_integration
[2] “The Changing Role of Chaebol,” Charlotte Marguerite Powers, Stanford Journal of East Asian Affairs, Summer 2010, https://web.stanford.edu/group/sjeaa/journal102/10-2_09%20Korea-Powers.pdf
[3] “I, Pencil: My Family Tree as Told to Leonard E. Reed,” courtesy of the Ralph Smeed Private Foundation, 1958. https://fee.org/media/14940/read-i-pencil.pdf
[4] “U.S. Department of Transportation expands and accelerates Takata air bag inflator recall to protect American drivers and passengers,” US NHTSA 13-16, May 4, 2016, http://www.nhtsa.gov/About+NHTSA/Press+Releases/nhtsa-expands-accelerates-takata-inflator-recall-05042016
[5] https://en.wikipedia.org/wiki/Smoot%E2%80%93Hawley_Tariff_Act
[6] “France labour dispute: Wave of strike action nationwide,” BBC, 26 May 2016 http://www.bbc.com/news/world-europe-36385778
[7] “How the West (and the Rest) Got Rich — The Great Enrichment of the past two centuries has one primary source: the liberation of ordinary people to pursue their dreams of economic betterment,” Deirdre N. McCloskey, Wall Street Journal, May 20, 2016, http://www.wsj.com/articles/why-the-west-and-the-rest-got-rich-1463754427
[8] “The Unrealized Horrors of Population Explosion,” Clyde Habermann, New York Times, May 31, 2015, http://www.nytimes.com/2015/06/01/us/the-unrealized-horrors-of-population-explosion.html
[9] “‘The switch in time that saved nine’ is the name given to what was perceived as the sudden jurisprudential shift by Associate Justice Owen Roberts of the U.S. Supreme Court in the 1937 case West Coast Hotel Co. v. Parrish. Conventional historical accounts portrayed the Court’s majority opinion as a strategic political move to protect the Court’s integrity and independence from President Franklin Roosevelt’s court-reform bill (also known as the “court-packing plan”), which would have expanded the size of the bench up to 15 justices, though it has been argued that these accounts have misconstrued the historical record.” https://en.wikipedia.org/wiki/The_switch_in_time_that_saved_nine


Death by HR: How Affirmative Action Cripples OrganizationsDeath by HR: How Affirmative Action Cripples Organizations

[From Death by HR: How Affirmative Action Cripples Organizations,  available now in Kindle and trade paperback.]

The first review is in: by Elmer T. Jones, author of The Employment Game. Here’s the condensed version; view the entire review here.

Corporate HR Scrambles to Halt Publication of “Death by HR”

Nobody gets a job through HR. The purpose of HR is to protect their parent organization against lawsuits for running afoul of the government’s diversity extortion bureaus. HR kills companies by blanketing industry with onerous gender and race labor compliance rules and forcing companies to hire useless HR staff to process the associated paperwork… a tour de force… carefully explains to CEOs how HR poisons their companies and what steps they may take to marginalize this threat… It is time to turn the tide against this madness, and Death by HR is an important research tool… All CEOs should read this book. If you are a mere worker drone but care about your company, you should forward an anonymous copy to him.

 


More reading on other topics:

Regulation Strangling Innovation: Planes, Trains, and Hyperloop
Captain America and Progressive Infantilization
FDA Wants More Lung Cancer
Jane Jacobs’ Monstrous Hybrids: Guardians vs Commerce
The Great Progressive Stagnation vs. Dynamism
Death by HR: How Affirmative Action is Crippling America
Death by HR: The End of Merit in Civil Service
Corrupt Feedback Loops: Public Employee Unions
Death by HR: History and Practice of Affirmative Action and the EEOC
Civil Service: Woodrow Wilson’s Progressive Dream
Bootleggers and Baptists
Corrupt Feedback Loops: Justice Dept. Extortion
Corrupt Feedback Loops, Goldman Sachs: More Justice Dept. Extortion
Death by HR: The Birth and Evolution of the HR Department
Death by HR: The Simple Model of Project Labor
Levellers and Redistributionists: The Feudal Underpinnings of Socialism
Sons of Liberty vs. National Front
Trump World: Looking Backward
Minimum Wage: The Parable of the Ladder
Selective Outrage
Culture Wars: Co-Existence Through Limited Government
Social Justice Warriors, Jihadists, and Neo-Nazis: Constructed Identities
Tuitions Inflated, Product Degraded, Student Debts Unsustainable
The Morality of Glamour

On Affirmative Action and Social Policy:

Affirmative Action: Chinese, Indian-Origin Citizens in Malaysia Oppressed
Affirmative Action: Caste Reservation in India
Diversity Hires: Pressure on High Tech<a
Title IX Totalitarianism is Gender-Neutral
Public Schools in Poor Districts: For Control Not Education
Real-Life “Hunger Games”: Soft Oppression Destroys the Poor
The Social Decay of Black Neighborhoods (And Yours!)
Child Welfare Ideas: Every Child Gets a Government Guardian!
“Income Inequality” Propaganda is Just Disguised Materialism

The greatest hits from SubstrateWars.com (Science Fiction topics):

Fear is the Mindkiller
Mirror Neurons and Irene Gallo
YA Dystopias vs Heinlein et al: Social Justice Warriors Strike Again
Selective Outrage
Sons of Liberty vs. National Front
“Tomorrowland”: Tragic Misfire
The Death of “Wired”: Hugo Awards Edition
Hugos, Sad Puppies 3, and Direct Knowledge
Selective Outrage and Angry Tribes
Men of Honor vs Victim Culture
SFF, Hugos, Curating the Best
“Why Aren’t There More Women Futurists?”
Science Fiction Fandom and SJW warfare

More reading on the military:

US Military: From No Standing Armies to Permanent Global Power
US Military: The Desegration Experience
The VA Scandals: Death by Bureaucracy

This is Not My Beautiful House

When I went to work at BBN Labs (a DARPA research shop, like a B-grade Xerox PARC or Bell Labs) in 1984 as a freshly-minted MIT graduate, my office was small and barren, with a desk, a VT-100 terminal, and a classic Mac. But it was still the age of the private office, and I’m thankful I never had to deal with the cubicle, or worse, the bullpen of today — I would never have been able to program with the noise and distractions.

The engineer next door had a leather couch and an oriental rug, and art and geeky knick-knacks on shelves all around. Sometime during the first week, the headhunter / HR contractor who had recruited me stopped by. “Don’t get too comfortable. I mean, don’t spend a lot of time decorating.”

I didn’t know quite what he was getting at — interpreting it as philosophical advice, or perhaps practical because he had just seen the overdecorated office next door. Everything changes and ends, so best be prepared to move on as soon as you think you’ve arrived at your destination? Always have your bug-out bag packed and ready? But later I realized he meant he knew the Labs were splitting, with the part I was working for to be spun off to commercialize the BBN Butterfly multiprocessor. And in a few months we were in a new building next door, so decorating my office would have been a waste of time.

And so it is with houses. We find ourselves looking for a summer place to escape the heat of Palm Springs — it was 110 today, starting the season of excessive heat. My gym saves money by keeping the thermostats at 80, and I’m sick of fighting over fans and struggling to breathe. PS is great two thirds of the year, but that last third is deadly. We’ve been scanning the houses near the coast, from San Diego up to Irvine. But this has me thinking of what the headhunter told me — and why I’ve spent so much time moving and fixing up places, hoping this time it would be Just Right….

College Avenue House

College Avenue House

By the time I started work at BBN I had been a landlord for five years, looking after a turn-of-the-century mansion that had been split up into four units during the Depression. It was my first venture into real estate investment — a grand three-story house on College Avenue between Tufts University and Davis Square, Somerville. I knew the Red Line subway extension would be coming to Davis Square, and at $70K the building was a good bet. I imagined doing all sorts of renovation, but while we lived in the ground floor apartment and I did do a lot of small upgrades for energy conservation and the like, I was too young and distracted to do anything major like finish the enormous attic into another glorious apartment as I had intended. And knowing what I know now, I realize I would have been stymied by the NIMBYs nearby anyway….

We had friends gutting and renovating houses in (crime-ridden, cheap) San Francisco (which is no longer cheap.) One time we were staying at their house while they had stripped their own bathroom down to the studs — which meant using a fully-exposed toilet. “Pretend there’s still a wall there.” The things we did when we were young and hungry…

I was getting into microcomputers and compilers and AI, which is how I ended up at BBN doing multiprocessor LISP for the SCI (Strategic Computing Initiative), which was supposed to be a government-funded response to the Japanese AI scare. Neither country cracked the problem, then both pulled the funding plug when no practical results happened — lots of money and effort went down the drain. This drying up of interest and collapse in AI research starting around 1986 is now called The AI Winter… which also crashed my next employer, Symbolics, when the beancounters decided to direct all researchers to buy Sun machines with Lisp compilers instead.

So because I had an absorbing job, I lost interest in the house projects, and it seemed like a good idea to free myself to move around by selling it. We got $350K for it; since we had borrowed all but $14K downpayment, that meant a profit of over $250K on a $15K investment, by the wonders of leverage and good luck. And the rents had largely paid for our own house expenses along the way, as rent controls ended, interest rates dropped, the subway opened, and investment started to flow back into the neighborhood, which today is highly desirable — Zillow thinks the building is worth $1.4 million now, 20x what we paid in 1978. Those conditions are unlikely to ever be repeated.

I entered a PhD program in computer science at Northeastern studying things like denotational semantics with Mitch Wand. A year of that was enough, and I moved to Vancouver to get away from the various unpleasantnesses of that era — escaping to a tiny apartment in a highrise tower in the West End.

First Bowen house framing stage

First Bowen house framing stage – 1992

I bought a big piece of land on Bowen Island and spent the next five years subdividing it, attacked by the Islands Trust and the antidevelopment faction on the island — which as it turned out, is retirement home to many Canadian bureaucrats. You really haven’t lived until people at a public meeting gang up to attack you as “an American developer.” The photo is of the first house being built in my subdivision, not by me — I never built my own house there, since I realized I wasn’t wanted.

Sunnyvale Eichler - 2007

Sunnyvale Eichler – 2007

I fought them to a draw and got out alive, though just barely. I ended up in California, where I picked up a new partner and bought an Eichler in Sunnyvale (photo above). That was my first real success at renovation — we updated the kitchen and baths, much of it “just enough” updating — for example, the 1969 bathrooms just needed new drop-in sinks and faucets to seem fresh, so I could do a lot of the work myself. We paid the dangerously-high sum of $600K for the house in 2000 and sold it for $1.2 million in 2007. Now Zillow claims it’s worth $1.7, showing how inflated values are in Silicon Valley….

View from Upper Market SF House

View from Upper Market SF House

We eventually ended up in the city of San Francisco itself, renting the top floor unit of a new building on upper Market Street. The developer built the largest building he could legally, and what he thought would sell — two condos in a five-story building, with the garage and entries in the middle floor.

The builder/developer made a few mistakes. First mistake: badly judging the market, which collapsed as he was finishing the project in 2008. Second mistake: the steel-framed center of the building didn’t settle, but the back end did, leaving our living room with an inch-high bulge running across the floor. Third mistake: the slate-tiled roof deck, planned hot tub and the garden box, which he never finished installing (but did fill with dirt.) The roof deck leaked. And leaked. And leaked — he rebuilt parts of it several times, while areas inside the house were soaked and had to be replaced. While it would be grand to sit in one’s rooftop hot tub watching the city lights and sipping Chardonnay, the reality never quite justified the trouble.

Market St Kitchen - Green Marble Counters!

Market St Kitchen – Green Marble Counters!

Meanwhile, the green marble countertops in the kitchen were probably chosen as a selling point — luxury! Green! Marble! But were horrible, since the slightest hint of acid — a lime, champagne, anything — etched the marble in ugly gray spots and rings. Despite our precautions, parts of it looked terrible in less than a year, and the owner had to bring in a refinisher to redo it and seal it again.

Nighttime View from Market St House

Nighttime View from Market St House

One last view from the Market Street place. The effect of the views eventually wore off, and we were left with the high rent, the leaks, the cold wind and fog that made the roof deck less than pleasant most of the time, and the steep walk up and down the hill to the gym.

Sevilla Great Hall - 2010

Sevilla Great Hall – 2010

Finally, we bought a big place in far south canyon Palm Springs. It came decorated in a sort of post-modern Beetlejuice style, not quite our taste but well-done. At over 6,000 sq. ft. it was a lot more house than we needed, but we were thinking one of our parents (or both?) might end up living with us, and of course we wanted room for guests. Neither of those really happened, so half the house was generally closed off.

The place had three dishwashers, three refrigerators, four water heaters, and six AC units. I replaced most of the ceiling lights with LED units, and since the AC bills were in the hundreds (and could easily have been in the thousands!), I looked into two-stage evaporative cooling.

Craning in Evaporative Coolers

Craning in Evaporative Coolers

Here you see one of the evaporative coolers being craned to the roof, where it was installed near the existing HVAC unit to share ducting. The concept of evaporative cooling takes advantage of the cooling effect of evaporation; the desert air is usually very dry, and under the right conditions evaporation can drive a surface down to near freezing temperature (the dew point is the theoretical limit, and that is often very cold — as I write it is 94 degrees outside, but the dew point is 37 degrees F.)

Normal evaporative coolers just run outside air over wet materials to cool and add moisture before sending it into the house. A two-stage cooler uses that effect to cool water, then expels the first stage air outside. The cold water is then sent to the next stage to chill outside air which is further cooled by running it over moist materials, but since the air is already cooled it gets a bit cooler and does not pick up so much moisture. The result is cool, clean, slightly moist air, perfect for a home in the desert. Running both units, we were able to cool the parts of the house we used most down to comfortable levels using less than 20% of the power used for AC, since all that was needed was a few showers a day worth of water and two big fans.

Control Board

Control Board

Unfortunately this super-advanced cooler was made by a pioneering company, and I soon had arrows in my back. No one knew how to install it, so I had to design the ducts myself. The computer control program would occasionally glitch, requiring a system reboot — cut the power and restart. When it was running, the air was much nicer than what you get from AC, but you had to understand how to open doors and windows just so to balance the system — air was being blown in cool and had to escape, so choice of open windows to distribute the coolth was an art.

It was no great strain for me to run it, but when our plans changed again and I was left alone in the house, it made no sense to keep the house for several more years. We put it up for sale. No one understood the coolers, since unlike solar panels virtually no one has ever seen one — the cheaper one-stage coolers, known as “swamp coolers” locally, have a reputation for being high-maintenance and the choice of people too poor to afford real AC. So that was no help at all in marketing the house, and I doubt the new owner ever used the instructions I left for him.

The Morrison, Phase 2 Construction

The Morrison, Phase 2 Construction – 2012

While waiting for that to sell, I put a deposit down on a unit to be built at The Morrison, a trendy modern development of detached houses on tiny lots, each with a small pool. One of the few developments that kept selling through the recession, and now a model for many copycat developments in Palm Springs. Above is a view of the construction site from our partly-furnished new house.

Finished Pool - 2013

Finished Pool – 2013

So again we had to move and set up a new place — change all the lighting to LED, buy new furniture, decorate. It always seems to be me that has the time and opportunity, so I do it. And years pass, and other things I could be focusing on don’t get done….

“Don’t get too comfortable. Don’t spend a lot of effort decorating,” as my HR guy told me long ago. Unless that’s what you want to do — specialization allows most of us to concentrate on what we’re best at, while farming out other tasks to people who specialize in those. When taxes are very high, there’s a big cost to hiring someone else to do something — you paid taxes on your income, and the people you hire pay taxes on what you pay them, and so on — which is why most of us try to do a lot of the work ourselves to save money. If I pay someone $1,000 to paint, I have to earn $1500-2000 more to make up for that expense. So I do the painting. And I get distracted, and do a worse job, and nothing gets written.

You can waste a lot of your life buying and selling houses, decorating and moving. I admire people who can stay in one spot for fifty years, happy with what they have — that’s not really me. But in my old age I now understand that a big house is a white elephant that owns you as much as you own it, that good enough is best, that getting your surroundings Just So is not worth the time and effort. Less stuff in less space means more money and free time.

The Great Progressive Stagnation vs. Dynamism

In the US, the decades after WWII were marked by high growth and technological innovation. Rebound from recessions was quick, and reforms like the deregulations of the Carter era (trucking, railroads, airlines, interest rates on savings, and the breakup of the AT&T monopoly on phone service) and the tax simplifications of the Reagan administration lifted growth. Waves of labor-saving innovations grew productivity — computers first eliminated most manual record-keeping, then automated processes and streamlined production and logistics.

But each successive wave of recovery growth from recession has been weaker. This graph from the Center for Economic Policy Research charts the recoveries from the recessions of 1981, 1990, 2001, and 2007.


Recession Rebounds Compared - US Census Data

Recession Rebounds Compared – US Census Data

The weak growth for the quarter puts this recovery even further behind any prior recovery at the same stage. After eight and a quarter years, the economy is only 10.1 percent larger than its pre-recession level of output. A more typical recovery would have seen at least twice as much growth.[1]

Economist Tyler Cowen has coined the term “The Great Stagnation” for this gradual decline in growth and economic dynamism. His book The Great Stagnation: How America Ate All The Low-Hanging Fruit of Modern History, Got Sick, and Will (Eventually) Feel Better[2] was published in 2011, after the shaky recovery from the recession of 2007, but before we knew the stagnation would continue for many more years.

His major point was that the US post-WWII took advantage of one-time advantages and opportunities: most of the industrialized world had been crippled by war, and unskilled unionized workers could take advantage of their position to win seemingly stable, high-paying jobs while the technologies developed in the Depression and WWII decades were rapidly incorporated into production processes. When the rebuilt rest of the world began to catch up and compete directly, much of the easy profits for both US companies and workers were competed away, and technologies developed since have been adopted around the world quickly. The backlog of new technology waiting to be incorporated into production is gone, and meanwhile the overhead of law, regulation, and the web of intellectual property (patents, trademarks, and copyrights) has grown complex, to the point where innovation in products may be retarded by legal tangles.

Here’s the blurb for his book:

America is in disarray and our economy is failing us. We have been through the biggest financial crisis since the Great Depression, unemployment remains stubbornly high, and talk of a double-dip recession persists. Americans are not pulling the world economy out of its sluggish state — if anything we are looking to Asia to drive a recovery.Median wages have risen only slowly since the 1970s, and this multi-decade stagnation is not yet over. By contrast, the living standards of earlier generations would double every few decades. The Democratic Party seeks to expand government spending even when the middle class feels squeezed, the public sector doesn’t always perform well, and we have no good plan for paying for forthcoming entitlement spending. To the extent Republicans have a consistent platform, it consists of unrealistic claims about how tax cuts will raise revenue and stimulate economic growth. The Republicans, when they hold power, are often a bigger fiscal disaster than the Democrats. How did we get into this mess?Imagine a tropical island where the citrus and bananas hang from the trees. Low-hanging literal fruit — you don’t even have to cook the stuff.In a figurative sense, the American economy has enjoyed lots of low-hanging fruit since at least the seventeenth century: free land; immigrant labor; and powerful new technologies. Yet during the last forty years, that low-hanging fruit started disappearing and we started pretending it was still there. We have failed to recognize that we are at a technological plateau and the trees are barer than we would like to think. That’s it. That is what has gone wrong.The problem won’t be solved overnight, but there are reasons to be optimistic. We simply have to recognize the underlying causes of our past prosperity—low hanging fruit—and how we will come upon more of it.

Cruft (a term from MIT hackers for useless, complicated leftover materials that have accumulated) has grown around our laws and practices, with vested interests blocking change through legal means and bureaucracy. New technologies continue to change our lives and speed up work, with the internet and web starting in the late 1980s and mobile apps and smartphones now connecting people on the go. Yet productivity does not appear to be increasing, and while there is a lot of improvement in living standards that doesn’t show up in GDP (no one enjoyed waiting in teller lines at the bank, for example!), all of that freed-up time is going somewhere else, and most people’s working hours aren’t shrinking, and their incomes aren’t rising much.

Occasionally a sector will be disrupted (the current buzzword for innovation that suddenly makes a stable sector of the economy unstable) and the efforts of the rent-seeking status quo defenders become more obvious, as with Uber and other ride-sharing services, which had cut into the business of cab companies in many cities before the taxi industry roused itself to try to outlaw them. Few understood the taxi system as it had been, with its taxi commissions, high-priced medallion licensing, and cabbies forced to rent cabs from medallion holders who made the lion’s share of the money. The taxi medallion system started in New York City in 1937 as another attempt to limit competition during the New Deal and spread elsewhere in following decades, originally justified as necessary to keep gypsy cabs and jitneys — low-priced, unregulated, and occasionally dangerous — from serving the needs of the poor and incidentally crowding the streets of Manhattan, where a free market in taxi services would have resulted in a tragedy of the commons in the form of continuous gridlock. Taxi commissions supposedly protected the safety of passengers, but they also restricted the market for local transportation, raising the price and reducing service. Medium-sized cities, low-income and low-density suburban areas adopting taxi regulations tended to end up underserved. In most places the benefits of Uber-like services were so apparent so quickly that politicians were forced to bow to Uber’s fait accompli, and the prices of taxi medallions giving the owner the right to operate a city-approved taxi fell dramatically:

To own a cab in New York, you need a medallion—a metal shield displayed on the vehicle’s hood—and there are a fixed number issued by the New York City Taxi & Limousine Commission (TLC). Until very recently, medallions were a good thing to have a lot of. In 1947, you could buy one for $2,500. In 2013, after a half-century of steady appreciation, including a near-exponential period in the 2000s, they were going for $1.32 million.

Then came Uber. Since the arrival of the car-by-app service… taxi ridership is down, daily receipts have declined, and drivers are idling—or going to work for Uber. Add it up, and desperate medallion sellers are trying to fob off their little tin ornaments for as little as $650,000.[3]

But that kind of disruption is rare and only happens when the public comes to understand the benefits of the innovative business before the vested interests can strangle it in the crib. More and more economic activities have come to be regulated and new entrants are kept out by the need for government approvals. Products and services from our most heavily-regulated industries — healthcare, education, energy utilities, cable and broadcast entertainment, housing, and finance — have seen outsized price increases without much increase in quality in recent decades, with government regulations either limiting competition or subsidizing consumption (or, as in the case of education and healthcare, both.) Routing around these government controls is starting to happen — household solar panels, Internet entertainment streaming, and homeschooling with online instruction from the likes of the Khan Academy[4] show what is possible when freed from monopoly providers. But breaking the grip of the vested interests in some of these sectors — like the NIMBY restrictions on new housing in the cities controlled by Progressive political machines, or the failed public K-12 schools in urban districts — will take more time and effort.

Virginia Postrel’s book, The Future and Its Enemies: The Growing Conflict Over Creativity, Enterprise, and Progress (1998)[5] set two opposing philosophies against each other: stasists, who prefer a regulated and controlled status quo offering predictability in a society mostly closed to new thinking, and dynamists, who accept instability, innovation, and change allowing higher growth and creative achievement. Her website has this blurb:

Postrel argues that these conflicting views of progress, rather than the traditional left and right, increasingly define our political and cultural debate. On one side, she identifies a collection of strange bedfellows: Pat Buchanan and Ralph Nader standing shoulder to shoulder against international trade; “right-wing” nativists and “left-wing” environmentalists opposing immigration; traditionalists and technocrats denouncing Wal-Mart, biotechnology, the Internet, and suburban “sprawl.” Some prefer a pre-industrial past, while others envision a bureaucratically engineered future, but all share a devotion to what she calls “stasis,” a controlled, uniform society that changes only with permission from some central authority.

On the other side is an emerging coalition in support of what Postrel calls “dynamism”: an open-ended society where creativity and enterprise, operating under predictable rules, generate progress in unpredictable ways. Dynamists are united not by a single political agenda but by an appreciation for such complex evolutionary processes as scientific inquiry, market competition, artistic development, and technological invention. Entrepreneurs and artists, scientists and legal theorists, cultural analysts and computer programmers, dynamists are, says Postrel, “the party of life.”[6]

Where are the jetpacks and the flying cars dreamed of in the 1960s? Disney’s Tomorrowland[7] suggested our shared pessimism had slowed progress and endangered the future, but it failed to address the source of the exhaustion and defeatism — the many regulations that now prevent an energetic entrepreneur from putting his or her new idea into practice in the world. People who tried to do something differently have found their way blocked, and their lives are often destroyed by vested interests using the legal system to delay their projects and drain them of energy and capital. Every effort to build something new becomes a political effort requiring that you not only interest customers, but pay off politicians and rent-seekers who see their interests threatened. The compliance overhead in growing from a small business to a large business is now so large that most people who might try are discouraged and stick with what already works for them. It’s far safer to work for a government or big corporation than to strike out on your own. The result for our economy is stagnation and declining growth.

The decline in new business formation and business dynamism from 1978 to 2011:[8]

Startups and Dynamism In Decline - US Census Data

Startups and Dynamism In Decline – US Census Data

It’s ironic that the free world outcompeted and ultimately broke the Communist central planning systems of the USSR and China, with both Russia and China now authoritarian mixed kleptocracies with at least some freedom for private industry, yet the US is now tied up by central-planning bureaucrats and regulations that are crippling growth and favoring larger corporations that support politicians through favor-trading and campaign contributions. Every small loss of economic freedom and increase in corruption has been accompanied by government-funded propaganda to explain how much it benefits The People. And The People have awakened to a hangover of enormous debts and poor job prospects, having been slipped a mickey of miseducation and dependency.

The French have a term to describe their tendency to let a centralizing state control business activity: dirigisme, “to direct.” Progressives have gradually molded the US population to more closely resemble the French in looking to the state to decide economic matters, and borrowed many of the ideas of the welfare state and public education from German models. The bureaucracies they spawned tend to grow, and those employed to write regulations will never run out of ideas for new and more detailed specifications of how everything should be done. Because Progressives believe wise rulers (themselves) can make better decisions on every choice less enlightened citizens might make — and it’s their duty to improve society by improving people, for their own good. As C. S. Lewis said:

My contention is that good men (not bad men) consistently acting upon that position would act as cruelly and unjustly as the greatest tyrants. They might in some respects act even worse. Of all tyrannies, a tyranny sincerely exercised for the good of its victims may be the most oppressive. It would be better to live under robber barons than under omnipotent moral busybodies. The robber baron’s cruelty may sometimes sleep, his cupidity may at some point be satiated; but those who torment us for our own good will torment us without end for they do so with the approval of their own conscience. They may be more likely to go to Heaven yet at the same time likelier to make a Hell of earth. This very kindness stings with intolerable insult. To be ‘cured’ against one’s will and cured of states which we may not regard as disease is to be put on a level of those who have not yet reached the age of reason or those who never will; to be classed with infants, imbeciles, and domestic animals.[9]

While this book will touch on overregulation and bureaucracies, there are already quite a few studies and books on each of the affected industries — books on the failures of public education alone number in the hundreds. This book is primarily about labor regulations and their costly and productivity-draining intrusion into hiring and employment practices. Employer fears of exposure to lawsuits led to extensive delegation of control over hiring and firing decisions to HR departments. Government-enforced unions, Civil Service rules, and increasing efforts to require equality of outcome while denigrating excellence are reducing growth now and may doom us to a second-rate future as other countries not so crippled outcompete us. The US can return to a high-growth, lower-inequality path, but only if these sectors are unlocked and allowed to innovate in both process and personnel. Freedom to work and trade as we choose — and not as Washington dictates — will keep us free, and give our children the future we dreamed of.


[1] “Falling Investment and Rising Trade Deficit Lead to Weak First Quarter” – Dean Baker, Center for Economic and Policy Research, April 28, 2016
[2] The Great Stagnation: How America Ate All The Low-Hanging Fruit of Modern History, Got Sick, and Will (Eventually) Feel Better, by Tyler Cowen. Dutton (January 25, 2011) http://amzn.to/1pTybdh
[3] “The Struggles of New York City’s Taxi King” — by Simon Van Zuylen-Wood, Bloomberg, Augist 27, 2015 http://www.bloomberg.com/features/2015-taxi-medallion-king/
[4] https://www.khanacademy.org/
[5] The Future and Its Enemies: The Growing Conflict Over Creativity, Enterprise, and Progress, Virginia Postrel, Simon and Schuster, 1998 http://amzn.to/1SFodo7
[6] From Virginia Postrel’s web site.
https://vpostrel.com/future-and-its-enemies
[7] https://substratewars.com/2015/10/30/tomorrowland-tragic-misfire/
[8] “The Rate of New Business Formation Has Fallen By Almost Half Since 1978: America’s declining ‘business dynamism’ has affected all 50 states and nearly every single metro area.” Richard Florida, Citylab, May 5, 2014
[9] From C.S. Lewis’s essay anthology “God in the Dock” (1948), viewed 4-28-2015 at http://www.wsj.com/articles/SB10001424052702304527504579170134126854254

If you have a good story or anecdote from your organization, please email it to jebkinnison@gmail.com. I can use a few good tales (anonymized, of course) to illustrate the problems.


Death by HR: How Affirmative Action Cripples OrganizationsDeath by HR: How Affirmative Action Cripples Organizations

[From Death by HR: How Affirmative Action Cripples Organizations,  available now in Kindle and trade paperback.]

The first review is in: by Elmer T. Jones, author of The Employment Game. Here’s the condensed version; view the entire review here.

Corporate HR Scrambles to Halt Publication of “Death by HR”

Nobody gets a job through HR. The purpose of HR is to protect their parent organization against lawsuits for running afoul of the government’s diversity extortion bureaus. HR kills companies by blanketing industry with onerous gender and race labor compliance rules and forcing companies to hire useless HR staff to process the associated paperwork… a tour de force… carefully explains to CEOs how HR poisons their companies and what steps they may take to marginalize this threat… It is time to turn the tide against this madness, and Death by HR is an important research tool… All CEOs should read this book. If you are a mere worker drone but care about your company, you should forward an anonymous copy to him.

 


More reading on other topics:

Jane Jacobs’ Monstrous Hybrids: Guardians vs Commerce
The Great Progressive Stagnation vs. Dynamism
Death by HR: How Affirmative Action is Crippling America
Death by HR: The End of Merit in Civil Service
Corrupt Feedback Loops: Public Employee Unions
Death by HR: History and Practice of Affirmative Action and the EEOC
Civil Service: Woodrow Wilson’s Progressive Dream
Bootleggers and Baptists
Corrupt Feedback Loops: Justice Dept. Extortion
Corrupt Feedback Loops, Goldman Sachs: More Justice Dept. Extortion
Death by HR: The Birth and Evolution of the HR Department
Death by HR: The Simple Model of Project Labor
Levellers and Redistributionists: The Feudal Underpinnings of Socialism
Sons of Liberty vs. National Front
Trump World: Looking Backward
Minimum Wage: The Parable of the Ladder
Selective Outrage
Culture Wars: Co-Existence Through Limited Government
Social Justice Warriors, Jihadists, and Neo-Nazis: Constructed Identities
Tuitions Inflated, Product Degraded, Student Debts Unsustainable
The Morality of Glamour

On Affirmative Action and Social Policy:

Affirmative Action: Chinese, Indian-Origin Citizens in Malaysia Oppressed
Affirmative Action: Caste Reservation in India
Diversity Hires: Pressure on High Tech<a
Title IX Totalitarianism is Gender-Neutral
Public Schools in Poor Districts: For Control Not Education
Real-Life “Hunger Games”: Soft Oppression Destroys the Poor
The Social Decay of Black Neighborhoods (And Yours!)
Child Welfare Ideas: Every Child Gets a Government Guardian!
“Income Inequality” Propaganda is Just Disguised Materialism

The greatest hits from SubstrateWars.com (Science Fiction topics):

Fear is the Mindkiller
Mirror Neurons and Irene Gallo
YA Dystopias vs Heinlein et al: Social Justice Warriors Strike Again
Selective Outrage
Sons of Liberty vs. National Front
“Tomorrowland”: Tragic Misfire
The Death of “Wired”: Hugo Awards Edition
Hugos, Sad Puppies 3, and Direct Knowledge
Selective Outrage and Angry Tribes
Men of Honor vs Victim Culture
SFF, Hugos, Curating the Best
“Why Aren’t There More Women Futurists?”
Science Fiction Fandom and SJW warfare

More reading on the military:

US Military: From No Standing Armies to Permanent Global Power
US Military: The Desegration Experience
The VA Scandals: Death by Bureaucracy