Showing posts with label Capitalism. Show all posts
Showing posts with label Capitalism. Show all posts

Sunday, November 17, 2024

Heaven from a Shoeshine

Executive Shoeshine, Charlotte
A lawyer catches a glimpse of the divine when his shoes are shined at the airport:
Hunched over, he toiled for what seemed an impossibly long stretch. The diligent and humble effort reminded me of something St. Thérèse of Lisieux said about the merits of redemptive suffering. “I prefer the monotony of obscure sacrifice to all ecstasies,” said the 19th-century Carmelite nun. “To pick up a pin for love can convert a soul.” From where I sat, that’s what the worker was doing: a small thing with great love.

There seemed no past or future, only a continuous present in which he was fully engaged. How often I selfishly worry about tomorrow or dwell on yesterday. Yet this man knew, as the proverb goes, how to be where your feet are.

His efforts breathed new life into my wingtips. Shoes that could have been mistaken for the worn-out kicks of the Nitty Gritty Dirt Band’s Mr. Bojangles suddenly looked good enough to pass military inspection.

When it was time to settle up, I asked what I owed for his services. “Whatever you think it was worth,” he said. Surprised, I asked the question again but got the same answer.

It had been years since I’d been to this shop, but I recalled its prices and figured they hadn’t changed much. Inspired by this man’s trust, I paid him a premium. Our circuitous path to price discovery got me thinking.

A cynic, Oscar Wilde said, is a man who knows the price of everything and the value of nothing. This most uncynical man demands no price for payment, only value for consideration. I think I understand why. Transactions in the material economy may be zero-sum—a dollar in his pocket was one out of mine—but ones in the spiritual economy never are. The abundant trust he placed in me didn’t diminish his stores of unperishable virtue.

How man sees himself and the world around him largely depends on which part, matter or spirit, he identifies as the seat of his authentic self. By transacting in values, the laborer chose the better part. As with shoes, I suddenly realized, so with people.

It’s fitting that a boot polisher would be the one great-souled enough to help me make this connection. He surely knows how life’s curb spares nobody, but that no matter how abraded our exterior, we’re never without intrinsic value. Once the imperfections are lovingly made right, interior magnificence is visible, and we are again glorious bodies.
A typical transaction in a capitalist economy this wasn't. Not only did the vendor insist that the buyer pay only what the buyer thought "it was worth", but the shoeshine man told the customer to do so after he rendered the service, i.e., after he had lost all negotiating leverage. He had made himself vulnerable and had to trust the customer to do the right thing. The latter did, and for just a moment the curtains of the world parted, and we caught a glimpse of the divine.

Sunday, September 24, 2023

Something for Everyone

Millet's Man with a Hoe, circa 1862
The Gospel lesson from Matthew, Chapter 20, was the Parable of the Workers in the Vineyard, the one that ends with the oft-quoted "the last will be first, and the first will be last."

It's about how the landowner pays workers the same amount at the end of the day, regardless of the time they started.

Preachers love this one, because it tells newcomers that they will be rewarded even if they come to church late in life. Our priest said that he interpreted the passage to be about God's generosity with His love.

My wandering mind, of course, turned to political philosophy.

Could God be a socialist? Each laborer received one denarius though some worked one hour and others the entire day. This is an example of the equality of result beloved by socialists.

Could God be a capitalist? Those who worked the whole day grumbled that they should have gotten more. The landowner replied, ‘I am not being unfair to you, friend. Didn’t you agree to work for a denarius?" In other words they were happy with the pay in the morning, and a deal is a deal. Capitalism is underpinned by mutual, voluntary arrangements that, once they are agreed to, are enforceable by the law of contracts.

Also, the landowner continued, "Don’t I have the right to do what I want with my own money?" That's capitalism at its core.

As often happens, Jesus had something for everyone.

Sunday, August 02, 2020

The Meaning of Life, Continued

Whether life has meaning beyond mere existence--e.g., a couple hundred years from now, when I and any of my works have long been forgotten, did it matter that I was here?--has been debated by theologians and philosophers for millennia. Whether true or not, research has shown that the belief that life has meaning helps individuals thrive:
People who view their decisions as existentially weighty cope better with stress and tragedy. They also live longer and healthier lives. Disbelief in meaning is a major risk factor for depression, substance abuse and suicide.
The belief in "existential agency"--the extent to which people believe they are capable of finding and maintaining meaning in life--is highly correlated with a favorable view of capitalism and entrepreneurship: [bold added]
In our study, 1,269 American adults 18 to 88 completed questionnaires that assessed psychological characteristics (including existential agency), their general views on economic freedom, and the extent to which they believe capitalism can help solve large-scale challenges such as climate change, automation and poverty. They also responded to items assessing how much they believe entrepreneurship benefits society, as well as their own entrepreneurial motivation.

We found that existential agency is strongly associated with views about capitalism. The more people believe in their ability to live a meaningful life, the more they view capitalism and entrepreneurship as good for society.
To be clear, the researchers do not say that life has meaning, just that believing it to be true makes an individual's life better.

Meanwhile, I ponder the words from our priests' farewell sermon last week:
"What gives our lives meaning is purpose."
"Seeking the reign of God needs to be the purpose of our lives."
"Good is kindness, mercy, compassion, a forgiving heart, humility, and faith"
"Evil is the result of self-seeking."
"It is my hope that...we will all continue to seek God's reign in our lives so that when we have completed them we will be able to return as loving servants and children to God who loves us all."
(Poster by Anna Vital)

Saturday, March 21, 2020

Yellowflake, and I Don't Mean Tuna

I suppose it takes someone of Chinese ancestry to say this to some Asians: quit whining about the "racism" in "Chinese virus."

The plague broke out in Wuhan, the capital of Hubei province. The Chinese government covered up the burgeoning catastrophe, and the result is a contagion that has triggered a worldwide recession, and 11,000 deaths so far.

Large swaths of the U.S. are under lockdown, including two of its biggest States:
No state is completely preventing people from going outside or to work, but some measures were more drastic. California Gov. Gavin Newsom effectively banned residents from socializing outside their homes, while New York Gov. Andrew Cuomo went further in cordoning off the elderly and sick populations.
Now China is suggesting the virus' origin was really a U.S. biowarfare project. Here's the tweet from diplomat Zhao Lijian. China through its diplomat just threw the accusation out there with no evidence. The not-made-in-China falsehood needs to be stamped out now by political leaders, journalists, and anyone with a platform. If calling it the "Chinese/China/Wuhan virus" in the daily news conference makes them stop, then good, we all can focus on the real enemy, COVID-19.

A few more comments directed at the young Asians who are triggered by "Chinese virus" and its variations:
  • Get your priorities straight; if some of the many thousands who are working the problem are racist, so what? Sticks and stones.
  • Use this time to toughen yourself. Your parents, grandparents, and ancestors endured far worse discrimination--some of it was the law of the land--and you complain about words, especially words that are not epithets?
  • Report on really offensive speech, if you must, after the crisis has peaked. No one wants to address complaints that are not helping to put out the fire, but the post-mortem phase is the time to go over bad decision-making and morally reprehensible behavior.
  • "Kung flu" is mildly racist, mildly funny, and is far, far from the worst thing I've ever heard. The journalist refuses to name names, btw, so we're not sure the story is even true.
  • The internment of Japanese-Americans during World War II is the most well-known example of modern discrimination against Asians. Despite having their assets seized, their families imprisoned, and their good names sullied, Japanese-Americans responded by giving their lives for the country that mistreated them. To this humble blogger the Nisei soldiers of World War II are the shining example of how to respond to unjust treatment and how to change hearts and minds.
  • To the aggrieved Asian-Americans of today: no one's throwing you into internment camps, and one's asking you to die in the Vosges mountains. Help out however you can, share your complaints with friends and family, and never repay evil with evil.
  • Lastly, physical attacks on Asians should be fully prosecuted, but isn't that one of the dumbest things you've ever heard? Are there really people who beat up those who they think have a deadly, highly contagious disease?
  • Tuesday, February 04, 2020

    Some Markets are Hazardous to Your Health

    I liked to go to "wet markets" in post-war Hawaii as a kid and look at all the live and dead creatures. They were an important part of the culture--and still are in Asia. But their time has passed.

    Business Insider (1/31/2020): [bold added]
    The coronavirus spreading in China and the SARS outbreak of 2003 have two things in common: Both are from the coronavirus family, and both likely started in wet markets. At such markets, outdoor stalls are squeezed together to form narrow lanes, where locals and visitors shop for cuts of meat and ripe produce. A stall selling hundreds of caged chickens may abut a butcher counter, where meat is chopped as nearby dogs watch hungrily. Some vendors hock skinned hares, while seafood stalls display glistening fish and shrimp.

    Guangzhou, 2004: SARS from civet cats in wet market (WSJ)
    Wet markets put people and live and dead animals — dogs, chickens, pigs, snakes, civets, and more — in constant close contact. That makes it easy for a virus to jump from animal to human.

    On January 22, authorities in Wuhan, China — where the current outbreak started — banned the trade of live animals at wet markets. The specific market where the outbreak might have begun, the Huanan Wholesale Seafood Market, was shuttered on January 1. The coronavirus that emerged there has so far killed at least 213 people and infected more than 9,800.
    The Wildlife Conservation Society has called for their abolition:
    SCMP: frogs for sale at Wuhan market
    It would be hard to design more opportune conditions for new viruses to emerge: Tightly pack together a variety of species from around the world and transport them across borders directly into large wet markets. Ensure that these massively stressed and immunocompromised wild animals are in close proximity to domestic and farmed animals. Then distribute these animals to urban populations for consumption.

    The reassortment and exchange of viral components between species at live animal markets is a major source of new viruses. These can be zoonotic—transmitted from animals to humans (e.g., avian flu, SARS, Middle East respiratory syndrome)—and later mutate so that they can transmit between humans, creating the conditions for a rapid global pandemic.

    Sunday, January 19, 2020

    No Other Gods

    The fondness of Episcopal clergy--and leaders of other Protestant denominations--for socialism and progressivism has been commented on in this journal before. But the love is not reciprocated.

    The War on Philanthropy. [bold added]
    (Image from FourStarWealth)
    progressive editorialists and political candidates openly call for deep cuts in the charitable deduction, an end to tax protections for churches and other charities, the taxing down of personal fortunes, and new regimes in which government becomes the sole ministrant of societal needs.
    Christians who are political progressives think that socialism's battle is with capitalism. They do not see that a powerful socialist State views all groups that have influence--not only businesses, but also churches, charities, and universities--as threats to its authority.
    Authoritarians have always hated independent civil society. Russian, Iranian and Chinese dictators clamped down on charities in recent years because they want the state to be the only forum for human influence. “Everything within the state, nothing outside the state, nothing against the state” was Mussolini’s encapsulation. For people with a controlling impulse, private wielders of resources represent alternative sources of ideas and social legitimacy that must be suppressed in favor of unitary government prescriptions.
    The first of the Ten Commandments was: You shall have no other gods before Me.

    When the State supplants God, I suspect that it will adopt the first commandment as its own.

    Thursday, May 09, 2019

    Nice Little Business You Have Here

    (Image from 123RF.com)
    Consumers value lower prices more than they do "corporate social responsibility (CSR)" policies--for example, green initiatives or workplace safety. So why do companies sometimes voluntarily restrict their actions more than the law requires? According to a Stanford study [bold added]
    Firms may exceed regulation in order to reduce support for stricter regulations among key stakeholders, thereby forestalling future implementation of these regulations.
    Another finding--breadth is more important than depth:
    We found that self-regulation can be an effective corporate strategy, but the breath [sic] of self-regulation (the number of companies participating) mattered more than depth (the extent of self-regulation). In some simulations we conducted, we find that in the absence of self-regulation, pro-regulatory forces dominate in 68% of cases. If companies implement broad and deep regulations, this number drops to only 4%. However, companies can get it to as low as 16% by implementing broad but shallow regulations. In contrast, deep and shallow regulations only slightly reduce the chance of pro-regulatory domination.
    Poll responders are displaying common sense; for example, it's better for everyone to cut their energy use by 10% than for a few large users to switch 100% to alternative energy.

    It's also clear that companies are strongly incentivized to adopt CSR policies not because of innate altruism but because of the unspoken threat of regulation, i.e., "nice little business you have here, it would be a shame if anything happened to it."

    Few approve of extra-legal coercion, especially if it's done to them, but it's better than imposing strict laws that nearly always have unintended consequences.

    Wednesday, January 30, 2019

    PG&E Bankruptcy as a Demo for Socialists

    We held PCG for 20 years and sold it in 2005 for $37.75. It's now at $13.
    We've long subscribed to the Peter Lynch principle "invest in what you know"; for example, if you know, like and use Apple products, buy AAPL because many people may think like you and you are Everyman/woman/other, right?

    Pacific, Gas, & Electric (PCG) is a hard company to "like", but as a utility its captive customers provide a steady stream of cash flow and dividends. In 2005, when PG&E's raw materials cost became more volatile and customers were beginning to look at alternative sources of energy, we sold our shares after holding them since the 1980's.

    We got out 13 years early. Now PCG is about $13, a precipitous fall due to the calamitous Camp Fire that began on November 8th, not coincidentally the 12-month high ($49.42) for the stock. The utility declared bankruptcy on Tuesday. One doesn't need an MBA, or even a calculator to figure out why: [bold added]
    The company, which says there will be no interruption in gas and electric service, listed assets of $71.4 billion and $51.7 billion in liabilities....

    “If the liability is anywhere close to the $30 billion estimate, they will lose market share tremendously because customers can in essence walk, especially the commercial and industrial customers,” said Terry Boston, the former chief executive of PJM, the power grid that serves parts of 13 states from Virginia to Illinois.
    The lawsuit damages, plus existing liabilities, exceed PG&E's assets. To preserve what's left, and to continue to provide service to its millions of customers, declaring bankruptcy was the prudent thing to do.

    IMHO, the PG&E bankruptcy is a tremendous opportunity for the Progressives who run California to show how much better Socialism is than Capitalism. The Government could buy the company for a pittance. Then, without having to deal with noisome shareholders and the Board of Directors, they can:
  • force the complete conversion to alternative energy from fossil-fuel sources
  • keep rates at current levels (or lower);
  • repair its aging infrastructure to prevent more San Bruno pipeline explosions
  • pay their unionized workers a fair wage;
  • bury more power lines both to prevent forest fires and to protect the public from downed lines. Sure, it'll cost a lot:
    A new underground distribution line across most of PG&E’s territory costs about $1.16 million per mile, according to data filed with state regulators during the utility’s most recent general rate case. That’s more than twice the price of a new overhead line, which costs about $448,800 per mile. Most of the difference comes from the expense of digging a trench for the cable.

    Prices rise within cities, where the work is more complex. A 2015 San Francisco report found that recent costs for moving power lines underground in Oakland had averaged $2.8 million per mile, while similar work in San Jose had cost $4.6 million per mile.
    Accomplishing all of the above shouldn't be too difficult since a government entity need not show a profit or pay dividends.

    Actually---and I'm being serious now---if Socialists can accomplish all of the above without losing money, they would have a much better chance of convincing the public that they could own and operate the health care system.
  • Saturday, June 30, 2018

    Boomers to Blame

    Many baby boomers need assistance, too.
    Lawyer/journalist/publisher Steven Brill asks the painful question:
    How did we get here? How did the world’s greatest democracy and economy become a land of crumbling roads, galloping income inequality, bitter polarization and dysfunctional government?
    Hint: the answer is in the title of his Time essay: How Baby Boomers Broke America.

    Mr. Brill doesn't attribute America's current state to evil people but to the unintended consequences of a meritocratic system:
    The story of America’s tailspin is not about villains, though there are some. It is not about a conspiracy to bring the country down, nor did it spring from one single source....

    The Meritocracy’s ascent was about more than personal profit....it may be understandable for those on the losing side of this triumph of the achievers to condemn the winners as gluttons. That explanation, however, is too simple. Many of the protected class are people who have lived the kind of lives that all Americans celebrate. They worked hard. They innovated. They tried things that others wouldn’t attempt. They believed, often correctly, that they were writing new chapters in the long story of American progress.
    Sure, the boomers who made it to the top were smart and worked hard, but now they are using the advantages of wealth, education, and social connections to create a new aristocracy. Elites
    can spend what they need to in order to send their children to the best schools, provide tutors for standardized testing and otherwise ensure that their kids can outcompete their peers to secure the same spots at the top that their parents achieved.
    Mr. Brill calls for bigger government to help the majority of Americans in the "unprotected" class. [bold added]
    On the other side are the unprotected many. They may be independent and hardworking, but they look to their government to preserve their way of life and maybe even improve it. The unprotected need the government to provide good public schools so that their children have a chance to advance. They need a level competitive playing field for their small businesses, a fair shake in consumer disputes and a realistic shot at justice in the courts. They need the government to provide a safety net to ensure that their families have access to good health care, that no one goes hungry when shifts in the economy or temporary setbacks take away their jobs and that they get help to rebuild after a hurricane or other disaster. They need the government to ensure a safe workplace and a living minimum wage . They need mass-transit systems that work and call centers at Social Security offices that don’t produce busy signals. They need the government to keep the political system fair and protect it from domination by those who can give politicians the most money. They need the government to provide fair labor laws and to promote an economy and a tax code that tempers the extremes of income inequality and makes economic opportunity more than an empty cliché.
    Your humble blogger has always been of the opinion ("belief" is too strong a word) that massive government redistribution efforts create more problems than solutions. I still hold out hope that eliminating suffering and providing a decent life for the majority who can't make it is possible through a combination of technological advancement and the voluntary actions of the rich, but it just may be that the problems are too vast to overcome without bigger government. I'm not in Mr. Brill's corner....yet.

    Sunday, May 27, 2018

    An American Story

    Ken Langone is a billionaire co-founder of Home Depot and has written an unapologetic paean to capitalism entitled, naturally, I Love Capitalism! An American Story. Like other self-made billionaires he had modest roots. [bold added]
    Ken Langone (WSJ photo)
    His father was a plumber and his mother a cafeteria worker. Mr. Langone worked odd jobs during high school, caddying and digging ditches...

    After graduating [from Bucknell], he sought work on Wall Street, but he says that his blue-collar Italian background prevented him from landing a job at the top firms. Instead he took an analyst job in the investment department at Equitable Life Insurance Society, an insurance firm, while serving in the Army and going to business school at night.
    He worked for small Wall Street firms, then helped found Home Depot, which went public in 1981.

    He wrote his book because young people hear few defenses of capitalism. Without much life experience they gravitate to the ideals of
    "socialism: Guaranteed income. Free college tuition. Single-payer health care. I disagree. Strongly.” He argues that such policies discourage people from bettering themselves. “I disagree with socialism not (as you might believe) because I’m a rich guy trying to hold on to my money,” he writes. “I disagree because socialism is based on the false notion that we should all be exactly equal in every single way.”
    I won't be buying Ken Langone's book because I doubt it will change my world view, and, besides, he doesn't need my money. But I do agree with him about capitalism and socialism.

    I look around at the most socialist-leaning state in the union, our California, where government failures abound in public transportation, education, health care, housing/homelessness and alternative energy. Despite having the highest income tax rate (13.3%) among states, collections are never enough; interest groups are always clamoring for more government spending.

    (Government does deserve credit for the vast State Water Project designed in 1957; completion of its initial phase in the '70s and '80s was crucial to the development of California's economy. Wikipedia: "The SWP provides estimated annual benefits of $400 billion to California's economy." However, even the first phase of the SWP couldn't be built today. Environmentalists have called a halt to all dam- and aqueduct building.)

    What has allowed California to stay afloat is capitalism, the wealth effect of having companies that are world leaders in their sectors. It's easy to tax and spend when you have a concentration of taxpaying and job-creating companies like Apple, Google, Facebook, Chevron, Visa, Wells Fargo, and Intel, all headquartered in the Bay Area and all on the list of the top-20 most valuable public companies in the U.S.

    But back to Mr. Langone. Peggy Noonan has teased out the "rules for living" inferred from his book:
    1. Take your religious faith seriously. His Catholicism gave him safe harbor in storms and left him “sensitive to the plight and needs of others.”

    2. Marry for the long run. He and Elaine have been wed 63 years. When things were good she cheered him on; when they weren’t she let him know “she would always be there for me—win, lose or draw.”

    3. You teach values by living them. Don’t say—do. People absorb eloquent action.

    4. “Pray at the feet of hard work.” Be ravenous in reading about your field, whichever you wind up in and for however long.

    5. Money solves the problems money can solve. Don’t ask more of it, and don’t be ashamed of wanting it. “A kid once said to me, ‘Money doesn’t buy everything.’ I said, ‘Well, kid, I was poor, and I can tell you right now poverty doesn’t do a very good job either.’ ”

    6. Stay excited. Don’t be sated.

    7. Admit the reality around you, then change it.

    8. When you’re successful you’ll put noses out of joint, even among colleagues who benefit from your work. Be careful about jealousy but in the end roll with it, it’s human nature. When you “piss off the old guard,” become the old guard—and help the clever rise.

    9. “There’s no defeat except in giving up.” You’re going to fail. So what? Keep going, something will work.
    These are old-timey sayings which are cliché-ish, but that doesn't make them less true. We won't be billionaires by following them, but we'll probably end up being happier.

    Saturday, June 24, 2017

    Overcoming Inertia

    Xfinity's WiFi is 5-10x the speed of AT&T's U-verse.
    Inertia is a fundament of physics. It's also a powerful behavioral phenomenon. Businesses rely on customers' inertia when prices are raised, and politicians impose tax surcharges and toll increases just below the threshold where the governed take action.

    As I noted in April, over the past 15 years AT&T through acquisitions became the sole provider of all four of our communications systems (landline, cellphone, television, and WiFi). The total cost doubled to $500 per month without improvement in service. It was time to do something about inertia (the ancients called it sloth).

    Earlier this week we replaced AT&T's television and broadband service with Xfinity's offering. The basic TV channels are about the same, while the WiFi is 5-10 times quicker; the speed improvement is especially noticeable when streaming movies or updating apps on iPhones and iPads. The monthly combined charge is $129, $47 less than AT&T.

    The big savings will occur this fall when we move our cellphone account. I had thought that by switching carriers for four lines, we would save perhaps $60 per month. But the cost reduction could be much higher. [bold added]
    telecommunications companies are losing their power to raise prices for using their networks, in part because the U.S. cellphone market is nearing saturation. That has kicked off a vicious price war among the four national wireless carriers.

    Offers from wireless providers are becoming increasingly extreme. Sprint this month launched a short-term promotion to give away a free year of wireless service to new customers who supply their own mobile phones. The move comes months before Apple Inc. is expected to introduce its newest iPhone, which is when carriers typically roll out discounts.

    The competition grew so intense during the first three months of this year that Verizon, the largest national carrier, suffered its first-ever quarterly subscriber loss. AT&T Inc. and Sprint also lost customers, and the industry’s total revenue growth slowed to 1% from a year ago, its lowest-ever rate.
    I don't love any of these cellphone companies, especially AT&T; however, I do love capitalism.

    Sunday, June 11, 2017

    Pope: Nope, Dopes, Cope

    Pope Francis and Russian Orthodox Patriarch Kirill (BBC)
    Pope Francis ignores Catholics in Russia and China:
    A group of Russian Catholics is demanding greater recognition from Pope Francis...Church leaders say the pope has ignored their appeals as he pursues closer ties with the Russian Orthodox Church, which is dominant in the country.

    Catholics in Ukraine accuse the pope of playing down Russian aggression toward their country in order to placate the Russian Orthodox Church.

    some members of China’s underground Catholic church, who have remained loyal to Rome through more than half a century of persecution, worry the pope will betray their fidelity in pursuit of a deal with Beijing and the government-controlled official Catholic church there.
    Sorry, faithful followers, if it's you or a totalitarian regime, the choice is clear. Hope you like it under the bus.

    Note - Francis' take on a different political-economic system: Capitalism is "the dung of the devil" and "condemns and enslaves men and women."

    Tuesday, March 29, 2016

    Go East, Young Man or Woman, Go East

    The Economist - it's easier to become a billionaire in Asia than the USA:
    The American dream of going from rags to riches appears more achievable in developing Asia than in America itself, which seems ever more in thrall to vested interests.
    Not only are more billionaires being created, they are less reviled:
    This may be because emerging-market billionaires seem more dynamic: more than half of them are under 60 compared with less than a third in the rich world. But it is partly because in the emerging world ordinary people have been getting richer alongside the billionaires; in the rich world ordinary people have seen their incomes stagnate.

    Thursday, September 03, 2015

    True Progressivism

    A rational activity
    We entered the diner after the lunch crowd left. One waitress was restocking condiments. She carefully wiped the outside of each bottle of Tabasco and refilled them from a plastic squeeze container.

    Curious about why a rational restaurant owner would view this activity as profitable, I looked up Tabasco's costs:

    A 5-oz bottle of Tabasco retails for $3.99. The gallon-size (128-oz) container sells for $55.74, including shipping.

    Too much for most individuals, but not a business.
    Let's say the waitress makes the California minimum wage of $9 per hour and round that up to $13 for taxes, insurance, and benefits (the $4 difference is the tax wedge).

    The restaurant owner could buy 25 5-oz bottles @ $3.99, for a total of $99.75, or she could pay the waitress for one hour's work refilling bottles at $13 + $55.74 = $68.74. The $31.01 difference is the restauranteur's profit. (Yes, sales taxes and wholesale prices have been ignored, but fine-tuning the costs won't change the result in any significant way.)

    In a capitalist economy millions of such decisions are made every day by people looking out for their own interests. Not all the decisions are good ones, but progress for society as a whole is ineluctable.

    Wednesday, August 19, 2015

    Breathless Anticipation

    The matchup of the year...

    In one corner we have Starbucks [bold added]:
    We have been trying to keep a lid on some big news [ed: gotta sit down for this!] for the beloved Pumpkin Spice Latte, but with recipes and ingredients starting to ship to our stores, the buzz is building.

    ...espresso, perfectly steamed milk, warm fall spices with delicious flavor of pumpkin pie that reminds you of the cool, crisp days of autumn. So, with that great taste you know and love, the PSL returns this fall, and this time it will be made with real pumpkin and without caramel coloring .
    In the other corner we have Panera Bread:
    Panera’s newly ‘clean’ pumpkin spice latte is made with select ingredients including milk, real pumpkin, whipped cream, spices and salted caramel sauce....“We’re offering a ‘Real Pumpkin Latte,’ made entirely without artificial colors, flavors, sweeteners or preservatives, and letting the goodness of real pumpkin, milk and spices do all the work.”
    Panera's release date is September 9th, while a Starbucks spokeswoman said, "it is coming soon." As one who didn't care or even know that this drink existed, I just have one reaction: isn't capitalism wonderful?

    Tuesday, April 21, 2015

    Hope vs. Reality

    Wishful thinking doesn't go away with age [bold added]:
    67% of workers say they plan to work for pay in retirement. But here’s why that may not be such a realistic plan: Among those who are already retired, only 23% actually work for pay.
    The explanations aren't surprising:
    Among the things that can cause people to leave the workforce earlier than they expect are health crises, layoffs and ageism on the part of prospective employers.
    (Image from frontpagemag.com)
    Deferred gratification, aka "saving", was a key element of the Protestant ethic that attached little value to wishful thinking. The Protestant ethic has been consigned to the dustbin of history.

    We reap what we have sown.

    Sunday, April 12, 2015

    From Prince to Pariah

    Back to basics (image from businesswire.com)


    In the late 1990's GE Capital was "the largest single contributor to General Electric's earnings."

    GE Capital was a colossus. Everyone in banking and financial services ran into them, as a competitor, lender, customer, investor, and sometimes all of the above. In aircraft leasing, where my division competed with it, GE Capital Aviation Services (GECAS) enjoyed the lowest borrowing costs as well as the lowest airplane prices from Airbus and Boeing. It owned more airplanes than the largest airline.

    We and other lessors could not offer lower lease rates than GECAS and had to come up with creative ways to compete (betting that the models we ordered would be in greater demand than GE projected, flexible lease-extension options, absorbing interest-rate and/or credit risk, favorable return conditions, etc.)

    After the financial crisis of 2008 GE Capital lost its AAA credit rating. The subsidiary had become a drag on the parent, instead of an earnings contributor.

    Last Friday General Electric announced that, after selling off pieces over the past 11 years, it will rid itself of GE Capital almost completely by 2018. The final straw was likely GE Capital's upcoming regulation by the Federal Reserve as "a large nonbank financial company" that produced systemic risk.

    Investors reacted positively to the news:
    News of the dramatic shift sent shares up 10.8%, to $28.51, after a 3% rise on speculative buzz Thursday. The gain is well-deserved: GE is choosing a good time to sell, because the market for financial and real estate assets has rebounded sharply since the 2008-09 financial crisis.
    Today's prince, tomorrow's pariah.

    Monday, September 29, 2014

    Sounding Like an MBA

    Your humble observer believes that the various flavors of capitalism are much superior to socialist/statist alternatives. But he is not blind to the human weakness and dastardly goings-on that can arise when individuals pursue their own self-interest.

    The top-50 business buzzwords are ingenious and often ruefully amusing. Some, like synergy and poison pill, have been around for decades (the most creative, IMO, are in red):
    A “granular” perspective: To examine something in detail – “course-grained” is to focus on the big picture, “fine-grained” the nitty-gritty.
    Deep diving: A liquid, “in-depth” take on the above.
    Deep pyramid: The structure of a centralised organisation consisting of many layers.
    Excentralise: The trend towards flatter corporate pyramids.
    Deliverable: An output, product, result, or outcome.
    Paradigm shift: Something revolutionary.
    Game changer: A step down from the above.
    Ideation: The ability to come up with effective new ideas.
    Resonance: The impact of an idea across the organisation.
    Vision statement: An explanation of what you one day hope to achieve.
    Decruiting: Current euphemism for firing people.
    Don’t boil the ocean: Don’t waste time or resources.
    Pain points: Mumbo-jumbo for problems or challenges.
    Emotional leakage: Anger or disappointment that transfers from one person to another.
    Eyebrow management: Arms-length management style in which a top exec can stop a course of action by the slightest hint of disapproval.
    Falling forward: Risk management term for a learning process that consists of trying something – a product, strategy or organisational change – and scrapping it for a better idea if it doesn’t work.
    Gatekeeper: Any person or department that screens or selects.
    Bleeding edge – Leading or cutting edge.
    Seamless integration: Patching things together so that nobody will notice.
    Pushing the envelope: Testing the boundaries.
    Data colouration: White lies that percolate up the line as employees at all levels report the state of their business in the most favourable light.
    Quick wins: Results that look good but can be achieved with minimal effort.
    Let’s speak “offline”: A one-on-on, face-to-face conversation.
    Out-of-the-box: To think outside the box, don’t you still have to think about the box?
    Informativity: The degree of efficiency with which a company’s information needs are handled.
    Disruptive thinking: Being innovative, only more so.
    Intrapreneurship: Innovation and creativity developed within an existing company.
    Dawn raid (daybreak attack): A surprise takeover move by a predator company.
    Death Valley curve: The stage in a new company’s existence when losses erode its equity base, damaging its ability to raise funds.
    Hot button: The thing you push to get a strong response.
    EEE sensation: Proceeding in the direction you are moving because it’s “easy, effortless and enjoyable”.
    JIC and JIT: Just in case and just in time.
    CSF: Critical success factor – be it great service, price, technology, etc.
    OVA: Stands for overhead value analysis.
    MIPS war: Acronym for speeding up computer power to handle “millions of instructions per second”.
    MEGO effect: The impact on an audience by an inept presenter: “My eyes glazed over.”
    Organic growth: The expansion of business through internal development.
    Golden retriever: A cash bonus that lures a retired executive back into an active business role.
    Layered: What happens when your responsibilities are eroded by a new layer of management.
    Mushroom management: A management technique that keeps employees in the dark.
    High-touch: Management style practised in people-oriented companies, where “touchy-feely” methods are popular.
    Poison pill: Debt and other liabilities taken on by companies that corrupt their balance sheet.
    Psychic income: The satisfaction derived from your job – usually a substitute for money.
    Spear carrier: Second-tier representative top managers send to the frontline to save themselves.
    Share of mind: A key factor in achieving brand recognition.
    Low-hanging fruit: Go for the easiest pickings first.
    Quant: A numbers man or woman.
    Synergy: A chronically overused buzzword that generally refers to cooperative interaction among groups.
    Big data: Lots of interpretations, but usually refers to the explosion of digitised data created by people, machines, sensors and the like that can act as an audit trail.
    Bandwidth: In its latest incarnation in the corporate sector, means the energy or mental capacity required to deal with a situation.

    Saturday, August 31, 2013

    Great Moments in Food Science

    While you and I may consider a coffee splurge to be a $3 latte at Starbucks, the upper 1% are paying eighty simoleons for coffee brewed from civet droppings.

    At those heady prices Kopi Luwak is ripe for counterfeiting and adulterating (though for yours truly watering down would be a feature, not a bug).  But now a Japanese scientist may have come up with a way of detecting whether the dark brown juice in the cup is the genuine article.
    Dr. Fukusaki’s quest began with many piles of civet faeces [blogger's note: British spelling makes it sound classier] , as well as undigested coffee beans from plantations in Bali, Java and Sumatra, all of which he treated by roasting them at 205°C and then grinding them up. Instead of popping them into a percolator at this point, though, he mixed them with distilled water, methanol and chloroform to extract the sorts of chemicals that give coffee its flavour. He then ran the extracts through a gas chromatograph and a mass spectrometer, to see what was in them.

    The crucial giveaways of Kopi Luwak turned out to be four substances: citric acid, malic acid, pyroglutamic acid and inositol.
    As the article points out, coffee drinkers can just add the chemicals themselves and get a much cheaper drink similar to Kopi Luwak. We'll wait and see; for us it will also need to pass the smell test. © 2013 Stephen Yuen

    Monday, July 30, 2012

    They'll Come Back Home

    Twenty years ago Francis Fukuyama declared the End of History to be at hand with the triumph of liberal democratic capitalism.

    Charles Murray argues that this consensus has crumbled:
    "Capitalist" has become an accusation. The creative destruction that is at the heart of a growing economy is now seen as evil. Americans increasingly appear to accept the mind-set that kept the world in poverty for millennia: If you've gotten rich, it is because you made someone else poorer.
    Mr. Murray attributes the negative attitude toward capitalism to several factors:
  • the prevalence of crony capitalism, i.e., winners win by pulling strings with friends in high places;
  • the accumulation of fabulous wealth through financial legerdemain;
  • the many successful liberal capitalists, such as those here in the Bay Area, who won't defend the system through which they produced their wealth;
  • the segregation of capitalism from virtue, i.e., "The freedom to act and a stern moral obligation to act in certain ways were seen as two sides of the same American coin. Little of that has survived."

    This humble observer is not as pessimistic as Mr. Murray. The alternative to capitalism is statism. The crises of the past decade swept statists into power throughout the West, and they were given rein to implement their pet solutions to major problems. For the most part they failed.

    Capitalism in practice always looks bad compared to other "-isms" in theory. Now that citizens have had a chance to see how the alternatives operate in the real world, they'll come back home.