Friday, April 8, 2011

Health Care Agitprop (Part 1)

One of the things that constantly infuriates me is the coverage generated by the debate over healthcare, ObamaCare specifically. While in a perfect world, everyone would be happy not have to worry about anything, let alone their health insurance, but this isn't the case. The idea that everyone is entitled to be taken care of by the government at no expense (to them) is pretty unrealistic. Even socialized healthcare has its own issues and costs associated with it, but I won't get into that today.

One of the main objections to the capitalist system in the US is that the "capitalist" market has failed to deliver adequate health insurance at a reasonable cost. This is flawed reasoning because there isn't a truly capitalist market in the US, since at least World War 2. Healthcare is one of the most non-competitive industries in the country, if not the most. The protections in the healthcare industry run so deep, it would take an overhaul of the entire system to achieve a competitive marketplace. The odds of this happening are very slim due to the insurance provider's lobby squashing any chance of passing legislation that isn't heavily in their favor. Hell, they worked with Obama to get this travesty passed.

Monday, March 14, 2011

What is it good for?

I was talking with a coworker not too long ago who was upset with the boss. He said that he wanted to punch him in the face and I explained that it was never worth it. Later, he came up to me and explained that he I, being white, would never understand the pressures that he, being black, has dealt with all his life.

While I suppose I understand his reasoning, I still maintain that it wouldn't be worth it. The non-violent campaigns of history have yielded more lasting success than the violent, forceful ones. In fact, history has shown that violence is the preferred tool of the state, rather than the people. Every state in the world that I can think of has taken a monopolistic approach to the use of force.

The most effective way, from my point of view, is to use reason rather than force, to effect change. Even in the case of perceived racism, the method most likely to generate a desirable outcome would be to either ignore it or approach the issue peacefully. Odds are good that succumbing to a stereotype of violent outbursts will do little to help your cause.

Note that the stereotype of violent outbursts has been associated with many different cultures. Arab peoples for example have become the villain du jour of the conservative movements, despite the militant and terroristic segments accounting for less than 1% of the total population (if that much). To provide some contrast, outlaw biker clubs have made it a point of pride to be the 1% that is responsible for violence in their subculture.

To succumb to violence is to lose one's self to your emotions. Rarely is violence worth the trouble of proving a point. From the standpoint of libertarian ideology, initiating force on another is pretty much the worst thing one can do. While disagreements occur, there is always a peaceful method of resolution available.

One thing that always annoys me is the idea of respect. I have had many friends pursue violence in an effort to reenforce the respect they think another person has not given them. Kinda like getting into a fight, just to prove a point. This never seems to solve anything, especially the respect that is desired. I can't imagine that after being punched by someone, the victim feels anything even remotely like respect for the attacker. If anything the attack would conjure either fear (which I suppose is the true goal) or the desire to retaliate. Retaliation escalates the conflict and the cycle of violence begins, potentially ending in arrest. The respect of another is not worth losing your freedom.

Monday, March 7, 2011

Class Wars

Whenever I hear talk about the tax breaks available to the rich versus the programs that are being cut do to lack of funding, I always wonder how things would look if the wealthy stopped providing jobs for people. While they may reap more of the benefits than the employed, the employers have the most to lose by the business failing.

I haven't heard too many cases of employees investing heavily into a company before taking a job at the company. Even more illusive is the employee that is willing to sacrifice for the sake of the company. While the employees who strongly believe in the company will do so, the employer still has a larger stake in the business failing. On the off chance that the employees that sacrifice for company, they are typically rewarded greatly for doing so.

I haven't met many successful people that have started a business with no investment.

Monday, February 28, 2011

Evil Employers (Scenario)

Your employer gives you a job and you work 2000 hours per year (40 hours a week for 50 weeks).

Your employer employs 49 other people and they each work 2000 hours a year.

Assuming a fairly generous rate of $20/hour, you would be making $40,000 a year as would the other 49 people at your job. From a labor cost alone your employer would need to make $2 million to pay all of you, but he believes that his employees are worth it.

If the company pays rent on the building in which you work, we'll make a modest guess of $19,000 each month, for a total of $228,000 annually. (Assuming 400 square feet per person with a company of 50 people at $0.95/square foot)

The costs associated with doing business are typically coming out of the pockets of the owner of the business. We'll call this the "investment". In this office you are provided with a phone, a computer, a desk and a chair totaling about $700. Everyone in the office has one, so the cost would be $35,000. (These are dirt cheap rates I am throwing out. The real cost would be a lot more.)

So the owner would be paying about $2,228,000 a year to offer all 50 of these jobs at $20/hr. Before you are able to work, he has to pay about $35,000 to furnish the office, likely out of his own pocket.

He negotiates this workplace and gets everything up and running. In its first year, the company takes in $4 million in revenue. Things are good. He gives everyone a 3% raise to follow the average inflation and as a thank you for making him some money. (He is now paying $2,060,000 in labor costs bringing his annual cost to $2,288,000)

Unfortunately, the economy takes a slight downturn, and the company only takes in $3 million in revenue. His costs don't change, but his profits suffer. He makes the tough decision to cut 5 jobs so he can save $200,000 a year. Looking over his staff he cuts the 5 worst performing employees and gives the rest a 3% raise. (His labor cost is now $1,915,800 and his rent is $228,000 for a total of $2,143,800)

The workers that did not get laid off get kind of antsy because five of their coworkers got laid off. They decide to organize to ensure that the rest of the workers will be compensated in the event of layoffs. They demand a raise to $24/hour and that he pay any more workers that get laid off for six months at 70% of their pay ($22 of their hourly goes to them and the other $2 goes to union dues). He declines the agreement. The workers strike until he agrees to their demands. ($2,160,000 labor costs)

Unfortunately the economy takes another turn for the worse, the company takes in $2 million in revenues and the owner is forced to lay off 10 employees to make up for having to pay them 70% of their wages. The remaining ones strike until they get to keep 5 of the workers. The owner takes a loss in his annual pay.

He made the investment into the company and reaped some of the benefits, but the workers have swallowed his profits. None of the employees have even considered a pay cut, yet he is losing money paying their inflated wages. He once believed in his workers, but he can't anymore. They shared his vision when the revenue was coming in, but once the revenue lessened, they only saw how it affected them.

Why should he continue a losing venture? Should he continue to operate at a loss just to engender good will with his employees or should he shut the office down? His employees won't take any cuts for him, but they are demanding that he take cuts for them.

Saturday, February 26, 2011

Evil Employers (Part 2)

Unions are bad today even in theory.

A little history will come first. In the United States, unions were vital in improving working conditions in the 19th century, but like many of the innovations from that time period, they have become somewhat outdated (more on this later). The working conditions in factories during the American Industrial Revolution were far from ideal and the wages earned by the people might be described as exploitive. When groups of workers banded together and protested their employers for higher wages and better conditions, unions were established to coordinate such activities. In uniting, they were able to leverage their employers to improve their working conditions. By doing so, they were offered better wages and more stable jobs. The factory managers now had to deal with higher labor costs and thus lowered profits.

The middle class was emerging from the somewhat narrowing disparity in earnings. By exercising there collective bargaining powers, workers were able to negotiate the terms at which they were willing to work. By uniting, they used the leverage of their supply of labor against the demands of their time. In turn, they received higher wages and a comparatively better working environment. The wages for non-union members increased due to marketplace forces. Overall the working conditions of the emerging middle class improved. That is about where unions stop being a moderately good concept.

While labor unions used to be a barometer for defining the middle class, they have lost significant market share to more competitive forms of employment. While the private sector only has 7.6% of the workforce unionized, the public sector has about a 36.8% unionized workforce. This disparity is worth noting, because the private sector is typically more reflexive to changing market forces and is often far more efficient. The private sector is driven by the bottom line profits whereas the public sector is often far more politically driven.

There was a case of a politician negotiating with a California public sector labor union in which the union official told the politician that if he didn't give in to the union's demands that they would elect someone else that would. Considering most elections are held on weekdays during which the majority of the population is working, the unions typically have a marked advantage in the negotiations using their voter base. Unionized workers are almost guaranteed to vote on a particular matter because they have a vested interest and the average non-unionized worker is less likely to because they wouldn't likely be affected by the measure at hand.

Another point worth mentioning is that public sector unions, such as teachers and police, are given more support because their jobs are considered righteous and completely necessary. These groups have a complete monopoly on their product and only have token amounts of competition. How many privatized police forces exist in the US and operate independently of the government run police force?

While private schools exist, they lack the overly abundant funding that public schools do and consequently can't pay teachers nearly as much. On average, despite these disadvantages, private schools perform better than public schools. In fact, in order to succeed a private school has to prove that the price of tuition is substantially better than the public school for which the parents will still have to pay. Like FedEx, they are competing against the US government.

What does this have to do with the unions themselves? Quite a bit actually. The National Educators Association is one of the largest and most powerful unions in the country. The police unions also carry a big stick (one so big that in some cases, speaking out against the police in any way can result in criminal investigations/allegations against you).

The public sector unions are supported primarily through tax dollars and the wages and pensions they demand are a burden to everyone. As the public sector outpaces the private sector in terms of pay, an untenable situation develops. The generous pensions are becoming a severe liability in many cases forcing state governments to go into ever increasing debt. California has been having problems paying its people for the past few years and the current economic downturn has exacerbated the problems.

As we are seeing in Wisconsin right now, when a politician tries to change or limit the scope of how much the unions can demand of the state, the workers strike. Much like years ago when factory owners had to meet the demands of the union at the expense of operating costs, the government is buckling under the crushing weight of their debt while the employees seem not to care.

There was a bread factory in Brooklyn that was struggling during the economic downturn of 2008 that was faced with striking workers demanding higher wages. The factory owner, rather than meet the demands, closed the factory and moved, taking all of the jobs (at whatever wage) with it. When faced with the prospect of diminishing or non-existent profits, the factory owners decided that neither was acceptable and took their jobs with them. In this respect, the employer still retains power and ultimately the control of the jobs.

In the case of the local government, the only leverage the government has is legislation. When the unions aim to stifle any legislation that would cut its pay, the government may have to shut down to get out from under the oppression of the workers.

Wednesday, February 23, 2011

One Man History Will Remember

Mohamed Bouazizi will be a person that should be remembered for some time. His self-immolation was the last straw for the people of Tunisia starting the revolution that has already overtaken two dictators in the Arab world. His contribution to history should never be forgotten.

While the revolts in the Arab world have yet to fully play out, the saber of the people has been rattled. Changes in the fabric of how the tyrants view their subjects has definitely shifted. The popular revolt is only one step towards change. Even governments not traditionally viewed as tyrannical have taken notice of the peoples' revolutions. While odds are good that the US has little to fear in a government take over, they have taken notice.

Mohamed Bouazizi should be remembered as a hero. In his act of defiance, he helped usher change in the world.

Tuesday, February 22, 2011

Evil Employers (Part 1)

One thing that always gets under my skin is the concept of what a job is to some people. To some it is a right, to others a privilege. While I can kind of appreciate the plight of the worker, I can't believe that any job is something other than the property of an employer.

To elaborate, if you are hired to do a job, your employer is giving you the permission to perform the functions that the job entails. In return for your performance of said functions, the employer pays you an agreed upon amount. From its most basic elements, the two of you would be engaging in commerce: you trade your time for their money. In order to agree to the terms of the exchange, both you and the employer may set terms (including but not limited to them demanding that you be at your post at a given time in the attire befitting your post). They may give you concessions regarding the number of days a week you work or perks such as discounts on their merchandise, but these may not be completely to your liking. In the event that you and an employer cannot agree on terms of employment, then you are not an ideal candidate for the job.

Even in the negotiation regarding the terms of the job, you must be willing to meet the employer's expectations. To give an example, I sell cars for a living, and I have to work on Saturday every weekend, and in exchange, I am given a day off during the week. The reasoning behind this is that my time is more valuable to my employer on Saturday than it is on Wednesday. In exchange for maintaining my employment, I have to agree to the terms set forth. If I were to tell my employer that I don't want to work before noon, or that I am going to leave everyday at 5, they would tell me not to come back. The job is theirs by right and I am asked only to follow the rules that allow me to keep it.

The thing about this mentality is that once you have a job, you work to keep it. No employer have ever owed me anything other than the payment for the time I worked for them. The idea that a person should have a job by some sort of right is ludicrous. The workers that perform well are treated well because they perform well and the employer's yield from the worker's time is more than enough to justify higher pay. In the event that a person performs well enough to merit extra pay but doesn't receive it, they have the option to find a job that pays the amount they think they are due.

In a free marketplace, the number of people an employer is able to find meritorious enough for a given post is directly proportionate to the pay that the post yields. The laws of supply and demand are in full clear effect. One would not expect that there are many people able to do as well as the CEO of UPS at running a company. There are millions of people who may be able to do a Burger King fry cook's job. Thus there is only one CEO of UPS and a staggeringly large number of Burger King fry cooks and the disparity in payment between the two reflects the demand for the abilities.

This is barely scratching the surface of the job matter. More tomorrow...