It became very clear in the debate last night, that Obama believes in taxing companies more. The best part of the debate was the discussion around Joe the plumber. Unfortunately, they got hung up on the philosophical discussion about re-distribution of income.
A much more salient point should have been made, namely, due to the new taxes that Obama is proposing, Joe the plumber won't be able to buy an additional truck, nor hire an additional plumber. This fact, stated so bluntly by Joe the plumber, is a microcosm of what Obama's proposed tax policy will result in.
To expose this, McCain should have asked Obama this ...
Let's assume you're the CEO of a public company; 20% of your stock is held by public employee pension funds (for teachers and firemen), as such, their pension checks rely on your dividend payments. You're in a position to hire 1000 call center workers; in Ireland you get to keep 89 cents of every dollar of profit, and hence pay out 89 cents to pensioners, in the US, you get to keep 65 cents, and hence pay out pensioners 65 cents. Where are you going to put those jobs?
If you decide to put them in the US, you'll be paying out lower dividends; since pension fund managers want to maximize dividend payments for their pensioners; they will sell your stock and buy stock in the company that pays higher dividends (because they decided to put their call center in Ireland). This may impact your operations by increasing your cost to finance, which in turn may cause you to have to fire people. If you put the jobs in Ireland, you continue to pay handsome dividends to pensioners and they hold onto your stock. You're financing stays cheap, and you can continue to grow your business.
These are your ONLY two options (if you keep taxes at current rates)-
1) You put jobs in Ireland and are rewarded by pensioners keeping your stock
2) You put jobs in US and are punished by pensioners selling your stock
The only way the 2nd scenario doesn't play out badly, is if you can convince retired teachers and firefighters to take a 27% pay cut in their pension checks. You see, it's not only greedy CEO's who want bigger profits; its 'greedy' pensioners and other retirees who hold stocks.
Obama doesn't seem to realize a truism that the rest of us seem to take for granted ... there's no such thing as a free lunch ... or more specifically, there's no such thing as a free (or harmless) tax ... you always wind up paying for it somehow ... In the case of corporate taxes, it's paid by pensioners (as stock holders), customers (via higher prices), and employees (in the form of lower wages or job losses).
UPDATE:
As a reader pointed out, there is a 3rd option (which McCain is advocating). Reduce corporate taxes to be more internationally competitive, allowing companies to keep jobs in the US, while also allowing for competitive dividend payouts to pensioners.
UPDATE 2:
Here's a great 'Fact Check' post on the debate last night.
Here's an excerpt ...
What Sen. Obama doesn't understand or doesn't want to tell the American public is that when Exxon Mobil writes that check to Uncle Sam, some PERSON is paying the price for that. In the short-run, that person could be a shareholder, a worker, or a consumer. But the fact that Exxon Mobil has a lower after-tax profit means that some PERSON is worse off. For example, Exxon Mobil would likely reduce its dividend payment, or its share price could fall, and that hurts every PERSON who was invested in Exxon Mobil at the time the tax was enacted.
And this isn't controversial. If you called up Obama's top economic advisers Jason Furman or Austan Goolsbee on November 5 (after the election) and asked them who pays taxes, both of them would tell you that people pay all taxes, and that a company merely acts as a means of collecting for the government the taxes imposed on owners of capital and in some cases, the company's workers.
Thursday, October 16, 2008
Friday, October 10, 2008
Wednesday, October 8, 2008
The real reason trickle down isn't working ...
I understand the Democratic attacks against 'trickle down' economics. The rich get richer and the poor get nothing (actually, the poor are also getting richer, just at a slower rate). However, their proposed solution, taxing the rich more and giving the money to the middle class in the form of a tax cut, will do more harm than good.
So what happens? You take $25K from someone making $250K, and give 10 families who make $75K a $2500 tax credit ... have you fundamentally changed the lives of that family? Have their career prospects changed? Do they have more opportunities now? Sure, they can afford a bigger SUV, and a nicer Flat Panel TV ... but you haven't really changed their lives.
What happens to the family that is making $250K, they have $25K less ... their lives are basically unchanged, maybe they decide to buy the regular gas SUV since the Hybrid SUV is too expensive now. The biggest impact on this family is that they will likely reduce what they save. They will no longer put $25K into the stock market or bond market. This means companies will see the cost of financing go up. To remain globally competitive, these companies will need to try to reduce costs elsewhere, to make up for the increased cost of borrowing money. One favorite activity has been to off-shore work, to lower cost areas. So, that's what these companies do, they send jobs overseas.
The outcome ... generally speaking, it's the lower skilled (lower paid) jobs that get moved off shore first. So, that family making $75K may start to worry (more) about their job, they hope they don't get laid off.
The sad fact is that wealth isn't trickling down, but it's because those making $40-80K don't have skills that produce enough value to warrant a higher wages, especially when those skills can be performed for much less offshore.
The best way to improve the lives of those in the middle, isn't to take money from the rich, who are investing it, and to give it to the middle who will spend it; but rather re-invest that money you take from the rich to improve the skills of those in the lower and middle wage brackets. Create tax credits for job retraining; encourage (as best you can) people to engage in life-long learning ... gone are the days when you learned one trade and practice it your whole life.
Removing invested money from the market and giving it to someone to spend, is the exact opposite of what the US needs to be doing.
So what happens? You take $25K from someone making $250K, and give 10 families who make $75K a $2500 tax credit ... have you fundamentally changed the lives of that family? Have their career prospects changed? Do they have more opportunities now? Sure, they can afford a bigger SUV, and a nicer Flat Panel TV ... but you haven't really changed their lives.
What happens to the family that is making $250K, they have $25K less ... their lives are basically unchanged, maybe they decide to buy the regular gas SUV since the Hybrid SUV is too expensive now. The biggest impact on this family is that they will likely reduce what they save. They will no longer put $25K into the stock market or bond market. This means companies will see the cost of financing go up. To remain globally competitive, these companies will need to try to reduce costs elsewhere, to make up for the increased cost of borrowing money. One favorite activity has been to off-shore work, to lower cost areas. So, that's what these companies do, they send jobs overseas.
The outcome ... generally speaking, it's the lower skilled (lower paid) jobs that get moved off shore first. So, that family making $75K may start to worry (more) about their job, they hope they don't get laid off.
The sad fact is that wealth isn't trickling down, but it's because those making $40-80K don't have skills that produce enough value to warrant a higher wages, especially when those skills can be performed for much less offshore.
The best way to improve the lives of those in the middle, isn't to take money from the rich, who are investing it, and to give it to the middle who will spend it; but rather re-invest that money you take from the rich to improve the skills of those in the lower and middle wage brackets. Create tax credits for job retraining; encourage (as best you can) people to engage in life-long learning ... gone are the days when you learned one trade and practice it your whole life.
Removing invested money from the market and giving it to someone to spend, is the exact opposite of what the US needs to be doing.
Tuesday, October 7, 2008
Tax the Rich ... even more?
I found this graph, and thought it did a great job of explaining the current tax situation in the US; as you can see, the top 5% earn 35% of income and pay about 60% of income taxes.
My question is, what is a 'fair' tax rate?
In 1981, the top 5% only paid 35% of all income taxes ... so over the last 28 years (of which the White House was controlled by Republicans for 20 years), the share of income taxes paid by the top 5% has increased 70%!
My question is, what is a 'fair' tax rate?In 1981, the top 5% only paid 35% of all income taxes ... so over the last 28 years (of which the White House was controlled by Republicans for 20 years), the share of income taxes paid by the top 5% has increased 70%!
Thursday, October 2, 2008
Why is Obama against testing students?
Obama on testing ...
"By twelfth grade, our children score lower on math and science tests than most other kids in the world. "
...
"And by the way - don't tell us that the only way to teach a child is to spend most of the year preparing him to fill in a few bubbles on a standardized test. Don't tell us that these tests have to come at the expense of music, or art, or phys. ed., or science. These tests shouldn't come at the expense of a well-rounded education - they should help complete that well-rounded education. The teachers I've met didn't devote their lives to testing, they devoted them to teaching, and teaching our children is what they should be allowed to do." ... source.
__________________
Do you think countries like South Korea score higher than the US on tests because they focus on a well rounded education?
Tell me, how do you teach a kid to answer this questions, without teaching them math?
Question:
2459 x 34593 =
Answer:
a) 82,245,187
b) 63,234,187
c) 69,603,477
d) 85,064,187
e) 84,249,127
You see ... teaching kids how to "fill in a few bubbles on a standardized test" requires that you teach them the subject matter of the test ... stop making excuses for failing education & schools.
"By twelfth grade, our children score lower on math and science tests than most other kids in the world. "
...
"And by the way - don't tell us that the only way to teach a child is to spend most of the year preparing him to fill in a few bubbles on a standardized test. Don't tell us that these tests have to come at the expense of music, or art, or phys. ed., or science. These tests shouldn't come at the expense of a well-rounded education - they should help complete that well-rounded education. The teachers I've met didn't devote their lives to testing, they devoted them to teaching, and teaching our children is what they should be allowed to do." ... source.
__________________
Do you think countries like South Korea score higher than the US on tests because they focus on a well rounded education?
Tell me, how do you teach a kid to answer this questions, without teaching them math?
Question:
2459 x 34593 =
Answer:
a) 82,245,187
b) 63,234,187
c) 69,603,477
d) 85,064,187
e) 84,249,127
You see ... teaching kids how to "fill in a few bubbles on a standardized test" requires that you teach them the subject matter of the test ... stop making excuses for failing education & schools.
Goodies in the 'rescue' package ..
Now part of the financial rescue package ...
“…Congress would provide tax breaks worth more than $470 million over the next decade for movie and TV producers that shoot in the U.S…. it could keep some low-budget productions -- and jobs -- from going offshore” Source
Sounds like a great idea, maybe they can give tax cuts to companies that write code in the US; after all, it would help keep jobs here as well!
“…Congress would provide tax breaks worth more than $470 million over the next decade for movie and TV producers that shoot in the U.S…. it could keep some low-budget productions -- and jobs -- from going offshore” Source
Sounds like a great idea, maybe they can give tax cuts to companies that write code in the US; after all, it would help keep jobs here as well!
Monday, September 29, 2008
Is it time to stock up?
For those of you who fear the collapse of modern civilization, here's a calculator to help you figure out how much you need to stock up ...
http://www.thefoodguys.com/foodcalc.html
http://www.thefoodguys.com/foodcalc.html
Tuesday, September 23, 2008
Classic Biden
"When the stock market crashed, Franklin D. Roosevelt got on the television and didn't just talk about the, you know, the princes of greed. He said, 'Look, here's what happened,'" Barack Obama's running mate recently told the "CBS Evening News."
Except, Republican Herbert Hoover was in office when the stock market crashed in October 1929. There also was no television at the time; TV wasn't introduced to the public until a decade later, at the 1939 World's Fair.
... "Part of what being a leader does is to instill confidence, is to demonstrate what he or she knows what they are talking about and to communicating to people ... this is how we can fix this," Biden said.
Re-engineering Goverment ...
Ever wonder how we could balance the budget without huge tax increases?
Here's a great article discussing the need to re-engineer the Federal Government; it quotes the Grace Commission report which found that "... nearly one-third of all taxes collected by the federal government are squandered through inefficiency."
... 1/3 of all taxes would be more than enough to balance the budget at current tax rates.
Here's a great article discussing the need to re-engineer the Federal Government; it quotes the Grace Commission report which found that "... nearly one-third of all taxes collected by the federal government are squandered through inefficiency."
... 1/3 of all taxes would be more than enough to balance the budget at current tax rates.
Wednesday, September 17, 2008
Saturday, September 13, 2008
Wednesday, September 10, 2008
Is Obama a Supply-Side convert?
"Democrat Barack Obama says he would delay rescinding President Bush's tax cuts on wealthy Americans if he becomes the next president and the economy is in a recession, suggesting such an increase would further hurt the economy." ... source
If you're admitting that taxing the rich hurts the Economy,you're actually admitting that the money the rich save on taxes, must TRICKLE DOWN into the Economy.
Yet in Obama's acceptance speech he made fun of trickle down saying: "For over two decades, he's [McCain] subscribed to that old, discredited Republican philosophy -- give more and more to those with the most and hope that prosperity trickles down to everyone else."
FYI - Supply side doesn't actually work on 'hand-outs' as Obama says above ... unless you consider letting someone keep more of what they make a handout. The philosophy posits that if you let people keep more of their income, that money will trick down into the Economy and grow the Economy.
I guess Obama is now a convert do that 'discredited Republican philosophy'.
If you're admitting that taxing the rich hurts the Economy,you're actually admitting that the money the rich save on taxes, must TRICKLE DOWN into the Economy.
Yet in Obama's acceptance speech he made fun of trickle down saying: "For over two decades, he's [McCain] subscribed to that old, discredited Republican philosophy -- give more and more to those with the most and hope that prosperity trickles down to everyone else."
FYI - Supply side doesn't actually work on 'hand-outs' as Obama says above ... unless you consider letting someone keep more of what they make a handout. The philosophy posits that if you let people keep more of their income, that money will trick down into the Economy and grow the Economy.
I guess Obama is now a convert do that 'discredited Republican philosophy'.
The Fannie and Freddie Enablers
Top Recipients of Fannie Mae and Freddie Mac Campaign Contributions, 1989-2008
1. Dodd, Christopher J, D-CT
2. Kerry, John, D-MA
3. Obama, Barack, D-IL
4. Clinton, Hillary, D-NY
Source
While Obama is only #3 on this list, he’s managed to move to 3rd place in only 4 (probably closer to 3) years of fund raising, compared to 10 years for the 2 placed ahead of him.
Change you can believe in? Change from people who, while accepting contributions from Fannie and Freddie, blocked calls for more oversight into these two GSEs. Now the tax payer gets to clean up the mess at a large cost. Thanks Obama for standing in the way of real change, change that might have helped to prevent this loss of over $300B. Just think of all those school teachers that could have been hired for that $300 billion.
1. Dodd, Christopher J, D-CT
2. Kerry, John, D-MA
3. Obama, Barack, D-IL
4. Clinton, Hillary, D-NY
Source
While Obama is only #3 on this list, he’s managed to move to 3rd place in only 4 (probably closer to 3) years of fund raising, compared to 10 years for the 2 placed ahead of him.
Change you can believe in? Change from people who, while accepting contributions from Fannie and Freddie, blocked calls for more oversight into these two GSEs. Now the tax payer gets to clean up the mess at a large cost. Thanks Obama for standing in the way of real change, change that might have helped to prevent this loss of over $300B. Just think of all those school teachers that could have been hired for that $300 billion.
Sunday, September 7, 2008
No free speech for this guy
My neighbor had a McCain lawn sign in his front yard. This morning he found that sign torn up, his house was teepeed, and he now has some Obama signs.
I guess free speech only applies to Obama supporters. I know, I know, just a few bad apples; then again, Obama supporters had a reporter arrested for taking pictures of Senators with big donors ... maybe these bad apples are getting their ideas from other bad apples ... who are currently United States Senators.
Thursday, September 4, 2008
We elect a President, not a King
It's amazing how candidates, pundits, and assorted 'experts' seem to have forgotten the basics of how the US Government functions.
Places like the Tax Policy Center and innumerable articles have examined the tax proposals of both candidates, as if the winner will be crowned king.
I've only come across one article (out of probably 50 that I've read on the topic) that acknowledges the fact that the new President will have to get Congress to agree to his tax and spending proposals (as well as any other legislation).
Yet McCain happily stands up in front of voters and lists a bunch of tax cuts he is for; realize that none of those aimed at the upper income earners stand a chance of being passed. In fact, given the temporary nature of the Bush tax cuts, they will expire, and are their expiration isn't up for presidential veto.
Of course, McCain knows this, and the Democrats know this; however, both are ignoring the elephant in the room. The Democrats don't want to point this out, because it will take away their ammunition against portraying McCain planning to give big business and the rich tax cuts. The Republicans don't want to point this out; because they're trying to make the pitch that they'll stimulate the Economy with more tax cuts.
The likeliest outcome of a McCain presidency, is the expiration of the Bush tax cuts, with perhaps some relief for the middle class (as McCain wouldn't veto this proposal from a Democratic Congress ... after all, some tax cuts are better than none), but the Democrats are unlikely to pass any legislation that would reduce taxes on the rich. On the spending side, McCain will be far more likely to veto new spending bills from a Democratic Congress than Obama would be. Net it out, and a McCain presidency gets you higher taxes for high wage earners, marginally lower rates for middle & lower wage earners, and less spending, leading to a smaller budget deficit.
In the same vein; people happily forget that the president needs the approval of the Senate for a Supreme Court justice appointment. As such, a Democratic Senate can (and will) simply not approve a pro-life justice replacing a pro-choice justice today. All the alarm around McCain rolling back Roe v. Wade totally ignores the fact that (1) the Senate will be Democratically controlled and (2) the Senate can vote down any presidential supreme court appointment.
The voter needs to take it upon themselves to analyze all the proposed policies of both candidates in light of the fact that congress has to vote to approve laws and Supreme Court justice appointments.
Places like the Tax Policy Center and innumerable articles have examined the tax proposals of both candidates, as if the winner will be crowned king.
I've only come across one article (out of probably 50 that I've read on the topic) that acknowledges the fact that the new President will have to get Congress to agree to his tax and spending proposals (as well as any other legislation).
Yet McCain happily stands up in front of voters and lists a bunch of tax cuts he is for; realize that none of those aimed at the upper income earners stand a chance of being passed. In fact, given the temporary nature of the Bush tax cuts, they will expire, and are their expiration isn't up for presidential veto.
Of course, McCain knows this, and the Democrats know this; however, both are ignoring the elephant in the room. The Democrats don't want to point this out, because it will take away their ammunition against portraying McCain planning to give big business and the rich tax cuts. The Republicans don't want to point this out; because they're trying to make the pitch that they'll stimulate the Economy with more tax cuts.
The likeliest outcome of a McCain presidency, is the expiration of the Bush tax cuts, with perhaps some relief for the middle class (as McCain wouldn't veto this proposal from a Democratic Congress ... after all, some tax cuts are better than none), but the Democrats are unlikely to pass any legislation that would reduce taxes on the rich. On the spending side, McCain will be far more likely to veto new spending bills from a Democratic Congress than Obama would be. Net it out, and a McCain presidency gets you higher taxes for high wage earners, marginally lower rates for middle & lower wage earners, and less spending, leading to a smaller budget deficit.
In the same vein; people happily forget that the president needs the approval of the Senate for a Supreme Court justice appointment. As such, a Democratic Senate can (and will) simply not approve a pro-life justice replacing a pro-choice justice today. All the alarm around McCain rolling back Roe v. Wade totally ignores the fact that (1) the Senate will be Democratically controlled and (2) the Senate can vote down any presidential supreme court appointment.
The voter needs to take it upon themselves to analyze all the proposed policies of both candidates in light of the fact that congress has to vote to approve laws and Supreme Court justice appointments.
Wednesday, September 3, 2008
Equal Rights?
Whether you like or hate Sarah Palin as McCain's running mate, one has to wonder whether questions were raised about Joe Biden's ability to be a US Senator and single dad after his wife was killed in an automobile accident. Worst of all, it's a liberal woman making this attack; you'd expect her to be defending Sarah Palin's choice to raise her family and pursue her career.
SALLY QUINN (Washington Post): "And I do think, too, that you have to weigh the situation. It's one thing to have one or two or three children, especially if they are healthy children. And everyone knows that women and men are different and that moms and dads are different and that women — the burden of child care almost always falls on the woman. But I think, when you have five children, one a 4-month-old Down syndrome baby, and a daughter who is 17, who is also a child and who is going to need her mother very much in the next few months and years with her own baby coming, that I don't see how you cannot make your family your first priority. And I think if you are going to be president of the United States, which she may well be, I think that's going to be a real stretch for her." (CNN's "Newsroom," 9/2/08)
SALLY QUINN (Washington Post): "And I do think, too, that you have to weigh the situation. It's one thing to have one or two or three children, especially if they are healthy children. And everyone knows that women and men are different and that moms and dads are different and that women — the burden of child care almost always falls on the woman. But I think, when you have five children, one a 4-month-old Down syndrome baby, and a daughter who is 17, who is also a child and who is going to need her mother very much in the next few months and years with her own baby coming, that I don't see how you cannot make your family your first priority. And I think if you are going to be president of the United States, which she may well be, I think that's going to be a real stretch for her." (CNN's "Newsroom," 9/2/08)
Tuesday, September 2, 2008
Polls Schmolls
Despite the fact that our electoral college system makes state elections more important than national numbers, numerous media outlets will spend lots of money, doing these mostly meaningless national polls.
For a better map of where things stand, go to:
http://www.realclearpolitics.com/epolls/maps/obama_vs_mccain/
For a fun interactive website to play what-if scenarios with various states, go to:
http://www.270towin.com/
For a better map of where things stand, go to:
http://www.realclearpolitics.com/epolls/maps/obama_vs_mccain/
For a fun interactive website to play what-if scenarios with various states, go to:
http://www.270towin.com/
Monday, September 1, 2008
Which America do you live in?
Following the narrative provided by the Democrats last week in Denver; one could be left feeling pretty awful about the state of the US. In fact, one wonders why we haven't had major protests in the streets, if we are in fact in such dire straights.
Then I read two articles (links below) and realized I was being sold a storyline; one that does not reflect the lives the vast majority (over 85%) of Americans are living. I don't doubt that life is hard for the 15% of Americans at the bottom, and life at the top is pretty easy in comparison ... but for the 70% in the middle, life is going just fine (according to polls at least). Of course, that would not really make for a compelling campaign slogan.
Most interesting is that polls show that while a vast majority of Americans are happy with their current situations, they do believe the US is headed in the wrong direction.
The policy implications seem clear, make policies to improve the lives of the bottom 15%; but don't screw up the other 85% while you're trying to fix the bottom 15%.
Political Diary WSJ
I'm alright, but country isn't; Times Online
Then I read two articles (links below) and realized I was being sold a storyline; one that does not reflect the lives the vast majority (over 85%) of Americans are living. I don't doubt that life is hard for the 15% of Americans at the bottom, and life at the top is pretty easy in comparison ... but for the 70% in the middle, life is going just fine (according to polls at least). Of course, that would not really make for a compelling campaign slogan.
Most interesting is that polls show that while a vast majority of Americans are happy with their current situations, they do believe the US is headed in the wrong direction.
The policy implications seem clear, make policies to improve the lives of the bottom 15%; but don't screw up the other 85% while you're trying to fix the bottom 15%.
Political Diary WSJ
I'm alright, but country isn't; Times Online
Friday, August 29, 2008
Intrade liked McCain's VP pick ...
Looks like Intrade Prediction Market has McCain up 2.5 points after his pick. Granted he still trails Obama by around 18%.
McCain picks Sarah Palin; what the ...?
Sometimes I think McCain lets his advisers get the better of him; and in the case of choosing his running mate, this was clearly the case.
He decided to overlook much more experienced candidates like Tom Ridge, Mitt Romney, and Tim Pawlenty (my personal favorite); and choose a relatively inexperienced far right governor. It makes me wonder, does McCain not realize how old he is?
Does he really think Palin could take over on day one? It's like a female Dan Quayle.
Worse yet, he somehow thinks that by picking a woman he'll automatically get the Hillary vote ... apparently he doesn't think that female Hillary supporters will mind that she's been a life-long NRA member, that is anti-choice, and pro-drilling. It really makes me question just how smart McCain is.
He decided to overlook much more experienced candidates like Tom Ridge, Mitt Romney, and Tim Pawlenty (my personal favorite); and choose a relatively inexperienced far right governor. It makes me wonder, does McCain not realize how old he is?
Does he really think Palin could take over on day one? It's like a female Dan Quayle.
Worse yet, he somehow thinks that by picking a woman he'll automatically get the Hillary vote ... apparently he doesn't think that female Hillary supporters will mind that she's been a life-long NRA member, that is anti-choice, and pro-drilling. It really makes me question just how smart McCain is.
One of my favorite lines from Obama's speech
"Washington's been talking about our oil addiction for the last 30 years, and John McCain has been there for 26 of them."
I guess he forgot that Joe Biden (his running mate) has been in Washington for 10 years longer than McCain. During Biden's 36 years, the Democrats controlled Congress for 18 years. They even controlled the Presidency during the last oil crisis; and the first two years of Bill Clinton's Presidency.
I guess he forgot that Joe Biden (his running mate) has been in Washington for 10 years longer than McCain. During Biden's 36 years, the Democrats controlled Congress for 18 years. They even controlled the Presidency during the last oil crisis; and the first two years of Bill Clinton's Presidency.
Thursday, August 28, 2008
Back of Envelope Math
I keep hearing Obama talk about creating 5 million new green jobs; and was curious about how he planned to do this. I Googled it and found this article.
He plans to spend $150 Billion dollars over 10 years to create 5 million green jobs.
Doing the math on this, shows he'll spend about $3,000 a year over 10 years per new job.
I'm wondering what kind of jobs he plans to create for $3,000 a year; maybe he plans to reduce the minimum wage to $1.25/hr.
Also, are these jobs 'net new' jobs, or will they simply be jobs that replace those jobs that are lost due to higher energy costs, making US products less competitive with other countries who are producing products using cheaper energy?
Case in point: Butterball just laid off 250 people, as they put it: "feed costs are soaring because ethanol production is driving up the price of corn". I'm sure someone has a new job at an ethanol plant, but not sure that's doing much good for these folks; so much for helping out those blue collar workers at Butterball.
He plans to spend $150 Billion dollars over 10 years to create 5 million green jobs.
Doing the math on this, shows he'll spend about $3,000 a year over 10 years per new job.
I'm wondering what kind of jobs he plans to create for $3,000 a year; maybe he plans to reduce the minimum wage to $1.25/hr.
Also, are these jobs 'net new' jobs, or will they simply be jobs that replace those jobs that are lost due to higher energy costs, making US products less competitive with other countries who are producing products using cheaper energy?
Case in point: Butterball just laid off 250 people, as they put it: "feed costs are soaring because ethanol production is driving up the price of corn". I'm sure someone has a new job at an ethanol plant, but not sure that's doing much good for these folks; so much for helping out those blue collar workers at Butterball.
Wednesday, August 27, 2008
“Lies, damned lies, and statistics” - Part 1
I just heard Hillary Clinton utter it again last night, “47 million people without health insurance”. All too often statistics get thrown around, and at some point take on a life of their own; this would be one of those cases. As Disraeli lamented about statistics, all too often they are misused to bolster inaccurate arguments.
This blog posting will analyze the ‘47 million uninsured’ number, not for the sake of discussing the health care issues confronting the US, rather to provide an approach to analyzing statistics presented in articles.
Step 1)
The most important thing to do, is to understand what the specific criterion for any statistic is; in this case, what does it take to be counted as one of the 47 Million people who ‘don’t have health care insurance’?
To qualify as uninsured, a survey respondent must have claimed that in the previous year they did not have any insurance coverage. There is no reduction made for people who qualified for programs but did not enroll, estimated in 2004 to be 14 million. No reductions are made for illegal immigrants who would not technically qualify for any universal program, estimated to be 10 million. Lastly, no reductions or 'qualifications' are made to reflect whether the individual 'could have' afforded health care insurance, it's estimated that 18 million of the 47 million had household incomes of over $50K/year.
So, is the real problem the 5 million who don’t fall into one of these three buckets? Note, there is likely little overlap between the three groups outlined, as $50K disqualifies you from most government programs, and more illegals don't make over $50K.
Step 2)
Always be weary of absolute numbers, more times than not, they are too large to comprehend, and are often used because they don’t give the reader a perspective of relevance. As such, the first thing you should do when presented with an absolute number is to convert it into a percent.
In this case:
• The % of the US population without health care insurance, 47M out of 301M = 15.6%
Sometimes inverting the number helps also:
• The % of US population with health care insurance, 100% - 15.6% = 84.4%
Now, re-evaluate both statements:
A. 47,000,000 US citizens do not have health care insurance
B. 84.4% of US citizens have health care insurance
Does one seem more dramatic than the other? When was the last time you were concerned about something that ‘only’ 84.4% of people had? Why do people use the 47,000,000 statistic instead of the seemingly smaller 15.6%?
Step 3)
Reevaluate the policy prescriptions in light of the new ‘re-framed’ statistics.
Ask yourself:
• Why do advocates of a certain position keep using numbers like ‘47 million uninsured’ to make their point, even though the number is neither an accurate representation of the current situation; given that the majority of uninsured could either afford to buy it, or be insured through state plans?
• Why aren't people focused on trying to get more people to a) enroll in programs they already qualify for or b) to prioritize spending in health care above other expenditures? It seems that the 47 Million masks three (or more) problems.
In Summary:
This post is not disputing the ‘47 million’ number, rather it’s simply pointing out that readers need to be willing to dig deeper into statistics that are presented to them to understand what they really mean.
When thinking about statistics, a better adage than Disraeli’s may be … “Statistics don’t lie, people do”
_____________
UPDATE
My take …
So where do I stand? After a lot of reading on this topic, I’m most shocked by how little is actually known about this problem. Compared to things like unemployment numbers, where you can track details like short-term unemployed versus long-term unemployed, changes in pay and benefits as people take new jobs; voluntary vs. involuntary changes; health care statistics very rudimentary.
Why does this matter? Without the data, it’s difficult to really know what the problem is. If 18 million of the 47 million are without health care insurance could afford some sort of health care; then passing a law that requires you to buy health care might seem like a good idea ... except, almost every state 'requires' people to get auto-insurance, yet in CA it's estimated that over 25% of drivers don't carry auto insurance; I'm not sure why a similar law requiring health care would have any different results ... in fact, the % of people without health insurance is already less than 25% without auto insurance, even though auto insurance is legally required.
Similarly, if 14 million people are eligible for health care plans (Medicare, Medicaid or SCHIP) today, but don’t enroll, making it a law won’t seem to address this problem either, unless you think these people will be motivated by a law more than their health. Generally, it's a lack of knowledge about the programs, that causes the low enrollment; perhaps funds would be better spent on education than enforcement.
There are undoubtedly millions of Americans who go without health care, that don’t qualify for government plans, and can’t afford health care insurance. It seems that these uninsured people are so, because of high health care costs; meaning that any solution would need to address these costs. Passing a law that requires someone to buy health care, doesn’t address this problem, especially if they can’t afford it in the first place. Worst of all, we don’t exactly know how many people are in this situation.
Without a more accurate holistic picture of the situation based on accurate data, you can’t begin to understand the problem, let alone start proposing solutions.
This blog posting will analyze the ‘47 million uninsured’ number, not for the sake of discussing the health care issues confronting the US, rather to provide an approach to analyzing statistics presented in articles.
Step 1)
The most important thing to do, is to understand what the specific criterion for any statistic is; in this case, what does it take to be counted as one of the 47 Million people who ‘don’t have health care insurance’?
To qualify as uninsured, a survey respondent must have claimed that in the previous year they did not have any insurance coverage. There is no reduction made for people who qualified for programs but did not enroll, estimated in 2004 to be 14 million. No reductions are made for illegal immigrants who would not technically qualify for any universal program, estimated to be 10 million. Lastly, no reductions or 'qualifications' are made to reflect whether the individual 'could have' afforded health care insurance, it's estimated that 18 million of the 47 million had household incomes of over $50K/year.
So, is the real problem the 5 million who don’t fall into one of these three buckets? Note, there is likely little overlap between the three groups outlined, as $50K disqualifies you from most government programs, and more illegals don't make over $50K.
Step 2)
Always be weary of absolute numbers, more times than not, they are too large to comprehend, and are often used because they don’t give the reader a perspective of relevance. As such, the first thing you should do when presented with an absolute number is to convert it into a percent.
In this case:
• The % of the US population without health care insurance, 47M out of 301M = 15.6%
Sometimes inverting the number helps also:
• The % of US population with health care insurance, 100% - 15.6% = 84.4%
Now, re-evaluate both statements:
A. 47,000,000 US citizens do not have health care insurance
B. 84.4% of US citizens have health care insurance
Does one seem more dramatic than the other? When was the last time you were concerned about something that ‘only’ 84.4% of people had? Why do people use the 47,000,000 statistic instead of the seemingly smaller 15.6%?
Step 3)
Reevaluate the policy prescriptions in light of the new ‘re-framed’ statistics.
Ask yourself:
• Why do advocates of a certain position keep using numbers like ‘47 million uninsured’ to make their point, even though the number is neither an accurate representation of the current situation; given that the majority of uninsured could either afford to buy it, or be insured through state plans?
• Why aren't people focused on trying to get more people to a) enroll in programs they already qualify for or b) to prioritize spending in health care above other expenditures? It seems that the 47 Million masks three (or more) problems.
In Summary:
This post is not disputing the ‘47 million’ number, rather it’s simply pointing out that readers need to be willing to dig deeper into statistics that are presented to them to understand what they really mean.
When thinking about statistics, a better adage than Disraeli’s may be … “Statistics don’t lie, people do”
_____________
UPDATE
- Beyond Those Health Care Numbers
- Paul Krugman, Your Doctor Is Calling
- Beyond Those Health Care Numbers: US Looks Good
- Crisis of the Uninsured 2008
My take …
So where do I stand? After a lot of reading on this topic, I’m most shocked by how little is actually known about this problem. Compared to things like unemployment numbers, where you can track details like short-term unemployed versus long-term unemployed, changes in pay and benefits as people take new jobs; voluntary vs. involuntary changes; health care statistics very rudimentary.
Why does this matter? Without the data, it’s difficult to really know what the problem is. If 18 million of the 47 million are without health care insurance could afford some sort of health care; then passing a law that requires you to buy health care might seem like a good idea ... except, almost every state 'requires' people to get auto-insurance, yet in CA it's estimated that over 25% of drivers don't carry auto insurance; I'm not sure why a similar law requiring health care would have any different results ... in fact, the % of people without health insurance is already less than 25% without auto insurance, even though auto insurance is legally required.
Similarly, if 14 million people are eligible for health care plans (Medicare, Medicaid or SCHIP) today, but don’t enroll, making it a law won’t seem to address this problem either, unless you think these people will be motivated by a law more than their health. Generally, it's a lack of knowledge about the programs, that causes the low enrollment; perhaps funds would be better spent on education than enforcement.
There are undoubtedly millions of Americans who go without health care, that don’t qualify for government plans, and can’t afford health care insurance. It seems that these uninsured people are so, because of high health care costs; meaning that any solution would need to address these costs. Passing a law that requires someone to buy health care, doesn’t address this problem, especially if they can’t afford it in the first place. Worst of all, we don’t exactly know how many people are in this situation.
Without a more accurate holistic picture of the situation based on accurate data, you can’t begin to understand the problem, let alone start proposing solutions.
Tuesday, August 19, 2008
Do secret ballots really matter?
In which of the following situations would you be more inclined to vote your true intentions and be free of intimidation?
a) Your vote will be shared openly, everyone will know how you voted
b) Your vote will be kept secret, no one but you will know how you voted
It would seem impossible for someone to intimidate you, if they didn’t know how you voted; whereas, if your vote was made public, you could be intimidated.
Despite this seemingly obvious truism, labor unions are claiming the opposite; that secret ballots actually enable companies to intimidate employees (who are voting on unionizing). How could companies possibly intimidate someone, if they don’t know how the person voted? This completely defies logic.
The fact that people vote differently on card checks (which are public) and secret ballots, only validates the point that people feel pressured to alter their vote when the vote is open to the public. The bottom line is this: even if you didn’t need to shield voters; there is no harm in doing so, people will only be more honest with their votes, not less.
Why do I bring this up? Two reasons: First, this runs completely counter to the direction unions should be going if they want to grow membership; as I discussed in a previous post, unions stand a much better chance of growing by aligning the value of the employee and the employer. Trying to change laws to allow more intimidation is a gigantic step backwards. Secondly, Senator Barack Obama voted to support the Employee Free Choice Act; which should more aptly be named the “Allow Union Intimidation Act”.
a) Your vote will be shared openly, everyone will know how you voted
b) Your vote will be kept secret, no one but you will know how you voted
It would seem impossible for someone to intimidate you, if they didn’t know how you voted; whereas, if your vote was made public, you could be intimidated.
Despite this seemingly obvious truism, labor unions are claiming the opposite; that secret ballots actually enable companies to intimidate employees (who are voting on unionizing). How could companies possibly intimidate someone, if they don’t know how the person voted? This completely defies logic.
The fact that people vote differently on card checks (which are public) and secret ballots, only validates the point that people feel pressured to alter their vote when the vote is open to the public. The bottom line is this: even if you didn’t need to shield voters; there is no harm in doing so, people will only be more honest with their votes, not less.
Why do I bring this up? Two reasons: First, this runs completely counter to the direction unions should be going if they want to grow membership; as I discussed in a previous post, unions stand a much better chance of growing by aligning the value of the employee and the employer. Trying to change laws to allow more intimidation is a gigantic step backwards. Secondly, Senator Barack Obama voted to support the Employee Free Choice Act; which should more aptly be named the “Allow Union Intimidation Act”.
Sunday, August 17, 2008
H-1B Visas Hurt US Tech Industry Competitiveness in the Long Run
How many times have you heard tech industry luminaries like Bill Gates or Intel’s Craig Barrett lament about the shortage of engineers in the US and the need for more H-1B visas?
The truth is that these guys are really complaining about something else … the lack of cheap engineering talent. There is ample evidence that we don’t have a shortage of engineering in the US.
If the US does have a shortage of engineers, the best way to get more people into engineering is to increase their wages; not to decrease them, which is the net effect of allowing more H-1B visas (in their current form).
Let’s be real, could you see Bill Gates standing up in front of Congress to testify that engineers cost too much, and the best way to drive down wages would be to increase the number of H-1B visas?
Long-term danger
There are two major problems with continually increasing H-1B visas: the temporary nature of H-1B visas causes a brain drain, and the decrease in engineering wages leads to a decrease in enrollment in engineering programs.
First, since H-1B visas are temporary, foreign engineers receive great training for a period of time, after which they take their acquired knowledge capital with them, and return to their home country; they aren’t given the option of staying and keeping that knowledge in the US.
Second, and more importantly, these temporary workers drive down the wages of permanent workers; the biggest impact of which is to decrease the number of people choosing to study engineering. College students aren’t dumb (especially those who could complete an engineering program), they do the math, and if the salary isn’t there, they’ll pick another more lucrative field (like law or finance).
The best way to get more people into engineering is to increase the wages.
The measurement problem
One of the biggest problems with trying to increase wages for engineers is that companies do a poor job of determining the quality and output of engineers. Companies can’t afford to pay all engineers more and remain globally competitive; however, they could afford to pay the best more and the worst less.
In computer programming, your top programmers are 2-3 times more productive than your average programmer, and 5+ times more productive than a bad programmer. Yet, there are very few companies that have a wage differential that reflects this. Say your average senior programmer makes $85K a year, how many companies pay their top programmers $250K a year? Very few!
Ironically, one of the biggest impediments to ‘judging’ programmers is the programmers themselves. They claim (as do most other professionals), that you can’t measure their productivity and quality adequately. However, with today’s technology this simply isn’t the case. While there is no perfect algorithm yet (although I’m sure Google is working on it), there are numerous metrics available to measure performance against; yet they are seldom deployed.
If engineers want more money, they should insist on being measured. I hear many US engineers lament about the poor quality of code created by 'H-1B visa holders', with few, if any metrics, to back up their claims. If these engineers hadn’t stood in the way of tracking quality metrics in the first place, they’d have a much easier time making the case that while being more expensive they are actually cheaper for the company in the long run, because of higher output & quality. It’s time for engineers to embrace this change and ask to be measured.
Short-term policy solutions
One of the reasons H-1B visas drive down wages so much is that they are tied to a particular employer. This means that a guy coming over from India on an H-1B visa, who has a job at Microsoft paying $24K a year, can’t take another job at Intel that pays him $50K a year. The net effect of this is to keep wages depressed, as H-1B visa holder are essentially indentured servants.
An easy solution would be to modify H-1B visas to remove the employer dependency, and let visa holders take the highest paying job. Wages will still be decreased, since you're increasing supply of labor, but by much less. (Many companies will complain that they wouldn’t go through the cost of acquiring H-1B visas unless they could guarantee that the employee stay with them; the reality is, there’s another way to accomplish this, pay your visa holders market wages!)
To address the brain drain problem, H-1B visas should be starting point for US citizenship (or permanent residency); who better to have as future citizens than well trained engineers?
There may very well be a need for more H-1B visas in the US, but how do we expect homegrown talent to be able to compete with indentured servants?
In summary
Solving our ‘engineering shortage’ by simply allowing more H-1B visas in their current form will drive down costs in the short run and allow tech companies to remain globally competitive, but in the long run it will only serve to increase the long term decline of engineering in the US.
Companies need address this problem over the long run, by tracking the output of their engineers more effectively, and paying salaries based on that output. How serious would the current engineering shortage be if companies regularly paid their top performing engineers $250K year or more?
Legislators should reach a compromise with tech companies to allow more H-1B visas, but only if their format changes to make them company independent, and a path to permanent residency or citizenship.
The truth is that these guys are really complaining about something else … the lack of cheap engineering talent. There is ample evidence that we don’t have a shortage of engineering in the US.
If the US does have a shortage of engineers, the best way to get more people into engineering is to increase their wages; not to decrease them, which is the net effect of allowing more H-1B visas (in their current form).
Let’s be real, could you see Bill Gates standing up in front of Congress to testify that engineers cost too much, and the best way to drive down wages would be to increase the number of H-1B visas?
Long-term danger
There are two major problems with continually increasing H-1B visas: the temporary nature of H-1B visas causes a brain drain, and the decrease in engineering wages leads to a decrease in enrollment in engineering programs.
First, since H-1B visas are temporary, foreign engineers receive great training for a period of time, after which they take their acquired knowledge capital with them, and return to their home country; they aren’t given the option of staying and keeping that knowledge in the US.
Second, and more importantly, these temporary workers drive down the wages of permanent workers; the biggest impact of which is to decrease the number of people choosing to study engineering. College students aren’t dumb (especially those who could complete an engineering program), they do the math, and if the salary isn’t there, they’ll pick another more lucrative field (like law or finance).
The best way to get more people into engineering is to increase the wages.
The measurement problem
One of the biggest problems with trying to increase wages for engineers is that companies do a poor job of determining the quality and output of engineers. Companies can’t afford to pay all engineers more and remain globally competitive; however, they could afford to pay the best more and the worst less.
In computer programming, your top programmers are 2-3 times more productive than your average programmer, and 5+ times more productive than a bad programmer. Yet, there are very few companies that have a wage differential that reflects this. Say your average senior programmer makes $85K a year, how many companies pay their top programmers $250K a year? Very few!
Ironically, one of the biggest impediments to ‘judging’ programmers is the programmers themselves. They claim (as do most other professionals), that you can’t measure their productivity and quality adequately. However, with today’s technology this simply isn’t the case. While there is no perfect algorithm yet (although I’m sure Google is working on it), there are numerous metrics available to measure performance against; yet they are seldom deployed.
If engineers want more money, they should insist on being measured. I hear many US engineers lament about the poor quality of code created by 'H-1B visa holders', with few, if any metrics, to back up their claims. If these engineers hadn’t stood in the way of tracking quality metrics in the first place, they’d have a much easier time making the case that while being more expensive they are actually cheaper for the company in the long run, because of higher output & quality. It’s time for engineers to embrace this change and ask to be measured.
Short-term policy solutions
One of the reasons H-1B visas drive down wages so much is that they are tied to a particular employer. This means that a guy coming over from India on an H-1B visa, who has a job at Microsoft paying $24K a year, can’t take another job at Intel that pays him $50K a year. The net effect of this is to keep wages depressed, as H-1B visa holder are essentially indentured servants.
An easy solution would be to modify H-1B visas to remove the employer dependency, and let visa holders take the highest paying job. Wages will still be decreased, since you're increasing supply of labor, but by much less. (Many companies will complain that they wouldn’t go through the cost of acquiring H-1B visas unless they could guarantee that the employee stay with them; the reality is, there’s another way to accomplish this, pay your visa holders market wages!)
To address the brain drain problem, H-1B visas should be starting point for US citizenship (or permanent residency); who better to have as future citizens than well trained engineers?
There may very well be a need for more H-1B visas in the US, but how do we expect homegrown talent to be able to compete with indentured servants?
In summary
Solving our ‘engineering shortage’ by simply allowing more H-1B visas in their current form will drive down costs in the short run and allow tech companies to remain globally competitive, but in the long run it will only serve to increase the long term decline of engineering in the US.
Companies need address this problem over the long run, by tracking the output of their engineers more effectively, and paying salaries based on that output. How serious would the current engineering shortage be if companies regularly paid their top performing engineers $250K year or more?
Legislators should reach a compromise with tech companies to allow more H-1B visas, but only if their format changes to make them company independent, and a path to permanent residency or citizenship.
Friday, August 15, 2008
Thursday, August 14, 2008
Analysts Miss the Mark on Predicting Oil ... Again
I saw this post on Seeking Alpha, and thought these must be the same analysts that are predicting that more drilling won't affect oil prices.
I also find it interesting that ever since the talk of lifting the ban on offshore drilling has started, the price of oil has declined dramatically. After all, 'experts' predict that it would take at least 5 years for any new oil from offshore drilling to start flowing. I guess these 'experts' don't realize that you can buy a futures contract TODAY, for oil in 5 years from now, so just the prospect of future drilling affects futures contracts now.
Of course, these experts also probably don't know about efficient market theory; which asserts that "prices on traded assets, e.g., stocks, bonds, or property, [or oil], already reflect all known information". Hence, if the rational expectation is that oil supply will increase in 5 years, it will affect prices today. In this case, the primary reason is that long-term supply constraints help protect speculators from a long-term correction; take away that protection, and speculators can only bet on short term supply & demand imbalances; a much riskier proposition.
I also find it interesting that ever since the talk of lifting the ban on offshore drilling has started, the price of oil has declined dramatically. After all, 'experts' predict that it would take at least 5 years for any new oil from offshore drilling to start flowing. I guess these 'experts' don't realize that you can buy a futures contract TODAY, for oil in 5 years from now, so just the prospect of future drilling affects futures contracts now.
Of course, these experts also probably don't know about efficient market theory; which asserts that "prices on traded assets, e.g., stocks, bonds, or property, [or oil], already reflect all known information". Hence, if the rational expectation is that oil supply will increase in 5 years, it will affect prices today. In this case, the primary reason is that long-term supply constraints help protect speculators from a long-term correction; take away that protection, and speculators can only bet on short term supply & demand imbalances; a much riskier proposition.
Reinventing Unions ... Can it be done?
Unions Past
Few people would argue that unions played an important role in improving the working condition of millions of American’s at the end of the 19th and early 20th century. Of course, few people today would argue that Unions have “outlived their usefulness”.
Unions’ recent successes include making US auto manufacturers completely uncompetitive internationally, and having union membership in the teachers’ union negatively correlate with student test scores.
An interesting thing about the decline of unions in the US is that their wounds seem to have be mostly self inflicted; namely thru their lack of innovation. Just like all service organizations, they need to constantly evolve to serve their customers (union members are people who pay a fee to receive a service from their union; as such, members are a union’s customer). Additionally, the lack of innovation has made unions much less appealing as partners to companies who employ their members.
Aligning Customer and Partner Objectives
Beyond the initial agreements for a shorter work week, safer work conditions, and eliminating child labor, Unions worked to establish a ‘career path’ for its members. This career path was closely tied to seniority, the longer you worked at a place, the more you earned.
The outcome of this arrangement was that employees gained more income the longer they worked on the job, and employers got employees who were incened to stay longer at their jobs and presumably improve their skills over time.
Initially, both employees and employers gained from this arrangement; even if employers were reluctant to reach said arrangement.
Failure to Innovate
As the US economy evolved to be less manufacturing focused, people moved into service jobs where seniority is poor indicator of productivity or performance. While this is obviously bad for employers, it is equally bad for employees as they are no longer being rewarded for being more productive or higher performing, rather simply by the length of service to that employer. This in turn leads newer more productive and better performing employees to seek jobs in non-unionized fields of work where they will be rewarded for their output, not simply based on their time at the job. What remains are either older employees who have climbed to the higher pay scales, newer employees that can’t or don’t want to compete based on their productivity or performance, and certain fields were non-unionized workforces simply don’t exist (government jobs, nursing, etc.)
Becoming Relevant
At one point in time there was a lot of talk about trying to unionize service jobs, even higher paying ones like programming; but they never seem to pick up much steam. The lack of enthusiasm for unions in these service sector jobs is largely due to service sector employees realizing that the seniority model is broken and won’t work for their industry; yet unions haven’t come up with alternatives. As such, here are some suggestions that could help unions provide value to both employees and employers in the service sector:
1) Establish metrics that are reflective of the employees output; better, smarter, more productive employees should get raises, not those who have been at a company the longest. With the evolution of business intelligence tools, these metrics are not only abundant, but cheaply captured and measured.
2) Provide career paths based on training to make employees more productive; establish rigorous testing that ensures those who test highly correlate with those who have a high output.
3) Negotiate on behalf of workers for more training to improve their output, and maintain their skills; this benefits employers too, it’s cheaper to keep current employees current and productive than having to hire and re-hire every few years as skill-set demands change.
4) Provide value added services that to improve the well-being of your members: the two obvious ones are retirement planning and healthcare. Maybe it’s time to stop fighting the employer for these benefits and look at providing these benefits yourself to members.
These suggestions would help re-align the objectives of unions with those of their customer-members as well as the employer-partner.
The Win Win
Item #1 above is probably the most contentious item, and is currently being debated in the education realm, namely in the form of rewarding teachers based on test results. Leaving aside the arguments about the efficacy of test results as an indicator of teacher performance, more strides need to be made in all lines of work to establish meaningful measures by which to reward employees, the time for ‘time’ to be the measure has passed.
Conclusion
Most (under 40) Liberals I know don't seem to think there's much chance of Unions surviving; in fact, they go so far as to suggest they've outlived their usefulness. Unless unions can dramatically change their value proposition for both employers AND customers (students, patients, etc.), I don't see much chance of their survival either ... outside of perhaps the public sector, where things like efficiency & value propositions don't seem to matter.
Few people would argue that unions played an important role in improving the working condition of millions of American’s at the end of the 19th and early 20th century. Of course, few people today would argue that Unions have “outlived their usefulness”.
Unions’ recent successes include making US auto manufacturers completely uncompetitive internationally, and having union membership in the teachers’ union negatively correlate with student test scores.
An interesting thing about the decline of unions in the US is that their wounds seem to have be mostly self inflicted; namely thru their lack of innovation. Just like all service organizations, they need to constantly evolve to serve their customers (union members are people who pay a fee to receive a service from their union; as such, members are a union’s customer). Additionally, the lack of innovation has made unions much less appealing as partners to companies who employ their members.
Aligning Customer and Partner Objectives
Beyond the initial agreements for a shorter work week, safer work conditions, and eliminating child labor, Unions worked to establish a ‘career path’ for its members. This career path was closely tied to seniority, the longer you worked at a place, the more you earned.
The outcome of this arrangement was that employees gained more income the longer they worked on the job, and employers got employees who were incened to stay longer at their jobs and presumably improve their skills over time.
Initially, both employees and employers gained from this arrangement; even if employers were reluctant to reach said arrangement.
Failure to Innovate
As the US economy evolved to be less manufacturing focused, people moved into service jobs where seniority is poor indicator of productivity or performance. While this is obviously bad for employers, it is equally bad for employees as they are no longer being rewarded for being more productive or higher performing, rather simply by the length of service to that employer. This in turn leads newer more productive and better performing employees to seek jobs in non-unionized fields of work where they will be rewarded for their output, not simply based on their time at the job. What remains are either older employees who have climbed to the higher pay scales, newer employees that can’t or don’t want to compete based on their productivity or performance, and certain fields were non-unionized workforces simply don’t exist (government jobs, nursing, etc.)
Becoming Relevant
At one point in time there was a lot of talk about trying to unionize service jobs, even higher paying ones like programming; but they never seem to pick up much steam. The lack of enthusiasm for unions in these service sector jobs is largely due to service sector employees realizing that the seniority model is broken and won’t work for their industry; yet unions haven’t come up with alternatives. As such, here are some suggestions that could help unions provide value to both employees and employers in the service sector:
1) Establish metrics that are reflective of the employees output; better, smarter, more productive employees should get raises, not those who have been at a company the longest. With the evolution of business intelligence tools, these metrics are not only abundant, but cheaply captured and measured.
2) Provide career paths based on training to make employees more productive; establish rigorous testing that ensures those who test highly correlate with those who have a high output.
3) Negotiate on behalf of workers for more training to improve their output, and maintain their skills; this benefits employers too, it’s cheaper to keep current employees current and productive than having to hire and re-hire every few years as skill-set demands change.
4) Provide value added services that to improve the well-being of your members: the two obvious ones are retirement planning and healthcare. Maybe it’s time to stop fighting the employer for these benefits and look at providing these benefits yourself to members.
These suggestions would help re-align the objectives of unions with those of their customer-members as well as the employer-partner.
The Win Win
Item #1 above is probably the most contentious item, and is currently being debated in the education realm, namely in the form of rewarding teachers based on test results. Leaving aside the arguments about the efficacy of test results as an indicator of teacher performance, more strides need to be made in all lines of work to establish meaningful measures by which to reward employees, the time for ‘time’ to be the measure has passed.
Conclusion
Most (under 40) Liberals I know don't seem to think there's much chance of Unions surviving; in fact, they go so far as to suggest they've outlived their usefulness. Unless unions can dramatically change their value proposition for both employers AND customers (students, patients, etc.), I don't see much chance of their survival either ... outside of perhaps the public sector, where things like efficiency & value propositions don't seem to matter.
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