Quotulatiousness

February 22, 2013

Ford’s wage-doubling myth

Filed under: Business, History, USA — Tags: , , , — Nicholas @ 00:02

In the Financial Post, Philip Cross explains the myth and reality of Ford’s famous wage-doubling ploy:

Start with the premise that Ford raised wages to increase purchasing power. As the Fortune article documents, before raising wages, Ford already had doubled output of the Model T with his innovative use of the moving assembly line, without adding to employment. The moving assembly line is what Ford deserves accolades for. To get an idea of how revolutionary it was, Ford built just over a quarter of a million cars in 1914, as much as the rest of the industry combined, but with 80% fewer workers. In other words, productivity already had doubled, allowing Ford to double wages without increasing labour costs.

And he needed to raise wages. Employee turnover at the Highland Park Model T assembly plant hit 370% in the year before the wage increase, clearly symptomatic of a dysfunctional internal labour market. That means Ford incurred the cost of hiring 52,000 people in 1913 to fill 14,000 jobs. The real reason Ford hiked wages was to reduce the cost of this turnover, not a soft-hearted desire to transfer purchasing power from management Scrooges to the Cratchits of the world.

The plan worked like a charm, as turnover plunged to 16% after wages were doubled, reducing labour costs despite the wage hike. Saying he did it to raise purchasing power was just good public relations. Who wants to advertise that their workplace was so disagreeable they could not keep workers for more than a few weeks at a time?

[. . .]

Ford is still reaping good publicity from the notion its founder spread joy and good cheer in the workplace by raising wages. Its website marvels that “newspapers from all the world reported the story as an extraordinary gesture of goodwill.” The universal appeal of this fable, repeated today by gullible journalists like those at Fortune, is probably because it feeds everyone’s fantasy that one day you’ll show up at work and get that long overdue raise, without your firm compromising its competitive position.

February 21, 2013

Looming cutbacks to US military include general officers scrambling for a soft landing

Filed under: Business, Humour, Military — Tags: , , — Nicholas @ 09:37

It’s a tough world out there. It looks like it’ll be getting tougher for soon-to-be retired US military leaders:

Sources revealed today that a top U.S. Marine General is “extremely hesitant” about plans for his possible retirement, indicating a greater problem with military transition assistance programs.

General John Murphy, the former commander of Fleet Marine Forces-Pacific, is looking toward a future in the private sector, but he says he may have to lower himself to take any position in order to support his family.

“It’s scary out there with the economy the way it is,” said Murphy in a telephone interview with The Duffel Blog. “I’m certainly hoping that I can secure a job as a D.C. lobbyist or a consultant to a defense contractor. But shit, I’m just not sure anymore. I might have to degrade myself and be a military analyst at Fox News just to feed my goddamn kids.”

Murphy’s worries underscore a major problem of assisting military members on their way out of the service. Junior enlisted personnel usually go through a weeklong Transition Assistance Program, or TAP, but the classes for general officers have serious drawbacks.

“The enlisted classes set the guys up for everything. They basically pave the way for them to go college, give them job placement, the whole nine yards,” said Michael Phillips, a counselor with the TAP program. “But for Generals, they need to do a lot of the work on their own. Most of them have to search for at least a few minutes in their rolodex to find a contact at BAE Systems or Lockheed before they have an executive position.”

Reason.tv: How Patent Trolls Kill Innovation

Filed under: Business, Law, USA — Tags: , , , — Nicholas @ 00:01

“My statement to someone that is the victim of a patent troll lawsuit is that you are completely screwed,” says Austin Meyer, who is himself the target of a so-called “patent troll” lawsuit.

Meyer is a software developer and aviation enthusiast. His two passions intersected in the ’90s when he created a flight simulator called X-Plane, which quickly grew in popularity, outlasting even the once-popular Microsoft Flight Simulator. As many software developers do, Meyer made his application available on mobile devices like the iPhone and Android. And this is where he first ran into trouble.

A company called Uniloc has sued Meyer for patent infringement over a patent called, “System and Method for Preventing Unauthorized Access to Electronic Data.” When a computer runs a paid application, one way that developers can assure that a customer has actually purchased the application is by coding the application to match a license code with an encrypted database. This is a method that most paid applications on the Android market use. It’s a method that Meyer argues has been in use since at least the late ’80s. This is the idea that Uniloc claims to own.

February 19, 2013

Container ships embiggen again

Filed under: Business, Technology — Tags: , , , , , — Nicholas @ 10:17

BBC News looks at the soon-to-be-launched Triple-E container ships:

What is blue, a quarter of a mile long, and taller than London’s Olympic stadium?

The answer — this year’s new class of container ship, the Triple E. When it goes into service this June, it will be the largest vessel ploughing the sea.

Each will contain as much steel as eight Eiffel Towers and have a capacity equivalent to 18,000 20-foot containers (TEU).

If those containers were placed in Times Square in New York, they would rise above billboards, streetlights and some buildings.

Or, to put it another way, they would fill more than 30 trains, each a mile long and stacked two containers high. Inside those containers, you could fit 36,000 cars or 863 million tins of baked beans.

The Triple E will not be the largest ship ever built. That accolade goes to an “ultra-large crude carrier” (ULCC) built in the 1970s, but all supertankers more than 400m (440 yards) long were scrapped years ago, some after less than a decade of service. Only a couple of shorter ULCCs are still in use. But giant container ships are still being built in large numbers — and they are still growing.

It’s 25 years since the biggest became too wide for the Panama Canal. These first “post-Panamax” ships, carrying 4,300 TEU, had roughly quarter of the capacity of the current record holder — the 16,020 TEU Marco Polo, launched in November by CMA CGM.

In the shipping industry there is already talk of a class of ship that would run aground in the Suez canal, but would just pass through another bottleneck of international trade — the Strait of Malacca, between Malaysia and Indonesia. The “Malaccamax” would carry 30,000 containers.

Comparison of bounding box of Chinamax with some other ship sizes in isometric view. (Wikimedia)

Comparison of bounding box of Chinamax with some other ship sizes in isometric view. (Wikimedia)

February 18, 2013

Reason.tv: 3 reasons to build the Keystone XL pipeline

Filed under: Business, Cancon, Environment, Government, USA — Tags: , , , , — Nicholas @ 12:30

Few energy projects have inspired the level of vitriol surrounding the Keystone XL Pipeline, that would run 1,700 miles from Alberta, Canada through the United States to refineries on the Gulf of Mexico.

The oil sands of Alberta are estimated to hold 170 million 170 billon barrels of petroleum, the largest reservoir of black gold outside of Saudi Arabia.

Because the pipeline crosses an international boundary, President Barack Obama has the final say over whether to give the project a green light.

February 15, 2013

A self-described hippie who loves capitalism. Ladies and gentlemen, please welcome Neil Young!

Filed under: Books, Business, Cancon, Media — Tags: , , — Nicholas @ 09:29

In sp!ked, Patrick Hayes reviews Neil Young’s new book, Waging Heavy Peace: A Hippie Dream.

Neil Young, the man who penned wistful lyrics about silver spaceships flying and about sleeping with Pocahontas, is, he openly admits in his autobiography, ‘a material guy’. After completing a project, he would ‘buy a car or something to celebrate’. He lavishes praise on Bill Ford, the executive chairman of Ford Motor Company. He gushes about the disruptive nature of new technologies. And he speaks romantically about developing business plans and navigating ‘the waters of venture capitalism’. When raving about being able to buy a green card to live in the US, Young even goes as far as to announce: ‘Capitalism rocks.’

In fact recently, he tells us, he has been dreaming more. Since his life-threatening brain aneurysm in 2005, when he decided to ditch his various narcotics, he dreams ‘every night, not like before, when I induced dreams in the waking hours to snatch them in their innocence and commit them to song and melody and words captured’.

While he has far from quit songwriting, kicking the drink and drugs has given Young a new sense of mission, something that makes him feel alive – in fact, a mission that makes him question whether he has ‘been asleep’ over the past 40 years. Young is currently ‘trying to rescue recorded sound so people can feel music again’. While a huge fan of the internet, Young has become increasingly infuriated that current methods of reproducing music digitally keep very little of the quality of the original. But he is never one to sit back and moan about how things were better in the days of vinyl. He has instead become obsessed with finding a solution.

And, with additional time due to a broken little toe, he also decided to tick another box by following in the footsteps of his father, famous Canadian author Scott Young, by writing a book. In this instance, an autobiography, with a second book tentatively titled Cars and Dogs planned, but ‘no matter how many books I write, I will eventually get to fiction’. He comments on the ease of writing: ‘No wonder my dad did this… writing could be just the ticket to a more relaxed life with fewer pressures and more time to enjoy with my family and friends – and paddleboarding!’

February 14, 2013

Crony capitalists make pitch for industrial policy in defence purchases

Filed under: Business, Cancon, Government, Military — Tags: , , , , , , — Nicholas @ 11:02

Canada doesn’t really have a defence industry — certainly not in the sense of Britain, France, or the United States. We have some companies which happen to make products of use to the military (armoured vehicles, for example), but our government is not tightly tied to the fortunes of these companies in some sort of maple-flavoured Military-Industrial Complex. Some movers-and-shakers want to change that:

It goes without saying that the proposal to siphon funds to defence contractors is gussied up in industrial-policy jargon. For instance, we’re told how defence industries are “important sources of technological dynamism and innovation [and] leading-edge participants in global value chains.” (Who today isn’t part of a global value chain?) Also in keeping with current industrial-policy trendiness, the government is instructed to be strategically selective in KIC-starting the sector. “KIC,” you see, stands for “Key Industrial Capabilities,” which is what we’re told we should focus on.

But despite the alluring bells and whistles, the message to firms selling to the government is clear: Either pay up or forget about getting the contract. From now on, if the committee gets its way, how you plan to spread the industrial booty around the Canadian economy will weigh directly in the balance with how your product performs. The new fighter jet doesn’t accelerate quickly enough to elude missiles? Well, never mind that, it comes with a new plant in Mississauga. Shells pierce the new tank’s armour? Too bad. But the innovation spinoffs for Thunder Bay are just too good to pass up.

You might think that interpretation extreme. Surely safety for our soldiers and value-for-money for our taxpayers come first. But what else could be meant by the recommendation that bidders specify the industrial benefits they’re offering as part of their bid itself, rather than as an add-on after the performance characteristics of their product or service have won them the contract?

Suppose that instead of causing defence contracts to be inflated with offsets for Canadian industry, this committee consisting of a high-tech CEO, a former chief of staff at national defence, an IP specialist in a defence company, a retired general and Paul Martin’s one-time policy guru recommended levying a 5% tax on all government defence purchases and using the revenues thus generated to subsidize Canadian defence contractors?

I sent the original Globe and Mail URL to Jon saying, “The very last thing Canada should be attempting is to use government money to build a ‘defence industry’. Let the military buy what they need on the open market — regardless of country of origin — at market prices. The fetish to have a domestic defence industry is pure crony capitalism clothed in a “patriotic” fig leaf.”

Why raising the minimum wage won’t help the poor

Filed under: Business, Economics, Government — Tags: , , — Nicholas @ 09:22

Microsoft Excel: the most dangerous software on Earth?

Filed under: Business, Economics, Technology — Tags: , , — Nicholas @ 00:02

I’ve made this case in conversation several times — usually after having to forensically determine just why someone’s spreadsheet produced an unlikely answer — the greatest strength of spreadsheets is also their greatest weakness. Anyone who’s built a spreadsheet knows how easy it is to make a mistake, and how hard that mistake can be to detect after the fact. Spreadsheets are free-form: you can set up relationships on the fly, pull data from one place to plug into a different formula somewhere else. It’s literally empowering to gain that much control over your data without having to learn a full programming language.

But that flexibility and power comes at a cost: there’s no built-in error checking of your assumptions. Oh, it’ll alert you to practical problems like mis-matched data types or mechanical errors in your formula, but can’t tell you whether the operation you’re attempting makes sense. The program can’t read your mind and can’t sanity check your work.

Do a spreadsheet for your family budget and you’ll almost certainly make a minor error or two.

Make a set of inter-linked spreadsheets and you probably double the chances of error for each new spreadsheet in the set.

Make a set of inter-linked spreadsheets that require manual copy-and-paste updates and you exponentially increase the chances of error.

Then, make that manually updated set of spreadsheets have a real-world impact on vast amounts of money:

To give you and idea of how important this is here’s a great tale from James Kwak:

    The issue is described in the appendix to JPMorgan’s internal investigative task force’s report. To summarize: JPMorgan’s Chief Investment Office needed a new value-at-risk (VaR) model for the synthetic credit portfolio (the one that blew up) and assigned a quantitative whiz (“a London-based quantitative expert, mathematician and model developer” who previously worked at a company that built analytical models) to create it. The new model “operated through a series of Excel spreadsheets, which had to be completed manually, by a process of copying and pasting data from one spreadsheet to another.” The internal Model Review Group identified this problem as well as a few others, but approved the model, while saying that it should be automated and another significant flaw should be fixed.** After the London Whale trade blew up, the Model Review Group discovered that the model had not been automated and found several other errors. Most spectacularly,

    “After subtracting the old rate from the new rate, the spreadsheet divided by their sum instead of their average, as the modeler had intended. This error likely had the effect of muting volatility by a factor of two and of lowering the VaR . . .”

To translate that into the vernacular, the bank, JP Morgan, was running huge bets (tens of billions of dollars, what we might think of a golly gee gosh that’s a lot of money) in London. The way they were checking what they were doing was playing around in Excel. And not even in the Masters of the Universe style that we might hope, all integrated, automated and self-checking, but by cutting and pasting from one spreadsheet to another. And yes, they got one of the equations wrong as a result of which the bank lost several billion dollars (perhaps we might drop the gee here but it’s still golly gosh that’s a lot of money).

And it’s not just JP Morgan: every financial firm, every bank, every brokerage uses Excel (or another spreadsheet program). Multiply JP Morgan’s experiences by the number of companies to get a rough idea of how much is at risk from un-audited (possibly even un-audit-able) financial models running on spreadsheets.

February 12, 2013

Rules for the masses, but not for the bureaucratic elite

Filed under: Bureaucracy, Business, Europe, Law — Tags: , , , , , — Nicholas @ 10:33

The European Union’s rules on gender equality appear to apply to everything in the EU except the EU’s own bureaucracy:

Part of the aggrandised myth EU institutions like to propagate about themselves is that they are pioneers in promoting tolerance, gender equality, and diversity in the workplace. Read the promotional literature and you will find effusive descriptions of liberal workplace revolutions and the achievements of Soviet-style five-year plans. Yet, like the Soviet Union, there is an embarrassing mismatch between the trumpeted idealism and the reality.

Since its creation in 1967, DG Employment (Directorate-General for Employment, Social Affairs and Inclusion at the European Commission) has nominally been responsible for fair employment conditions in the European Union. Rising levels of workplace equality in member states (for which DG Employment take an undue amount of credit) are woefully incongruous with the situation of EU civil servants. Women occupy 19 per cent of senior management positions; compare this with the often decried 35.9 per cent of women in the top levels of the UK civil service.

Yet it is figures like the UK civil service’s that prompt EU proposals on affirmative action. One set of proposals has recently been discussed in the European parliament, for example, which if passed will introduce gratuitous and complicated legislation across the continent. That bureaucracy breeds bureaucracy is unsurprising, but it is hard to take seriously calls for equality from an institution endemically opposed to the concept.

The only European agency where women in management positions outnumber men is in the Institute for Gender Equality (the administration is 95 per cent female). Incontrovertibly, out of all the agencies, this is the one with the strongest prerogative for tackling equality in its workforce. But the message is clear: shout about equality to the world and create a dummy institute to anyone holding a mirror up to the EU bureaucracy itself. So far, the commission is on its fifth ‘action programme’ to tackle inequality within its institutions, taking the same form as every one that has come before it; vague guidelines forgotten until lobby group pressure becomes too annoying.

February 11, 2013

Senate report calls for tariff cuts

Filed under: Business, Cancon, Economics, Government, USA — Tags: , , , , , , — Nicholas @ 12:57

In the Financial Post, Terence Corcoran looks at the good and not-so-good aspects of a recent Senate report on the reasons Canadians pay so much more for goods than Americans (even when the goods are identical and the currencies are trading at par):

Retail prices in Canada, seemingly across the board, are higher. Even with the Canadian dollar at par, the price of everything from running shoes to televisions and Chevy Camaros to books is said to be above U.S prices. One bank report once put the Canada-U.S. price gap at 20%.

Somebody’s gotta do something, everybody agrees. Enter the Senate committee with one of the most hard-nosed, market-driven overviews of how and why Canadians pay more for goods at retail. The report dodges and fudges some key issues, especially farm product supply management, which was seen by the committee and the retail industry as too politically hot to handle.

[. . .]

Even in this, however, the committee pulls its first punch. The recommendation to “review” such tariffs — watery phrasing in itself — also suggests “keeping in mind the impact on domestic manufacturing.” Sorry, folks, but you can’t have it both ways. Tariffs are protectionist devices for manufacturers that consumers pay for. If you want to reduce the price to consumers, the $3.9-billion in protection for manufacturers has to go. End of discussion.

What makes The Canada-USA Price Gap even more valuable is its compact insights into the many causes of higher retail prices in Canada. The economy is a complicated and often unfathomable series of market and price relationships beyond the power and even understanding of policy makers. The report recognizes that fact time and again.

February 3, 2013

Bureaucracy and the would-be small business owner

Filed under: Bureaucracy, Business, Cancon, USA — Tags: , — Nicholas @ 11:40

It took me less than a day to start my own business — and it was all done online. We have it good: Canada is at the top of the league table for ease of starting a new business. Americans don’t have it as easy as we do:

Last week, having read my own writing about how it’s cheaper to buy a house than rent one in most markets, I decided to take my own advice. My wife and I bought a new place, and instead of selling our old condo, we’re going to rent it out. And thus I became a small-business man.

Or, rather, I’m becoming one. Entrepreneurship — even on the smallest and most banal scale — turns out to be a time-consuming pain in the you-know-what. My personal inconveniences aren’t a big deal, but in the aggregate, the difficulty of launching a business is a problem and it may be a more important one as time goes on.

[. . .]

The striking thing about all this isn’t so much that it was annoying — which it was — but that it had basically nothing to do with what the main purpose of landlord regulation should be — making sure I’m not luring tenants into some kind of unsafe situation. The part where the unit gets inspected to see if it’s up to code is a separate step. I was instructed to await a scheduling call that ought to take place sometime in the next 10 business days.

Not that I expect your pity. I don’t even pity myself. Going through the process, I mostly felt lucky to be a fluent-English-speaking college graduate with a flexible work schedule. But the presence of a stray pamphlet offering translation into Spanish, Chinese, or Amharic seemed like it would be only marginally useful to an immigrant entrepreneur. A person who needs to be at her day job from 9 to 5 would have a huge problem even getting to these offices while they’re open.

The bureaucratic hassles of entrepreneurship turn out to vary pretty substantially from place to place. The World Bank has a fairly crude measure of how easy it is to start a business in different countries and ranks the United States 13th. North of the border in Canada (ranked third), there’s typically just one “procedure” — a paperwork filing, basically — needed to launch a business. In America, it takes more like six.

February 1, 2013

Nicely played, Samsung

Filed under: Business, Football, Humour, Media — Tags: , , , , — Nicholas @ 10:05

At Techdirt, Timothy Geigner tries to talk about something to do with football or advertising:

It’s almost that time of year again, when many of us lesser beings will gather together to watch super-human men on all manner of PEDs and deer antler urine sprays smack each other around while an oblong leather ball sits somewhere in the background. We’ll leap for the pizza and chili like salmon during mating season while, between whistles, obligatory commercials with Avatar-like production budgets glow at us. That’s right sports fans, it’s [editor redacted] time!

Wait, hey! What the hell? I said it’s [editor redacted] time! Oh, come on. I can’t say [editor redacted]? Fine, what about a euphemism, like [editor redacted]? No, can’t say that either? Maybe [editor redacted]? Damn it, this is stupid. I’m talking about something that rhymes with “Pooper Hole” (heh, got you, editor!).

Fortunately for our entertainment sensibilities, Samsung decided this year to combine a distaste for trademark stupidity and our concept of advertising being content in this gem of a spot.

January 30, 2013

“The only people [DRM] annoys are the ones who have [acquired] legal copies”

Filed under: Business, Media, Technology — Tags: , , , , , — Nicholas @ 12:12

At Techdirt, Glyn Moody explains why the attempt to add DRM to the HTML5 standard is doomed to failure:

You would have thought by now that people would understand that DRM is not only a bad idea, but totally unnecessary: Apple dropped DRM from music downloads in 2009 and seems to be making ends meet. Despite these obvious truths, the stupidity that is DRM continues to spread. Here, for example, is a particularly stupid example of DRM stupidity, as revealed by Manu Sporny:

    A few days ago, a new proposal was put forward in the HTML Working Group (HTML WG) by Microsoft, Netflix, and Google to take DRM in HTML5 to the next stage of standardization at W3C.

After all, this is exactly what Web users have been crying out for: “just give us DRM for the Web, and our lives will be complete….”

[. . .]

That clearly implies that when people are not sharing their own content with family and friends, then they are indeed adversaries:

    This “user is not an adversary” text can be found in the first question about use cases. It insinuates that people that listen to radio and watch movies online are potential adversaries. As a business owner, I think that’s a terrible way to frame your customers.

    Thinking of the people that are using the technology that you’re specifying as “adversaries” is also largely wrong. 99.999% of people using DRM-based systems to view content are doing it legally. The folks that are pirating content are not sitting down and viewing the DRM stream, they have acquired a non-DRM stream from somewhere else, like Mega or The Pirate Bay, and are watching that.

This is the fundamental reason why DRM is doomed and should be discarded: the only people it annoys are the ones who have tried to support creators by acquiring legal copies. How stupid is that?

Pirates_vs_Paying_Customers_full

January 28, 2013

Let’s get real reform at the CRTC: eliminate “mandatory carriage” altogether

Filed under: Bureaucracy, Business, Cancon, Media — Tags: , , , — Nicholas @ 08:49

In the Toronto Star, Michael Geist calls for the CRTC to stop the “mandatory carriage” provision that forces cable providers to carry certain channels on their “basic” packages:

Canadians frustrated with ever-increasing cable and satellite bills received bad news last week with the announcement that the Canadian Radio-television and Telecommunications Commission will consider whether to require cable and satellite companies to include nearly two-dozen niche channels as part of their basic service packages. If approved, the new broadcast distribution rules would significantly increase monthly cable bills with consumers forced to pay for channels they may not want.

Two issues sit at the heart of the broadcast distribution rules. First, whether the CRTC should grant any broadcaster mandatory distribution across all cable and satellite providers such that all subscribers are required to pay for them as part of their basic packages. Second, in the absence of mandatory distribution, whether broadcast distributors should be required to at least offer the services so that consumers have the option of subscribing.

[. . .]

While the financial benefits for broadcasters are enormous, the policy represents a near-complete elimination of consumer choice for the channels at issue. Rather than convincing millions of Canadian consumers that their services are worth buying, the broadcasters need only convince a handful of CRTC commissioners that their service meets criteria such as making “an exceptional contribution to Canadian expression.” That is supposedly a high bar, yet it is surely far easier than convincing millions of people to pay for your service each month.

Last year, CRTC chair Jean Pierre Blais emphasized that the Commission’s top priority was to “put Canadians at the centre of their communications system.” The mandatory distribution rules do the opposite. Rather than focusing on consumer interests and choice, the rules place broadcasters at the centre of the communications system by offering up the prospect of millions in revenue without regard for what consumers actually want.

There are few, if any, broadcasters that can be considered so essential as to merit mandatory distribution. Niche cultural broadcasters have a myriad of distribution possibilities and should be forced to compete like any other content creator or distributor. In fact, even broadcasters that position themselves as “public services” can often be replicated by Internet-based alternatives.

I always find it interesting how cable providers usually manage to group their offerings so that you can’t get the group of channels you actually want in the same package. I doubt that this would change even if the regulator allowed the change from “must carry” to “must offer”, however: there’s too much potential profit to the cable companies in crafty packaging strategies. You’ll almost certainly not see the opportunity to pay for just the individual channels you want, as that would be too consumer friendly (and, we’re assured by cable company reps, would kill off lots of niche channels because they wouldn’t get enough subscribers).

Of course, if a TV channel can’t attract enough subscribers, that’s usually a pretty strong economic signal that they shouldn’t be broadcasting anyway.

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