Quotulatiousness

January 11, 2015

Is more immigration the answer? It depends on how you frame the question

Filed under: Business, Cancon, Education, Politics, Technology — Tags: , , , — Nicholas @ 04:00

Jay Currie looks at one of the traditional way of looking at the benefits of immigration — as providing society with workers who will “do the jobs Canadians/Americans won’t do” and wonders if that’s actually true in today’s increasingly technological world:

The elite refrain seems to be that if we want to maintain our welfare system, pensions, healthcare and the like we have simply no choice but to import drafts of tax serfs to make up our declining numbers. Is that true?

Here are a few ideas to extend the independence of the Boomers and reduce the need for immigrants at any cost.

  • Postpone retirement to 70 or even 75: the boomers parents are extending life expectancy rapidly. 90 is the new 70. Greater activity, a keener sense of healthy life style choices and, as Doug Coupland put it, “Vitamin D and baby aspirin and (mum’s) going to live forever.” Boomers are nuts to be thinking of retirement at 60 unless they really are too sick to work. So don’t. Pushing back the retirement and pension ages saves a lot of pension money and reduces the need to bring in more people.
  • Have more children. Not something the boomers can do but our kids can and should. But to do this we need a lot of very family friendly policy. Income splitting is a cute idea but hardly a huge incentive to family formation. Big tax deductions for kids number three, four and five could help a bit. But those are governmental changes.

    • […]

  • Where possible transfer wealth early. There are a lot of older boomers whose parents have died and left good big whacks of dough. And those same boomers are coming to the end of their mortgages. Here is a hint: offer your kids some money. And not, ideally, as a loan. An outright gift is more useful. Don’t tie it to real estate either. There is going to be a massive correction in Canadian real estate but even if there wasn’t tying a gift to what is usually a debt and endless expense is a poor idea.

    • […]

  • Build houses and condos which can adapt to the changing needs and means of families. Everything from in-law suites to legally easy house splitting needs to be done to drive down the price of housing in Canada. Yes there is a correction coming but that does not change the fact there are many cities where housing is unaffordable. Build rental housing for families. Build up market rental housing. Encourage density. Make it possible to rent with a 1/5 of your average income rather than 1/2.

  • Use technology in place of people. A lot of the jobs “Canadians just will not do” should not be done at all by anyone. From self cleaning toilets – already done in Japan – to robotic floor cleaners and fast food “servers” there are lots of jobs which can and will be done by robots. Pushing that sort of technology will reduce the need for more immigrants.

    • […]

If you actually look at those numbers seriously and, instead of 10% use 5%, you’ll see that 900,000 low skill jobs are going to get eaten by robots and IT over the next decade. 90,000 a year. Now, look at the naturalized Canadian number for 2014 again 260,000. If half our new citizens are entering the labour force that is 130,000 new workers per year in an economy which will be shedding 90,000 jobs per year. Does that make any sense at all?

January 10, 2015

The four kinds of healthcare spending

Filed under: Bureaucracy, Business, Economics, Government, Health, USA — Tags: , , , — Nicholas @ 03:00

Megan McArdle explains why healthcare costs more than you think it should:

Milton Friedman famously divided spending into four kinds, which P.J. O’Rourke once summarized as follows:

  1. You spend your money on yourself. You’re motivated to get the thing you want most at the best price. This is the way middle-aged men haggle with Porsche dealers.
  2. You spend your money on other people. You still want a bargain, but you’re less interested in pleasing the recipient of your largesse. This is why children get underwear at Christmas.
  3. You spend other people’s money on yourself. You get what you want but price no longer matters. The second wives who ride around with the middle-aged men in the Porsches do this kind of spending at Neiman Marcus.
  4. You spend other people’s money on other people. And in this case, who gives a [damn]?

Most health-care spending in the U.S. falls into category three. In theory, the people who are funding our expenses — the proverbial middle-aged men in Porsches, except that they’re actually insurance executives and government bureaucrats — have every incentive to step in, cut up the charge cards, and substitute a gift-wrapped box of Hanes briefs with the comfort-soft waistband. In practice, legislators frequently intervene to stop them from exercising much cost-control. The managed care revolution of the 1990s died when patients complained to their representatives, and the representatives ran down to their offices to pass laws making it very hard to deny coverage for anything anyone wanted. Medicare cost-controls, such as the famed Sustainable Growth Rate, fell prey to similar maneuvers. The only system that exhibits sustained cost control is Medicaid, because poor people don’t vote, or exit the system for better insurance.

The result is a system where everyone complains that we spend much too much on health care — and the very same people get indignant if anyone suggests that they, personally, should maybe spend a little bit less. Everyone wants to go to heaven — but nobody wants to die.

Unfortunately, this is what cost-control actually looks like, which is to say, like people not being able to spend as much on health care. Oh, to be sure, we could achieve this end differently — instead of asking patients to pay a modest share of their own costs (the article suggests that this amount is less than 10 percent, in the case of Harvard professors) — we could simply set a schedule of covered treatment, and deny patients access to off-schedule treatments, or even better, not even tell them that those treatments exist. But people don’t like that solution either, which is why medical dramas are filled with rants about insurers who won’t cover procedures, and the law books are filled with regulations that sharply curtail the ability of insurers to ration care. And the third option, refusing to pay top-dollar for care, would be a bit tricky for Harvard to implement, given that they run exactly the sort of high-cost research facilities that help drive health-care costs skyward. Nor do I really think that the angry professors would be mollified by being given a cheap insurance package that wouldn’t let them go see the top-flight specialists their elite status now entitles them to access.

Instead, they persist in our mass delusion: that there is some magic pot of money in the health-care system, which can be painlessly tapped to provide universal coverage without dislocating any of the generous arrangements that insured people currently enjoy. Just as there are no leprechauns, there is no free money at the end of the rainbow; there are patients demanding services, and health-care workers making comfortable livings, who have built their financial lives around the expectation that those incomes will continue. Until we shed this delusion, you can expect a lot of ranting and raving about the hard truths of the real world.

January 8, 2015

Copyright is to culture what salt is to snails

Filed under: Books, Business, Law, Media — Tags: , , , — Nicholas @ 02:00

Mike Masnick included a fascinating chart in this story:

New books by decade at Amazon

What it shows is that while new books are available for sale, they quickly go out of print and are basically not available — until you get down to 1923, at which point the works are in the public domain. Think of all those works that are no longer available to buy in that major gap in the middle. Heald has since updated that research to show how serious a problem this is — and demonstrating how the arguments against letting these works into the public domain make no sense. He demolishes the arguments made by some that a public domain will be either “under” or “over” exploited (yes, both arguments are made), as neither makes much sense.

It appears that copyright is doing similar damage in Europe. At the latest Chaos Communications Congress in Germany, Julia Reda, the European Parliament member from the Pirate Party gave a talk on the state of copyright law today (you can see the video here and included a similar graphic concerning books available in Europe:

The 20th century black hole

January 5, 2015

QotD: Hollywood elites and the mere bourgeoisie in the audience

Filed under: Books, Business, Media, Quotations, USA — Tags: , , , , — Nicholas @ 01:00

… Hollywood movies are made by the elite for the elite, and that it is only with reluctance, or to pay the bills, does Hollywood turn out nutritious fare meant to please and sate the coarse palate of coarse commoners like me, as the popular blockbusters mentioned above.

I do not mean to dwell on this point, I merely ask that you, ladies and gentlemen of the jury, accept it as uncontested, since surely the counselor for the Defense of Hollywood dare not claim the actors and studios like us, want to be like us, or like what we like. Their entire claim to be an elite, and superior in taste, intellect, and moral insight to the pathetic bourgeoisie is dashed if they do not discriminate themselves from bourgeoisie tastes.

With these assumptions explicit, let us ponder the question.

Why are comic book movies better than Hollywood movies?

[…]

What is difficult is learning to appreciate and savor the artistic genius of Jack Kirby and Steve Ditko, of JRR Tolkien and CS Lewis, who wrote comic books and paperbacks, fairy stories and science fiction marketed to children. I have worked hard to lower my taste to appreciating the things as common and simple as fairy tales, and all the simple and true things under heaven. I hope one day my taste will be as coarse as that of St. Peter, who was a fisherman.

The elite of our culture have not yet shouldered that difficult task. We all know that the elite are out of touch with the tastes of the common man, but how far out of touch they are is something of a shock.

Allow me to quote from J.R.R. TOLKIEN by Jeremy Mark Robinson:

    Philip Toynbee declared, in 1961, that Tolkien’s ‘childish books had passed into a merciful oblivion’, a wonderful statement, just a tad inaccurate. In 1997, The Lord of the Rings was voted the top book of the 20th century by readers in a British bookstore’s poll (Waterstone’s). 104 out of 105 stores and 25,000 readers put The Lord of the Rings at the top (1984 was second).

    The results of the poll angered many lit’ry critics in the UK. Howard Jacobson, Mark Lawson, Bob Inglis, Germaine Greer and Susan Jeffreys, were among those irritated by Lord of the Rings‘ success among readers. The Daily Telegraph readers’ poll came up with the same results. The Folio Society also ran a poll (of 50,000 members), and Middle-earth was top again (Pride and Prejudice was second and David Copperfield was third).

    It was Tolkien’s incredible popularity that annoyed some critics and journos. Writers are nothing if not bitchy and envious of other people’s success, and British journalists have a long tradition of knocking down anyone who’s successful. So the popularity of The Lord of the Rings served to underline many of the prejudices of the literary establishment and media in the UK:

    (1) That people who liked Tolkien were geeks, anoraks, sci-fi nuts, college students, hippies, and so on.

    (2) That Tolkien’s fiction was juvenile, reactionary, sexist, racist, pro-militaristic, etc.

    (3) And it was badly written, simplistic, stereotypical, and so on.

    (4) And it was in the fantasy genre, which was automatically deemed as lightweight, as ‘escapist’, as fit only for adolescent boys. And so on and on.

What Mr. Robinson reports of these polls is underscored and emphasized by some that film critic and conservative commentator Michael Medved mentions about movies.

Allow me again to quote, this from a talk Mr. Medved gave at Hillsdale College:

    In years past, Hollywood also turned out popular and sympathetic portrayals of contemporary clergymen. Bing Crosby, Pat O’Brien and Spencer Tracy played earthy, compassionate priests who gave hope to underprivileged kids or comforted GI’s on the battlefield. Nearly all men of the cloth who appeared on screen would be kindly and concerned, if not downright heroic.

    In the last ten to fifteen years mainstream moviemakers have swung to the other extreme. If someone turns up in a film today wearing a Roman collar or bearing the title “Reverend,” you can be fairly sure that he will be either crazy or corrupt — or probably both.

John C. Wright, “Supermanity and Dehumanity (Complete)”, John C. Wright’s Journal, 2014-12-13.

January 4, 2015

When companies bought into the open plan workspace model

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

In the Washington Post, Lindsey Kaufman recounts her experience when her workplace changed to the “open-office model”:

A year ago, my boss announced that our large New York ad agency would be moving to an open office. After nine years as a senior writer, I was forced to trade in my private office for a seat at a long, shared table. It felt like my boss had ripped off my clothes and left me standing in my skivvies.

Our new, modern Tribeca office was beautifully airy, and yet remarkably oppressive. Nothing was private. On the first day, I took my seat at the table assigned to our creative department, next to a nice woman who I suspect was an air horn in a former life. All day, there was constant shuffling, yelling, and laughing, along with loud music piped through a PA system. As an excessive water drinker, I feared my co-workers were tallying my frequent bathroom trips. At day’s end, I bid adieu to the 12 pairs of eyes I felt judging my 5:04 p.m. departure time. I beelined to the Beats store to purchase their best noise-cancelling headphones in an unmistakably visible neon blue.

Despite its obvious problems, the open-office model has continued to encroach on workers across the country. Now, about 70 percent of U.S. offices have no or low partitions, according to the International Facility Management Association. Silicon Valley has been the leader in bringing down the dividers. Google, Yahoo, eBay, Goldman Sachs and American Express are all adherents. Facebook CEO Mark Zuckerberg enlisted famed architect Frank Gehry to design the largest open floor plan in the world, housing nearly 3,000 engineers. And as a businessman, Michael Bloomberg was an early adopter of the open-space trend, saying it promoted transparency and fairness. He famously carried the model into city hall when he became mayor of New York, making “the Bullpen” a symbol of open communication and accessibility to the city’s chief.

These new floor plans are ideal for maximizing a company’s space while minimizing costs. Bosses love the ability to keep a closer eye on their employees, ensuring clandestine porn-watching, constant social media-browsing and unlimited personal cellphone use isn’t occupying billing hours. But employers are getting a false sense of improved productivity. A 2013 study found that many workers in open offices are frustrated by distractions that lead to poorer work performance. Nearly half of the surveyed workers in open offices said the lack of sound privacy was a significant problem for them and more than 30 percent complained about the lack of visual privacy. Meanwhile, “ease of interaction” with colleagues — the problem that open offices profess to fix — was cited as a problem by fewer than 10 percent of workers in any type of office setting. In fact, those with private offices were least likely to identify their ability to communicate with colleagues as an issue. In a previous study, researchers concluded that “the loss of productivity due to noise distraction … was doubled in open-plan offices compared to private offices.”

I work in the software industry and it’s been nearly 20 years since I last had a private office. Every company I’ve worked for since then has either consciously been moving in the open office direction, or unwilling to spend money to partition open space in whatever office space they had. Sometimes, I even get nostalgic for cube farms…

January 3, 2015

Last year, “a Kentucky judge did something no federal judge has done since 1932”

Filed under: Business, Law, Liberty, USA — Tags: , , , , , — Nicholas @ 11:44

It’s been a very long time since a federal judge in Kentucky anywhere in the United States has struck down a “certificate of necessity” (CON) regulation:

Mighty oaks from little acorns grow, so last year’s most encouraging development in governance might have occurred in February in a U.S. district court in Frankfort, Ky. There, a judge did something no federal judge has done since 1932. By striking down a “certificate of necessity” (CON) regulation, he struck a blow for liberty and against crony capitalism.

Although Raleigh Bruner’s Wildcat Moving company in Lexington is named in celebration of the local religion — University of Kentucky basketball — this did not immunize him from the opposition of companies with which he wished to compete. In 2012, he formed the company, hoping to operate statewide. Kentucky, however, like some other states, requires movers to obtain a CON. Kentucky’s statute says such certificates shall be issued if the applicant is “fit, willing and able properly to perform” moving services — and if he can demonstrate that existing moving services are “inadequate,” and that the proposed service “is or will be required by the present or future public convenience and necessity.”

Applicants must notify their prospective competitors, who can and often do file protests. This frequently requires applicants to hire lawyers for the hearings. There they bear the burden of proving current inadequacies and future necessities. And they usually lose. From 2007 to 2012, 39 Kentucky applications for CONs drew 114 protests — none from the general public, all from moving companies. Only three of the 39 persevered through the hearing gantlet; all three were denied CONs.

Bruner sued, arguing three things: that the CON process violates the Constitution’s equal protection clause because it is a “competitors’ veto” that favors existing companies over prospective rivals; that the statute’s requirements (“inadequate,” “convenience,” “necessity”) are unconstitutionally vague; and that the process violates the 14th Amendment’s protections of Americans’ “privileges or immunities,” including the right to earn a living.

January 1, 2015

The Laffer Curve at 40

Filed under: Business, Economics, Government, USA — Tags: , , , , , — Nicholas @ 11:39

In the Washington Post, Stephen Moore recounts the tale of the most famous napkin in US economic history:

It was 40 years ago this month that two of President Gerald Ford’s top White House advisers, Dick Cheney and Don Rumsfeld, gathered for a steak dinner at the Two Continents restaurant in Washington with Wall Street Journal editorial writer Jude Wanniski and Arthur Laffer, former chief economist at the Office of Management and Budget. The United States was in the grip of a gut-wrenching recession, and Laffer lectured to his dinner companions that the federal government’s 70 percent marginal tax rates were an economic toll booth slowing growth to a crawl.

To punctuate his point, he grabbed a pen and a cloth cocktail napkin and drew a chart showing that when tax rates get too high, they penalize work and investment and can actually lead to revenue losses for the government. Four years later, that napkin became immortalized as “the Laffer Curve” in an article Wanniski wrote for the Public Interest magazine. (Wanniski would later grouse only half-jokingly that he should have called it the Wanniski Curve.)

This was the first real post-World War II intellectual challenge to the reigning orthodoxy of Keynesian economics, which preached that when the economy is growing too slowly, the government should stimulate demand for products with surges in spending. The Laffer model countered that the primary problem is rarely demand — after all, poor nations have plenty of demand — but rather the impediments, in the form of heavy taxes and regulatory burdens, to producing goods and services.

[…]

Solid supporting evidence came during the Reagan years. President Ronald Reagan adopted the Laffer Curve message, telling Americans that when 70 to 80 cents of an extra dollar earned goes to the government, it’s understandable that people wonder: Why keep working? He recalled that as an actor in Hollywood, he would stop making movies in a given year once he hit Uncle Sam’s confiscatory tax rates.

When Reagan left the White House in 1989, the highest tax rate had been slashed from 70 percent in 1981 to 28 percent. (Even liberal senators such as Ted Kennedy and Howard Metzenbaum voted for those low rates.) And contrary to the claims of voodoo, the government’s budget numbers show that tax receipts expanded from $517 billion in 1980 to $909 billion in 1988 — close to a 75 percent change (25 percent after inflation). Economist Larry Lindsey has documented from IRS data that tax collections from the rich surged much faster than that.

QotD: Henry Ford and the doubled wages – the real story

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

In 1913, turnover reached an unbelievable 370 percent, and Ford hired more than 50,000 people to maintain an average labor force of about 13,600. When profits swelled, he paid well for labor, creating an uproar when he doubled the basic wage to $5.00 a day, which triggered a virtual stampede of job seekers. Paying higher wages for labor was not altruistic in Ford’s eyes. Moreover, it wasn’t simply that Ford was trying to pay his workers “enough to buy back the product,” although he did preach a high-wage doctrine after the stock market crash in 1929. Rather, paying relatively high wages was, for Ford, a matter of smart business. He regarded well-paid skilled workers as important as high-grade material. By paying workers well, he effectively lowered his costs because higher wages reduced turnover and the need for constant training of new hires. (At the time, the newspapers saw Ford’s wage increase as an extraordinary gesture of goodwill.)

Mark Spitznagel, The Dao of Capital: Austrian Investing in a Distorted World, 2013.

December 31, 2014

The (awful) people of Whole Foods

Filed under: Business, Health, Personal, USA — Tags: , , , — Nicholas @ 04:00

Many years ago, when we lived on “the Danforth”, we were occasional patrons of “The Big Carrot”, an early retail store for the self-consciously “alternative” set. If you wanted gluten-free, or dairy-free, or fair-trade, they were almost the only game in town in the late 80s and early 90s. The selection may not have been great at times, but they did try to provide a variety of foods that you couldn’t get at the mainstream supermarkets of the day. The employees seemed to be mostly good, helpful folks, but almost to a person the customers were incredibly self-centred, self-righteous, arrogant, and intolerant. I don’t know how the staff put up with the constant childish antics and unending whining from the customers. Whole Foods is a much bigger enterprise than Toronto’s Big Carrot … and they seem to have attracted exactly the same customer base:

The problem with Whole Foods is their regular customers. They are, across the board, across the country, useless, ignorant, and miserable. They’re worse than miserable, they’re angry. They are quite literally the opposite of every Whole Foods employee I’ve ever encountered. Walk through any store any time of day—but especially 530pm on a weekday or Saturday afternoon during football season — and invariably you will encounter a sneering, disdainful horde of hipster Zombies and entitled 1%ers.

They stand in the middle of the aisles, blocking passage of any other cart, staring intently at the selection asking themselves that critical question: which one of these olive oils makes me seem coolest and most socially conscious, while also making the raw vegetable salad I’m preparing for the monthly condo board meeting seem most rustic and artisanal?

If you are a normal human being, when you come upon a person like this in the aisle you clear your throat or say excuse me, hoping against hope that they catch your drift. They don’t. In fact, they are disgusted by your very existence. The idea that you would violate their personal shopping space — which seems to be the entire store — or deign to request anything of them is so far beyond the pale that most times all they can muster is an “Ugh!”

Over the years I have tried everything to remain civil to these people, but nothing has worked, so I’ve stopped trying. Instead, I walk over to their cart and physically move it to the side for them. Usually, the shock of such an egregious transgression is so great that the “Ugh!” doesn’t happen until I’m around the corner out of sight. Usually, all I get is an incredulous bug-eyed stare. Sometimes I get both though, and when that happens, I look them square in the eye and say “Move. Your. Cart.” I used the same firm tone as Jason Bourne, with the hushed urgency of Jack Bauer and the uncomfortable proximity of Judge Reinhold. From their reaction you’d think I just committed an armed robbery or a sexual assault. When words fail them, as they often do with passive aggressive Whole Foods zombies, the anger turns inward and they start to vibrate with righteous indignation. Eventually, that pent up energy has to go somewhere, and like solar flares it bursts forth into the universe as paroxysms of rage.

December 30, 2014

Economics of SF writing – the fall of the short story and the rise of the novel

Filed under: Books, Business, Economics, Media — Tags: , , — Nicholas @ 09:48

Charles Stross outlines the reason SF writers pretty much stopped writing short stories en masse in the mid-to-late 1950s:

A typical modern novel is in the range 85,000-140,000 words. But there’s nothing inevitable about this. The shortest work of fiction I ever wrote and sold was seven words long; the longest was 196,000 words. I’ve written plenty of short stories, in the 3000-8000 word range, novelettes (8000-18,000 words), and novellas (20,000-45,000 words). (Anything longer than a novella is a “short novel” and deeply unfashionable these days, at least in adult genre fiction, which seems to be sold by the kilogram.)

[…]

Genre science fiction in the US literary tradition has its roots in the era of the pulp magazines, from roughly 1920 to roughly 1955. (The British SF/F field evolved similarly, so I’m going to use the US field as my reference point.) These were the main supply of mass-market fiction to the general public in the days before television, when reading a short story was a viable form of mass entertainment, and consequently there was a relatively fertile market for short fiction up to novella length. In addition, many of these magazines serialized novels: it was as serials that Isaac Asimov’s Foundation and E. E. “Doc” Smith’s The Skylark of Space were originally published, among others.

For a while, during this period, it was possible to earn a living (not a very good living) churning out pulp fiction in short formats. It’s how Robert Heinlein supplemented his navy pension in the 1930s; it’s how many of the later-great authors first gained their audiences. But it was never a good living, and in the 1950s the bottom fell out of the pulp market — the distribution channel itself largely dried up and blew away, a victim of structural inefficiencies and competition from other entertainment media. The number of SF titles on sale crashed, and the number of copies each sold also crashed. Luckily for the writers a new medium was emerging: the mass market paperback, distributed via the same wholesale channel as the pulp magazines and sold through supermarkets and drugstore wire-racks. These paperbacks were typically short by modern standards: in some cases they provided a market for novellas (25,000 words and up — Ace Doubles consisted of two novellas, printed and bound back-to-back and upside-down relative to one another, making a single book).

The market for short fiction gradually recovered somewhat. In addition to the surviving SF magazines (now repackaged as digest-format paperback monthlies) anthologies emerged as a market. But after 1955 it was never again truly possible to earn a living writing short stories (although this may be changing thanks to the e-publishing format shift — it’s increasingly possible to publish stand-alone shorter works, or to start up a curatorial e-periodical or “web magazine” as the hip young folks call them). And the readership profile of the remaining magazines slowly began to creep upwards, as new readers discovered SF via the paperback book rather than the pulp magazine. With this upward trending demographic profile, the SF magazines entered a protracted, generational spiral of dwindling sales: today they still exist, but nobody would call a US newsstand magazine with monthly sales of 10,000-15,000 copies a success story.

A side-effect of dwindling sales is that the fixed overheads of running a magazine (the editor’s pay check) remains the same but there’s less money to go around. Consequently, pay rates for short fiction stagnated from the late 1950s onwards. 2 cents/word was a decent wage in 1955 — it was $20 for a thousand words, so $80-500 for a short story or novelette. But the monthly magazines were still paying 5 cents/word in the late 1990s! This was pin money. It was a symbolic reward. It would cover your postage and office supplies bill — if you were frugal.

The humble pallet … and a shipping revolution

Filed under: Business, Economics — Tags: , , — Nicholas @ 04:00

It’s very easy to let your eye skip over the humble pallet, yet it represents a huge improvement in how products get from the factory to you:

The magic of these pallets is the magic of abstraction. Take any object you like, pile it onto a pallet, and it becomes, simply, a “unit load” — standardized, cubical, and ideally suited to being scooped up by the tines of a forklift. This allows your Cheerios and your oysters to be whisked through the supply chain with great efficiency; the gains are so impressive, in fact, that many experts consider the pallet to be the most important materials-handling innovation of the twentieth century. Studies have estimated that pallets consume 12 to 15 percent of all lumber produced in the US, more than any other industry except home construction.

Some pallets also carry an aesthetic charge. It’s mostly about geometry: parallel lines and negative space, slats and air. There is also the appeal of the raw, unpainted wood, the cheapest stuff you can buy from a lumber mill — “bark and better,” it’s called. These facts have not escaped the notice of artists, architects, designers, or DIY enthusiasts. In 2003, the conceptual artist Stuart Keeler presented stacks of pallets in a gallery show, calling them “the elegant serving-platters of industry”; more recently, Thomas Hirschhorn featured a giant pallet construction as part of his Gramsci Monument. Etsy currently features dozens of items made from pallets, from window planters and chaise lounges to more idiosyncratic artifacts, such as a decorative teal crucifix mounted on a pallet. If shipping containers had their cultural moment a decade ago, pallets are having theirs now.

Since World War II, most of America’s pallet needs have been met by several thousand small and mid-sized businesses. These form the nucleus of not just an industry, but a sprawling, anarchic ecosystem — a world, really, complete with its own customs, language, and legends, with a political class, with its own media. This world is known as “whitewood.” There are approximately forty thousand citizens of whitewood, ranging from pallet pickers (who salvage pallets from the trash) to pallet recyclers (who repair broken pallets and make them whole) to pallet manufacturers, pallet consultants, pallet academics, pallet thieves, and pallet association presidents. Whitewood includes people who crisscross the country selling pallet repair machinery, preaching the gospel of tools such as the Rogers Un-Nailer.

Not all pallets belong to the world of whitewood. The most important other category — and whitewood’s chief antagonist — is the blue pallet. These blues are not just a different color; they are also built differently, and play by different rules, and for the past twenty-five years, the conflict between blue and white has been the central theme in the political economy of American pallets. The person most identified with this conflict is a soft-spoken, middle-aged man from Kansas named Bob Moore. Currently embroiled in a legal battle over a pallet deal gone bad, Moore is a singular figure in the industry and a magnet for controversy. When not in federal court, he can sometimes be found piloting a Mooney Acclaim Type S airplane, which he prefers, when possible, to flying commercial. The Mooney is a good place to concentrate, one imagines. And it is important to concentrate when plotting the future of pallets.

Tax-splaining a headline

Filed under: Business, Economics, Law, USA — Tags: , — Nicholas @ 03:00

The headline that grabs attention says that a vast number of US corporations pay absolutely no corporate taxes. Tim Worstall explains that this is quite true:

Timothy Taylor has a nice piece here on the subject:

    More than 90 percent of businesses, representing more than one-third of all business activity, in the United States are structured as flow-through entities — businesses that do not pay the corporate income tax, but rather pass profits through to owners who pay tax under the individual income tax.

    We have two (actually, more than two, but this is the distinction that matters to us here) forms of business ownership. The first is the C Corporation, what we all normally think of as a corporation. The second is an S corporation (in taxation, very like a partnership). And the important thing is that C corporations are the only ones that pay the corporate income tax. S corporations don’t: their owners pay individual income tax on the profits. So, if we saw a move from C to S corporations as the method of organisation then we’d see a reduction in corporate income tax paid. But not, possibly, a reduction in total tax paid on business profits.

And that is what seems to have happened at least in part:

    Back in 1980, nearly 80% of business income went to “C” corporations–so named after the applicable part of the tax code that governs them–which are what most of us think of when we think of a “corporation.” Back then, the remaining 20% was almost all sole proprietorships, which were just taxed as individual income. …..(…)…But C corporations now account for only about 30% of all business income. The share going to sole proprietorships hasn’t changed much. But much more corporate income is going to partnership and S corporations….(…)…Back in the 1960s, the corporate income tax often collected 4-5% of GDP. Since about 1990, it has more commonly collected 1-2% of GDP. Part of the reason is that a smaller share of business income is flowing through the conventional C corporation form.

That really is a large part of the explanation. It’s not that business profits are not being taxed, it’s that they’re being taxed in a different way. And that explains much of the fall in the corporate income tax revenues: and all too few people are over on the other side looking at the increase in individual income tax payments stemming from corporate profits.

So a legal change has drawn a lot of corporations to change how they are structured, so that profits are taxable in the hands of their individual owners, rather than in the imaginary hands of the corporate person. And another US tax quirk explains even more of the headline:

There is another point to be made here, about how we measure the share of corporate profits in the US economy. This has very definitely risen, this is absolutely true. And the tax bill hasn’t, that’s also true. A goodly part of the explanation is the above, about C and S corporations. But there’s this one more thing. Profits in the US economy includes all profits made in the US, by both Americans and foreigners. But it also includes foreign profits made by US corporations. Those tens of billions being made abroad by Google and Apple, Microsoft, they’re all included in the US profit share. And as we also know, those foreign profits aren’t paying the US corporate income tax because, entirely legally, they’re being used overseas to reinvest in those foreign businesses. My stick my finger in the air estimate of the difference those profits make is about 2% of US GDP. Meaning that if we measure US profits as 10% of GDP, then look at tax payments, we’re only seeing the tax payments from 8% of GDP (before we even look at the C and S corporation thing).

December 27, 2014

Regulatory costs don’t scale to smaller businesses

Filed under: Bureaucracy, Business, Food — Tags: , — Nicholas @ 04:00

Warren Meyer writes a letter to the dean of Harvard Business School after reading the story of a professor at HBS harassing a mom’n’pop restaurant over a $4 overcharge on a meal order:

… I was horrified to see an HBS professor (prof Edelman) in the news harassing a small business over a small mistake on its web site. I don’t typically get worked up about Harvard grads acting out, but in this particular case his actions are absolutely at the core of what is making the operation of a small business increasingly impossible in this country.

Small businesses face huge and growing compliance risks from almost every direction — labor law, safety rules, environmental rules, consumer protection laws, bounty programs like California prop 65, etc. What all these have in common is that they impose huge penalties for tiny mistakes, mistakes that can be avoided only by the application of enormous numbers of labor hours in compliance activities. These compliance costs are relatively easy for large companies to bear, but back-breaking for small companies.

So it is infuriating to see an HBS professor attempting to impose yet another large cost on a small business for a tiny mistake, particularly when the proprietor’s response was handled so well. Seriously, as an aside, I took service management from Ben Shapiro back in the day and I could easily see the restaurateur involved being featured positively in a case study. He does all the same things I learned at HBS — reading every customer comment personally, responding personally to complaints, bending over backwards to offer more than needed in order to save the relationship with the customer.

As for the restaurateur’s web site mistake — even in a larger, multi-site company, I as owner do all my own web work. Just as I do a million other things to keep things running. And it is hard, in fact virtually impossible, to keep all of our web sites up to date. Which is why Professor Edelman’s response just demonstrates to me that for all HBS talks about entrepreneurship, the faculty at HBS is still more attuned to large corporations and how they operate with their enormous staff resources rather than to small businesses.

Large corporations are crushing smaller ones in industry after industry because of the economy of scale they have in managing such compliance issues. If the HBS faculty were truly committed to entrepreneurship, it should be thinking about how technology and process can be harnessed by smaller businesses to reduce the relative costs of these activities. How, for example, can I keep up with 150+ locations that each need a web presence when my sales per site are so much less than that of a larger corporation? This is not impossible — I have learned some tools and techniques over time — and we should be teaching and expanding these, rather than spending time raising the cost of compliance for small business.

December 20, 2014

“The Freight Yard” – New York Central Railroad

Filed under: Business, History, Railways, USA — Tags: — Nicholas @ 00:03

Uploaded on 14 Apr 2011

New York Central Railroad (NYC) publicity film from the late 1940’s, part of their “Running the Railroad” series. Archival footage shows freight yards of all types, along with steam and diesel locomotives.

The New York Central Railroad (NYC), known simply as the New York Central in its publicity, was a railroad operating in the Northeastern United States. Headquartered in New York, the railroad served most of the Northeast, including extensive trackage in the states of New York, Pennsylvania, Ohio, Michigan, Indiana, Illinois, and Massachusetts, plus additional trackage in the Canadian provinces of Ontario and Quebec. The railroad primarily connected greater New York and Boston in the east with Chicago and St.Louis in the midwest along with the intermediate cities of Albany, Buffalo, Cleveland, Cincinnati, and Detroit. The NYC’s Grand Central Terminal in New York City is one of its best known landmarks.

Repost – Induced aversion to a particular Christmas song

Filed under: Business, Cancon, Gaming, Media, Personal — Tags: , , , , — Nicholas @ 00:02

Earlier this year, I had occasion to run a Google search for “Mr Gameway’s Ark” (it’s still almost unknown: the Googles, they do nothing). However, I did find a very early post on the old site that I thought deserved to be pulled out of the dusty archives, because it explains why I can — to this day — barely stand to listen to “Little Drummer Boy”:

Seasonal Melodies

James Lileks has a concern about Christmas music:

This isn’t to say all the classics are great, no matter who sings them. I can do without “The Little Drummer Boy,” for example.

It’s the “Bolero” of Christmas songs. It just goes on, and on, and on. Bara-pa-pa-pum, already. Plus, I understand it’s a sweet little story — all the kid had was a drum to play for the newborn infant — but for anyone who remembers what it was like when they had a baby, some kid showing up unannounced to stand around and beat on the skins would not exactly complete your mood. Happily, the song has not spawned a sequel like “The Somewhat Larger Cymbal Adolescent.”

This reminds me about my aversion to this particular song. It was so bad that I could not hear even three notes before starting to wince and/or growl.

Mr. Gameways' ArkBack in the early 1980’s, I was working in Toronto’s largest toy and game store, Mr Gameways’ Ark. It was a very odd store, and the owners were (to be polite) highly idiosyncratic types. They had a razor-thin profit margin, so any expenses that could be avoided, reduced, or eliminated were so treated. One thing that they didn’t want to pay for was Muzak (or the local equivalent), so one of the owners brought in his home stereo and another one put together a tape of Christmas music.

Note that singular. “Tape”.

An ad from the year of Trivial Pursuit (via OSRcon)

An ad from the year of Trivial Pursuit (via OSRcon)

Christmas season started somewhat later in those distant days, so that it was really only in December that we had to decorate the store and cope with the sudden influx of Christmas merchandise. Well, also, they couldn’t pay for the Christmas merchandise until sales started to pick up, so that kinda accounted for the delay in stocking-up the shelves as well …

So, Christmas season was officially open, and we decorated the store with the left-over krep from the owners’ various homes. It was, at best, kinda sad. But — we had Christmas music! And the tape was pretty eclectic: some typical 50’s stuff (“White Christmas” and the like), some medieval stuff, some Victorian stuff and that damned “Drummer Boy” song.

We were working ten- to twelve-hour shifts over the holidays (extra staff? you want Extra Staff, Mr. Cratchitt???), and the music played on. And on. And freaking on. Eternally. There was no way to escape it.

To top it all off, we were the exclusive distributor for a brand new game that suddenly was in high demand: Trivial Pursuit. We could not even get the truck unloaded safely without a cordon of employees to keep the random passers-by from trying to grab boxes of the damned game. When we tried to unpack the boxes on the sales floor, we had customers snatching them out of our hands and running (running!) to the cashier. Stress? It was like combat, except we couldn’t shoot back at the buggers.

Oh, and those were also the days that Ontario had a Sunday closing law, so we were violating all sorts of labour laws on top of the Sunday closing laws, so the Police were regular visitors. Given that some of our staff spent their spare time hiding from the Police, it just added immeasurably to the tension levels on the shop floor.

And all of this to the background soundtrack of Christmas music. One tape of Christmas music. Over and over and over and over and over and over and over again.

It’s been over 20 [now 30] years, and I still feel the hackles rise on the back of my neck with this song … but I’m over the worst of it now: I can actually listen to it without feeling that all-consuming desire to rip out the sound system and dance on the speakers. After two decades.

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