Monday, June 27, 2011

WHY JOBS EXIST

Highlighted lately by the National Labor Relations Board's fight against Boeing setting up a new plant in South Carolina is the fact that many people don't realize the reason jobs exist in the first place. There seems to be the misunderstanding that jobs exist for the employees. Nothing of course could be further from the truth. Jobs exist to produce profit for the business owner. Be that owner the shareholders of a Fortune 100 company or Mom & Pop's grocery on the corner. That is the sole reason that jobs exist.


You see to employers labor, or the cost of providing jobs is a necessary expense not the purpose of the exercise. As a business owner you don't hire someone so you can watch them sit in a chair and make widgets all day. You hire someone to obtain widgets so that you can sell them at a profit. That profit of course being to you what the pay check is to that widget maker.



Since by definition EVERYTHING in a business is done with the intent of creating profit, hiring someone is scrutinized the exact same way. For example these are the thoughts that run through the owner's head before he places an ad to hire a new employee: Right now we can make 100 widgets per week with 2 employees. That's 50 per employee per week. I think I can sell 150 widgets per week since the widget market is picking up and my competitor just retired. So considering that AND the facilities costs I can hire another person and give myself a raise.

You will note nowhere in there was the thought: I really should provide a job for some stranger just because it would be a nice thing to do. That is because providing jobs is not what companies are about. Providing profit is what companies are about. Now that same business owner may very well stop off at 3 charities and 2 churches after work to donate his time and profit, but when he's at work making widgets he's not thinking altruistic thoughts.  He's thinking how to maximize profit.




So the next time you hear someone whining that people aren't hiring, think about why it is people get hired in the first place, and remember that they need to find someway to make themselves profitable to an employer and they'll have no problem getting a job. But, if they try to force an employer to pay so much for their widget making labor or only make widgets in non competitive areas labor costs wise then they'll send our fictitious widget maker out of business, or out of the country. So be careful what you try to get out of your job. You don't want to price yourself such that it's cheaper to let you stay home. Because there is no good business reason not to let you do so, and considerable reason to not only allow it, but force it.

Friday, June 24, 2011

WHAT IF THEY'RE WRONG

What if the scientist saying that man is killing the planet via global climate change are wrong? Now before you start assassinating my character indulge me for a moment please. I'm not asking what if there is not global climate change? Rather, what if it is a natural phenomena that man has no control over? Ponder that and it's implications.

Right now the basic premise is that man is causing Global Climate Change. Now let us assume that the global climate is changing for the sake of this argument. Let us further assume that since science has known some things in the past that turned out not to be true (the sound barrier will never be broken, the planet is flat, the sun revolves around the planet etc) that the global climate is not changing due to man's affect on the planet. That it is simply a natural phenomena that we have no control over, and yet we still keep going down this path of cutting back on energy usage, and carbon dioxide restrictions. Where does that lead us?




Well, as near as I can tell it leads us to less and less energy usage which may not be a bad thing, but it also leads us to less and less technological advances. So let's say we go back to farming with horse drawn plows and spinning our fabric by hand. All of that is human and animal labor intensive. So here we are working in more hazardous and labor intensive ways outdoors more exposed to the weather, and the weather is getting more and more harsh.



Now, I don't know how many people die each year currently of exposure, but that number has to now go up from simply having more of the population exposed. In the meantime generation by generation we're going more agrarian simply to feed ourselves without our polluting machines. Which lead to cutting back on our industrial capacity which means that things like refrigerators and air conditioners are being manufactured less and less, because they are part of the problem. Not to mention automobiles that can be used to transport the sick to health care facilities rapidly. All of this adds up to a decreasing life span.



Then one day we wake up and realize that oops, the climate is still getting more and more harsh, despite our new Luddite lifestyle. But, knowing us we decide to give it some time. And another generation goes by, and still the things get more harsh. So for several generations now we've been getting more and more harsh in the climate department, and there are fewer and fewer of us.



The Einstein definition of insanity occurs to someone, and finally the ones left are convinced that we need to adapt to our changing environment rather than try to change it. But now we have to start from scratch. Not totally because hopefully we kept a lot of the information available in book form at least. But it takes time to spool up. And, that information is designed for a climate considerably different than the one we have now so we have to adapt them. All of which means we may very well be yet another generation away from getting adapted to the new climate.



Now, what if, we turned out to have waited one generation to long?



Oops. Now we are no more as species. Is that really what we want? Actually there are probably some that do, but I am not among that number. So I'm thinking we should take some of this hysterical energy we're devoting to arrogantly trying to change the climate, and channel it into adapting to the changing climate just in case. Worst case scenario, there is no global climate change, and we've developed more technology to make us more comfortable and safer. I kind of don't see that as a bad thing. Or there is, we're at fault, and we've developed technology to help us bridge the gap before we're on the brink of extinction which I also don't see as a bad thing.



Just a little something to consider.

Saturday, June 11, 2011

WHO'S TO BLAME?

So, who's really to blame for all of the manufacturing jobs going overseas? Well, we still had as of 2007 (the newest numbers I could find) the largest manufacturing output in the world. But even so it is true that we as a nation are moving away from manufacturing towards what has been termed the information age. You may have heard that term before.  

What it means is that we will need less manufacturing and more of other types of labor. Not necessarily that we'll just need less labor. With that in mind some people think the corporations that are moving manufacturing jobs over seas are evil, and greedy. Well to them I say: You do realize that the point of a corporation is to make money for it's shareholders don't you? Oh wait, apparently a significant percentage of you do not. So, let me lay it out for you.

It is the job of the corporation to provide profit for the shareholders. There is really nothing more complicated than that. A company, any company, exists solely to generate cash which the company owners use as their pay check. A corporation is merely a company that is owned by a group of shareholders who all want that same thing. Payment for the corporation using their investment. But under ZERO circumstances are publicly traded corporations in business for any other reason than to generate profit. Sorry if that's to politically incorrect for you, but that's all they is!

The vast majority of shareholders want a rising profit year over year. Not as a measure of greed, but usually as a measure of a healthy company. You see a stagnate or dropping profit margin is typically a sign that company is starting to degenerate. And if you have your hard earned dollars invested in that you don't want to see a degeneration or devaluing of your investment. And it can happen to the largest and oldest of companies. Montgomery Wards went from having raised it's dividend for 50+ straight years to out of business in less than 3. So just as your mom watched your temperature when you were sick as a child, you watch the profit line as it is the single quickest way to judge the health of a corporation.

This brings us to profit. There are exactly two ways to produce that profit increase, and only two ways to produce that profit increase:
  1. Increase revenue (money in)
  2. Decrease expenses (money out)
That's it there ain't no more.

Revenue is set by the market. You are only going to pay so much for any item before you decide you don't need it that bad. That goes for everything from that AC/DC shirt that you bought at that drunken concert in 1982 to your house. And, there is only so many units you can produce and sell in a year. Once those maximums are reached the company must start looking for ways to lower expenses.

Typically the single largest line item on any companies expense ledger is labor. Oops, gotta hate that one. But it's true. Employees and their related expenses are typically the single largest expense of any corporation. So they tend to get looked at first when cutting expenses comes up. Because the single easiest way USUALLY to cut expenses is to cut labor costs either by lay offs or moving to a climate that has cheaper labor

It is not the corporation's job to supply jobs. Jobs are merely a necessary expense that happen to benefit the employees. That's right folks. As I've shown so far the company doesn't exist to pass out jobs, it exists to make money for the shareholders. As an employee you are only going to be around as long as you bring in more than you take out. Live with it. It's the way it is.

And, the government can't do a darn thing about it. While the government can control cost via taxes and regulatory expenses which are usually the 2nd largest item on expense sheet. It can't change the market nor make employees profitable except through taxes and regulation.

Labor costs are also set by the market. If labor here in the US won't build widgets as cheap as labor in foreignstaniland then it is the corporations DUTY to its shareholders to move to foreignstaniland. That's right, those evil corporations that must now do their job and move to foreignstaniland. Like it or not.

So, who is to blame for all of this job exportation. Well, frankly you and I are. You see WE are the vast majority of shareholders either directly or through our various retirement plans. Hmm, bet you never thought about that did you. But it's true. Most stock is held by investors of some sort or another. Mostly through mutual funds that you invest in through your 401k or other retirement plan. Even those currently politically correct to vilify multinational oil companies. You own these companies as sure as you own (presumably) the shirt on your back. So if you penalize these companies you are in essence ripping your own shirt. Kind of a silly thing to do to a vintage AC/DC concert shirt if you think about it that way isn't it?

The corporate officers that are lambasted as greedy bastards are usually merely employees trying to give us what we want in order to keep their job. That's right, mostly they are paid with a more complicated package than the average joe. Which includes stocks, and special retirement incentives etc, but the bottom line is that their usually hired hands brought in to do a job. And most of them are conscientious about doing that job as well and as ethically as they can. Are there some exceptions? Sure, but they are just that exceptions. That's why you hear about them. Kind of like why you don't hear about the 10,000 flights a day that land safely, but let one airplane go down and you can't get away from it on the news for weeks. Same with corporations. You'll hear about the Enrons, but not the SAICs of the corporate world. And yes SAIC is a real company and it's listed in the Fortune 500. But odds are you've never heard of it. Why? Because they do their job well and ethically with a minimum of fanfare except to their stock holders.

Now some say, “But we have no power as shareholders.” And to some degree that's right. You are not going to be able to go into the board room and start dictating policy. But all of us, as a whole, telling our financial advisers that we want more profit so we can afford that giant motorcycle to tour on when we retire is heard loud and clear in those board rooms. And that wish is heeded. So, if you don't like what a company is doing simply quit buying their products and dump their stock. Or, shut up and quit whining, and start working on making American jobs competitive on the world market. Like it or not we live in a global economy and we have to compete globally.  Because like it or not we are responsible for their actions.  Not some evil board members.  They, like our politicians, work for us, and we are responsible for their actions.

The other fix is to innovate so that our jobs allow us maintain our way of life and our workers to make what they need to. Of the choices I prefer that last one. And more importantly I believe in the ability of the American people to do just that, make their economy and therefore their jobs more innovative so that we can manufacture our widgets elsewhere without harming our selves.

Sunday, June 5, 2011

ENUMERATED POWERS

Some say that stating that the Constitution doesn't specifically allow for it, therefore it must not be Constitutional is a failure of logic. But I say hogwash! If you are told, 'You will do these things and nothing more.' then you authorized those things and nothing more. In the constitution we have that specific situation. We have a specific list of duties for the federal government in Article 1 Section 8 (summarized by yours truly):

*To Tax to carry out the list bellow
*To borrow money
*To regulate Commerce with foreign Nations, the States, and with the Indians
*To establish Rules on Immigration bankruptcies
*To coin Money, fix the Standard of Weights and Measures;
*To Punish counterfeiting
*To establish Post Offices and Post Roads;
*To enforce patents and copyrights
*To make courts inferior to the supreme Court;
*To enforce maritime and international law
*To declare War
*To maintain the military
*To cal forth the Militia
*To organize, arm, and discipline, the Militia, called to serve actively
*To administer Washington DC and build other federal use facilities
*To make all Laws to do the above

Then to put the cherry on the cake in the 10th amendment specifically states that:

"The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people."

To me the VERY logical conclusions of those FACTS is that the list of enumerated powers is all there is. Anything else must be handled by the people or the states. Now, as I have said in the past there is some bad case law that we have to deal with, but the constitution itself is pretty clear.

Saturday, June 4, 2011

GENERAL WELFARE CLAUSE IN THE US CONSTITUTION

I really get tired of people pulling the 'general welfare' clause of the constitution.  Its meaning is pretty clear, and it was bad case law that allowed it be used as it is today to do things blatantly unconstitutional.  So, let's explore it for a bit.  It may not change that we have to abide by this case law, but it does explain it.


The term 'general welfare' appears twice in the United States Constitution. Once in the preamble, and once in section 8 which lists the powers of congress.

First the preamble:

We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.”

SCOTUS has held that - the Preamble to the U.S. Constitution "has never been regarded as the source of any substantive power conferred on the Government of the United States or on any of its Departments"

That's pretty cut and dried. Now for section 8:

There it is in the first power:

“The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States; “

Thomas Jefferson explained the latter general welfare clause for the United States: “[T]he laying of taxes is the power, and the general welfare the purpose for which the power is to be exercised. They [Congress] are not to lay taxes ad libitum for any purpose they please; but only to pay the debts or provide for the welfare of the Union. In like manner, they are not to do anything they please to provide for the general welfare, but only to lay taxes for that purpose.”

The key point in the Jefferson explanation is - "...provide for the welfare of the Union...." So he pretty much spells it out that it was intended to be used for the welfare of the nation as a whole NOT individuals.

To me that is one of the key points: when the Founders meant individuals they used the term 'the people' when they meant as a nation they used the United States. This would seem in and of itself to to mean that taxation was to be collected for use in the other enumerated powers NOT for individual gains. There shouldn't be any other issue, but the sad fact is that there has been some seriously bad case law that has changed that. However the base dispute goes all the way back to James Madison and Alexander Hamilton.

James Madison advocated for the ratification of the Constitution in The Federalist and at the Virginia ratifying convention upon a narrow construction of the clause, asserting that spending must be at least tangentially tied to one of the other specifically enumerated powers

Alexander Hamilton, only after the Constitution had been ratified, argued for a broad interpretation which viewed spending as an enumerated power Congress could exercise independently to benefit the general welfare, such as to assist national needs in agriculture or education, provided that the spending is general in nature and does not favor any specific section of the country over any other.

I find it interesting that Hamilton espoused his view only after ratification. To me that is enough to dismiss Hamilton, but in several cases. Notably 'US vs Butler' and 'Steward Machine Company v. Davis' the SCOTUS ruled fairly Hamiltonionish (to coin a phrase), but then later in life one of the Justices (citation needed) admitted that he (and hinted that others might have) voted as they did to head off FDR's attempt to pack the court. So they basically destroyed the constitution in order to save the court. Kind of scary, but I think many of the US's problems stem from those bad cases.


Friday, June 3, 2011

DANCER'S HIGH

Now as I sit here typing this with my right foot in a cast and throbbing in pain (thank you modern science for codeine) I am immensely grateful to the gods of dance that they let me have 2 of these this week before I had to stop for a month. One Tuesday and one Wednesday. The one Wednesday especially will be one I relive on my death bed I bet. Both were in practice sessions after lessons at separate classes. My wife and I hadn't taken the classes because we knew I would not be able to finish them due to the cast, but we'd gone to the after class sessions just to be with our people and enjoy ourselves before the forced hiatus. I am of course referring to the perfect dance. The dance that transports you a higher plane of existence.  I don't expect every one to understand this, but my friends who dance will. Hopefully it will inspire some of my non dancing friends to start.

The perfect dance doesn't happen very often, but occasionally everything works just right and you get that perfect moment in dance. It's you, your partner, and the music all becoming one entity that exists in a place not of this world.

I had never understood the concept of a runner's high until the first time this happened to me. It was 20 years ago, and up until then my learning to dance was primarily a way to meet women. One in which I'd had limited success I might add, but I'd stuck with it since I've never been very good at quitting. I can't tell you her name, but she was my instructor's professional partner, we were dancing two step in a now long gone night club in North Austin. From that moment I realized that I could no longer exist without dance.

It was years before I had that experience again, and even now when my health lets me dance regularly it's only an occasional thing, but I still hope for it every time I walk on the floor. I wish I had the words to describe it fully, but I don't. I once heard that every dance was a short relationship, and that's true, but when the perfect dance comes along it's even more intimate. It's as if your souls touch and intertwine with the music and if you could you would exist there forever.

And, it doesn't matter what type of dance. It can be country, ballroom, or as in the case this week my favorite West Coast Swing. So, if you haven't been dancing for a while, or if you've never been, go! It's the only way to fly.

PS – it's times like this that I wish I had more literary talent to describe the feeling so if you don't fully get it don't blame the dance blame the dancer :)