Do We Still Need Unions?!

Those of us who grew up during the Cold War experienced more than our fair share of capitalist propaganda. Communists were the enemy, and capitalism—more than democracy—was positioned as its antithesis. Reaganomics and Thatcherism promoted the idea that the only thing better than Capitalism was capitalism unfettered by unions and government regulations. With the advent of offshoring, this was done one better by dispensing with niceties like human rights, by moving jobs to countries where democracy didn’t spoil the fun!

As a child of the 80’s I bought into this propaganda, and didn’t notice the prejudice that I, and those around me, had developed against unions, and the people who belonged to them. When I entered the working world, it was common to hear people say proudly that they did not—and would never—belong to a union. The word ‘union’ had transformed from noun to derisive adjective.

First-in-last-out, pay based on tenure, constant labour strife shutting down productive capacity, and strikes timed with good weather, all seemed to undermine the idea that unions still had a place in a Darwinian capitalist system. The best that supporters of the labour movement could do was point out that they were to thank for the 40-hour work week, and weekends.

Sure, but what have you done for me lately?! 
It turns out, not much.
 
So why don’t we just get rid of them? We can, as long as we can answer ‘no’ to all of the following questions:

Do jobs exist where people trade their productive capacity for money? Does worker safety come at some cost? 
Is anything other than profit a desired outcome?

For people who have knowledge-based jobs, they are inevitably paid to continue learning. Every job becomes an opportunity to add to the résumé, and increase their value to the market. But there are still many jobs—and notably, jobs that can’t be offshored—where there is a straight trade of money for time, with the worker becoming less valuable with each passing day. Does a delivery person become more or less valuable as the years advance? How about someone working in a mine? Chances are, their market value is dropping as they work, which exposes them to being exchanged for younger, perhaps more energetic, and lower paid replacements. Also, when unemployment rates rise, these types of jobs are prone to salary erosion dictated by market forces; if there is always someone willing to do it cheaper, it’s a race to the bottom.

The profit motive is the basis of capitalism. Profit and the interests of the worker are often at odds, as is usually the case when it comes to worker safety. We’re not sending foreign workers into railway tunnels with unstable explosives anymore (I think), but there continues to be lots of skilled and unskilled work in environments where cutting corners to save a buck will cost lives, or the quality of them. Without a mechanism to counteract the profit motive, it will win out over safety every time.

For some jobs, it is pretty easy to calculate a worker’s value. How many quality widgets did he produce? How much did she sell? How many billable hours did they contribute? Many others are more qualitative than quantitative. Has a balance been stuck between patient health, and the cost of health care? Are students being adequately prepared for the world? Are the interests of the public being prioritized over political expediency? In these cases, it is a great advantage for a worker to have protection, when pressures such as cost, profit, and perception could lead to bad outcomes.

Until someone comes up with something better, unions still have a role to play when workers trade their value for money, worker safety comes at a cost, and we desire more than just profit.

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Mutiny of the Mounty

This is originally a post on Psychē, but since it is a little more ‘op-ed‘ than my usual pieces there, I thought I would cross-post. Also note, this is a longer version of the letter to the editor I submitted to the Ottawa Citizen.

RCMP Saluting Obama - Inauguration

RCMP by Connect2Canada

I have been watching with interest the tenure of William Elliott, the first Commissioner of our Royal Canadian Mounted Police who was not a RCMP officer. I am not surprised at this recent mutiny (that is what it is) but not because of anything to do with Mr. Elliott’s management style.

The Allegations

First, some perspective on the allegations against him: One of the biggest complaints is that Mr. Elliott is a petulant –some say passionate– boss, prone to outbursts and paper-throwing (unsubstantiated). It seems to me that the typical beat cop is subjected to more petulance from the public, or even risk of physical harm on a daily basis, than anyone sitting in a board room. You’d hope that the veteran officers reporting to Mr. Elliott were made of sterner stuff, and able to deal with petulance!  This is why I think this is an excuse, not the real reason they want Mr. Elliott out.

The second allegation suggests –more subtly– that Mr. Elliott isn’t capable to lead the force. Much has been made of him being a career bureaucrat, not a police officer. If we extend this logic, we would argue that iTunes dominance of the music business now means Steve Jobs shouldn’t lead Apple because he doesn’t have the requisite experience in the music business. Closer to home, do we suggest a veteran officer can’t lead the RCMP if they haven’t had experience in special weapons and tactics (SWAT), counter-fraud and forgery, musical ride, or any other one of the specialized functions in the RCMP? Top executives need to have the skill to learn what is important, and fast! A career RCMP officer may be good for morale, but the person that leads the RCMP needs to be a skilled bureaucrat first and foremost. Supporting this observation is the fact that the RCMP hasn’t fallen apart with Mr. Elliott in the top seat, and seems to be doing a better job keeping out of trouble (if you really are stuck on credentials, it is also worth pointing out that the RCMP enforces the laws of the country, and Mr. Elliott IS a lawyer).

Is the real reason  for the mutiny that someone is tired of waiting for their shot at the top job? This seems to me the most plausible explanation.

Mutinies Don’t End Well

Leadership change via mutiny doesn’t lead to desired results for anyone involved. Mr. Elliott’s job either becomes more challenging if he stays, or he loses it entirely. However this plays out, the RCMP further establishes its reputation as an organization that is stuck in its ways.

And then there is what happens to the new person if they succeed in their coup d’état: you still have all the same problems, but now you have nowhere to hide. After a 2-3 month grace period, employees will start wondering why nothing has improved with the change in command. While Mr. Elliott provided a convenient scapegoat for all the new requirements placed upon the force, the new Commissioner will see that the pressures that motivated Mr. Elliott are still present and now the buck stops with them. They will also have helped foster a new culture where mutiny is a valid means to affect change at the top, and even more organizational energy will be spent on politicking that before.

What To Do?

It is no surprise that Mr. Elliott has faces opposition from the start. He came in as a ‘fixer’ in 2007 when past commissioner Giuliano Zaccardelli left the force rocked by scandal and in crisis, and nobody likes to be ‘fixed’. The RCMP has a strong identity, much of it deservedly positive, but this also gives it a strong immune system when it comes to change. I’ve seen a new ‘outside’ CEO come in to a large organization in crisis (Nortel), and the strong reaction that it will illicit from those that want to protect the status quo.

Mutineers have to recognize this, and decide where their true motives lie. Are they really trying to make the RCMP a more effective organization, or are they trying to promote themselves? Those that can see the latter motivating their behaviour should remember the oath they took, and realize that their job is to help protect citizens, not promote their careers (maybe consider a job in the private sector).

Those that truly believe that changes Mr. Elliott is directing are going to harm the RCMP’s ability to protect citizens and enforce the laws of the land, need to make this very clear. The timing is perfect for them to give Mr. Elliott their support and explain where they see lines being crossed. By doing so, they can avoid a mutiny that will hurt the RCMP, and help create a more effective organization.

What Does the HST Tell Us?

I got a very well organized and informative guide in the mail today called “What changes –and what doesn’t change– under the HST”, which may be one of the very few things I like about this new Ontario tax scheme.

Governments often use taxation to try and influence of buying behaviour of their citizens, so I thought I would take a look and see what behaviours the government is trying to change with the HST:

  • Smelly Ontario – Apparently they want us to dry-clean less, with taxes going from 5 to 13%
  • Drunk Ontario – Alcohol will be taxed at 13% instead of the old 17% (although they footnote that they will stop people from drinking so much with ‘other fees’)
  • Lazy Ontario – Gym, athletic memberships, fitness trainers, hockey rink rentals, hall rentals, hunting licenses, fishing licenses and golf green fees will increase from 5 to 13%
  • Ugly Ontario – Hair stylists, barbers and aesthetician services up to 13% from 5%
  • Lawless Ontario – Legal fees will be taxed at 13% instead of 5%
  • Cold (winter) and Hot (summer) Ontario – Electricity & heating bills to go from 5 to 13% tax
  • Flooded and Electrocuted Ontario – Home visits by plumbers, electricians, etc. will go from 5-13% as will home renovations
  • Digitally-divided Ontario – Internet access will now be taxed at 13% instead of 5%
  • Wild Ontario – Landscaping and snow removal up to 13% from 5%
  • Homebound Ontario – Hotel rooms (from 10%), taxis, campsites, domestic air, rail, boat and bus travel all up to 13% from 5%, as does fuel for your car, unfortunately you will have fewer magazines to read at home since subscription magazines also go from 5 to 13%
  • Double-dipped Ontario – Remember that new car that you paid 13% tax on, well now the government makes 13% again –up from 5%– when you sell it used!
  • Suburban & Condo Ontario – New homes over $400,000 will be taxed at 13% instead of 5%, and AFAIK can only be found in the suburbs or in condo dwellings. Real estate commissions will also be taxed more, at  13% instead of 5%.
  • Scurvied Ontario – Vitamins up to 13% from 5%
  • Stiff & sore Ontario – No reduction on Viagra tax, they are increasing taxes on massage therapy from 5 to 13%
  • Entertained Ontario – Tickets for professional sporting events and movies will DROP from 15% to 13%.
  • Alive Ontario – Death will cost you more, with funeral services taxed at 13%, up from 5%… sure as death and taxes.

    Apparently, Banner Ads Don’t Have to be Crap!

    I can’t believe it, I actually saw a banner ad today that I wanted to click on! This was the first such banner ad, after perhaps the millions I have seen, and it looked like this:

    Unfortunately, there is no direct link to this ad for you to try it yourself (if you find it, please let me know!), I can only hope that you find it the same place I did at: http://www.reuters.com/article/idUSTRE6573FD20100614?type=politicsNews I just tried again and another ad popped up, so all I can suggest is to keep trying!

    Why is this ad so awesome? Clearly I fit the demographic they are targeting (people who like nice cars) but I have skipped over many such ads by Audi and others many times. I think it was because the ad challenged me to try something where I would not be certain of the result. This leveraged the ‘gap theory’ of curiosity, where the ad created an information gap that I wanted to fill. Once I saw my cursor slide and crash, I noticed the toggle at the top left that allowed me to turn on ‘quattro’ (Audi’s super-grippy 4WD system), which created another information gap: What would this do?

    With the quattro system engaged, my cursor slices through the water no problem.

    I have never seen such a good example of an ad being able to draw me in, and stay so core to their message (safety = traction = Audi quattro). Also impressive is the TV spot with the ‘downhill skiing’ theme in San Fran (see at end of post).

    Kudos to the Audi marketing team for creating the first banner ad that has ever worked on me!!

    Brand Police: When Brands Go Horribly Wrong…

    I doubt it's a 'Chevy'

    There was a time when the marking teams held sway in organizations. When Nike was rising to the top, selling bits of rubber at 5x the competition’s prices, it seemed that a simple logo and marketing campaign was the key to success. But, as the saying goes, absolute power corrupts absolutely.

    The marketing teams –drunk with this power– started enforcing brand etiquette, like some kind of secret police: “Our logo should never be used on a blue background!” or how about “You should never say Chevy, but ‘Chevrolet’!”

    The latter isn’t some throwback to some corporate debate from the 80’s, it happened TODAY.

    One of the biggest signs that a company is on its last legs (and I, unfortunately, have first hand experience with this), is that it starts flagellating wildly trying to do anything that will right the ship. Some marketeer has convinced the top executive at GM that it is somehow important to call their ‘Chevrolet’ brand ‘Chevrolet’ instead of ‘Chevy’.  It is under the auspice of ‘reducing confusion’ in internal communications:

    “I get calls from international colleagues asking me ‘What is a Chevy,” said German-born GM spokesman Klaus-Peter Martin. “It takes quite a long time to explain to them.”

    How long does it take to say “You know when you call Alexandre ‘Alex’, it’s like that.”

    Instead they waste the time and energy of their employees bringing attention to this ‘issue’, instead of focusing on the key elements of building a brand. I can just imagine the remaining employees of GM rolling their eyes en-masse when –those that still read corporate communications– review this corporate memo. Basically, your executive is telling the world that its employees are too stupid to use your own company name.

    Remember guys, your ‘brand’ is your promise to your customer, so how about you quit navel-gazing and BUILD SOME BETTER CARS!

    So before you hit ‘send’ on that next company-wide memo, ask yourself: “Is this helping us build a better car?”

    Want to Present Like Steve Jobs?

    Few speakers are as anticipated as Steve Jobs. My Twitter feed is already filled with comments from the many people watching his WWDC keynote today.

    Clearly nobody would be interested if he didn’t provide stellar presentations (performances?) to accompany his company’s stellar products; here is a great presentation that illustrates just how he does it:

    Why I’m Done with the Stock Market for Good

    Oh so close! I was holding a stock, waiting for a positive earnings release, with the full intent of exiting stock ownership for good once I saw a nice bump to reward me for my time and risk. Instead, I watched a combination of a bear market, overly optimistic analysts and a heavy short position drop my stock 50% in 2 days.

    This was so typical of my experiences on the market: years of careful effort and minor gains, more than erased in seconds on the stock market.

    Now before you start to think this is purely emotion, remember that I was already planning on exiting before my recent calamity, and here are some reasons why:

    1) Given Enough Time, the Market Used to be a ‘Sure Thing’… NOT Anymore!

    When I entered investing ca. 1998, this is what the trend on the Dow Jones Industrial average looked back to approximately the time of my birth:

    Plot of the DJ Industrial Average from 1972-1998

    Sure thing right? Little burp back in ’87, but if you look at any 10 year period you are still in the money.

    Now look at plot of the market over my ~12 year trading career:

    Plot of DJIA from 1998 to Present

    Hmmm… not such a sure thing. Lets assume I made all my purchases back at 8000, and not at 11,000 and 14,000 like I actually did, and I actually had an index fund (and not a bunch of crappy tech stocks). My potential gain was about 10,000-8,000 = 2,000 or about 20%.

    Guaranteed funds provide a compounded annual growth rate (CAGR), but relatively low rates (low single digit), so it is worthwhile understanding what kind of CAGR this gain translates into. To get a 20% gain over ~12 years, you would only need a CAGR of 1.88%. You can EASILY have found a GUARANTEED fund that would have returned more than this! Keep in mind I am already using a best-case scenario, not including this notable stock that I did invest in:

    NT Stock Plot fot the Last 10 Years

    2) So if you were a lot smarter than me, and stuck with index funds, you at least saw some gains right?

    Again, not so fast!

    The Dow Jones is based on the US dollar value of stocks. What has happened to the value of the US dollar since 1998? At the start of 1998 $1 US would purchase about $1.44 Canadian.  Today, they are trading close to parity, meaning that the USD has actually depreciated about 40%.

    Lets see what happened to the $8000 USD we invested in the DJIA index fund: we used about $11,500 Canadian to purchase that $8000 USD, rode it up to $10,000 USD which is now worth $10,000 CDN! We have actually lost $1,500! That isn’t even counting the opportunity cost of that money.

    3) Give it your full attention, or not at all.

    I only worked one or two stocks where I could play close attention to the nuances of the particular business, and the market that they were in (think Apple). I found that even with this detailed focus, I still couldn’t keep track of all the important metrics that could have a significant impact on the stock (like exchange rate trends, short position, the macro market trend).  I could never put in a sufficient amount of money in to create the gains that would justify my time. For example, even though I kept buying AAPL from $120, all the way down to $80, and all the way back up to sale at $185, I still didn’t make any money due to interest charges, trading charges, and exchange rate fluctuation! I was so surprised come tax time that I had to perform the calculations 5 times to convince myself the net was $0!

    4) Analysts are a flaming pile of crap.

    I think only meteorologists are paid for being so consistently wrong, and compared to stock analysts, they are oracles.

    That is why I was planning on getting out of the market for good, and focussing on low risk money market funds, guaranteed funds, or bricks of cash under the mattress. Now I have to wait and see if the stock can dig itself back out of its hole.

    *^#&^#)

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