Category Archives: Unions

Government Epic Fail: USPS

Chicago has enjoyed the dubious distinction of having one of the worst United States Postal Service systems. And you wanna know what the Postmaster General had to say about it?

US Postmaster General Jack Potter, responding in 2007 to findings that Chicago’s USPS had the worst reliability records said…

…that some managers created the problem by cutting costs.

“They obviously had expectations that were beyond what they were able to achieve and as a result we saw a decline in service performance,” Potter said.

Union leaders representing mail clerks and carriers said the cuts have created an environment in which managers put a lot of pressure on them.

This may well be an out of context quote taken by CBS2 to show their preferred view on the story. But I don’t think that is too likely.

The lack of business sense is appalling, though coming from someone who has worked in the money hole that is the USPS since the ’70’s, it’s not that surprising.

The two main points of the article are that cutting costs necessarily hurts efficiency and effectiveness and that unions and unionized employees don’t like an environment where they’re pressured to work.

Successful businesses require profitability. Profit is achieved by cutting costs, raising productivity, and otherwise adjusting the variants you have control of to maximize the return for any investment.

To dismiss, out of hand, one of the primary methods of improving profitability is to have bought into the idea that any problem can be surmounted if you simply throw enough money, real or imagined, at it. An idea all to prevalent in government.

Regarding workers experiencing a pressure to work, yes, there can be inordinate expectation to go beyond what is reasonable. Many businesses have environments that encourage, rather strongly, overtime and weekends and hours beyond the normal and already codified restrictions. But laws already exist that protect workers’ 8-hr day and 5-day work week. Reasonably safe work environments are already required and discrimination is illegal as well. So what’s this kvetching over feeling pressure to work?

Government-union collusion is one of many things that must end in order to starve and shrink the government back to reasonable and helpful levels. Unions know they’ve already extended their requests beyond the reasonable and admirable into the insane and obscene, and they know the best way to ensure their own survival is to give loads of money to people who can legislate their life-support.

Be careful, those who can legislate can also legislate. And what is given can be taken away.

Jack Potter ought to be required to work in the real world, starting with flipping burgers at McDonalds, and then being a middle manager who is required to actually show something for all his effort. Then, and only then, should he be welcome back at the head of the USPS.

And the unions? They should innovate somewhere besides DC.

The Blueberry Story: A Failure Of Analogy

I came across the Blueberry Story recently. It didn’t pass the sniff test, but I couldn’t immediately explain why.

Jamie Vollmer was the CEO of an ice cream company that made, at one time, what some considered the best ice cream in America. He was also a sharp critic of the public school system, and shared his criticisms before an assembly of teachers and educators.

I was convinced of two things.  First, public schools needed to change; they were archaic selecting and sorting mechanisms designed for the industrial age and out of step with the needs of our emerging “knowledge society”.  Second, educators were a major part of the problem: they resisted change, hunkered down in their feathered nests, protected by tenure and shielded by a bureaucratic monopoly.  They needed to look to business.  We knew how to produce quality. Zero defects! TQM! Continuous improvement!

At the end of this particular talk he took questions from the audience.

As soon as I finished, a woman’s hand shot up.  She appeared polite, pleasant – she was, in fact, a razor-edged, veteran, high school English teacher who had been waiting to unload.

She began quietly, “We are told, sir, that you manage a company that makes good ice cream.”

I smugly replied, “Best ice cream in America, Ma’am.”

“How nice,” she said. “Is it rich and smooth?”

“Sixteen percent butterfat,” I crowed.

“Premium ingredients?” she inquired.

“Super-premium! Nothing but triple A.”  I was on a roll.  I never saw the next line coming.

“Mr. Vollmer,” she said, leaning forward with a wicked eyebrow raised to the sky, “when you are standing on your receiving dock and you see an inferior shipment of blueberries arrive, what do you do?”

In the silence of that room, I could hear the trap snap….  I was dead meat, but I wasn’t going to lie.

“I send them back.”

“That’s right!” she barked, “and we can never send back our blueberries.  We take them big, small, rich, poor, gifted, exceptional, abused, frightened, confident, homeless, rude, and brilliant.  We take them with ADHD, junior rheumatoid arthritis, and English as their second language. We take them all!  Every one! And that, Mr. Vollmer, is why it’s not a business.  It’s school!”

He was unable to reply to such ideas. And it took me a day to realize what was wrong with this teachers argument.

First, there is truth in both what Mr. Vollmer said and in what this teacher said. Neither of them are completely correct, and neither of them are completely wrong.

The big hole in this educators argument is that children are not the only resource in a school.

When you’re building a product commercially you gather all sorts of raw materials and assemble them and process them to create a finished product. Businesses are primarily rewarded by doing this more efficiently and with more quality than other companies. However, simple physical raw materials are never the entire picture.

You can take blueberries and cream and sugar and eggs and ice and salt and throw them together all day and it will not turn into ice cream. You must have a goal, a guiding principle, a primary idea which directs the process from beginning to end. This idea begins before any raw materials are assembled and achieves fruition and is born into reality in the end product.

In a school children are both a raw material and eventually the fruition and reality of this idea. A healthy, intelligent, wise, productive and strong member of society is the hoped-for result of any school. When children are the raw material (as small children first coming into the school) they indeed cannot be turned away. The school must take any and all. The teacher is right about this.

However, there are many other raw materials which may (and indeed should) be turned away at the loading dock for insufficient quality. Teachers are one of the raw materials of our education system. Those who can’t do, teach, is a sad but true tale of many who comprise the front lines of education in America. Low academic standards does not attract the best and the brightest to this profession. Many of the best teachers teach because they love to. Many others do it because they cannot find so secure a position with as healthy a payroll or extensive benefits in the private sector.

Education philosophies are another raw material that can and should be examined in light of reality and not in light of the establishment’s preconceived notions of the state of the world.

Specific subjects that do not pertain directly to healthy functioning in society also ought to be turned away at the door.

The lesson that schools should take from business, first and foremost, is that competition is good for everybody involved.

The only people who will be hurt by school vouchers, charter schools, more local control of education, and less federal nannying are teachers who aren’t up to snuff and entrenched and ensconced administrators who cannot really justify their silly existence.

The teacher was right, they can’t turn away children from school. Every child can and will benefit from learning truth. But learning and truth are not necessarily the same, and to fail to see the difference and to support a system that is so obviously and painfully failing yet another generation of children is to fail to see yet another blade laid to the neck of our great nation.

The Ugly Head Of Good Intentions

Henry Waxman and... his brother?

Pro-Abortion Democrat Bart Stupak joined Henry Waxman in chiding AT&T, Caterpillar, and several other large corporations who have adjusted their balance sheets in response to some of the first changes of the Health Care Socialization bill to take affect.

These large corporations have been enjoying a substantial tax deduction in return for their paying for their retirees prescription drugs. Because they had built their budgets around the savings this program gave them, as this program ends, they have to report the loss of this expected revenue.

And it’s significant amounts we’re talking here. After all, several hundred million here, a billion there, and pretty soon we’re talking real cash.

So Henry Waxman, from California (“sorry folks” says this former Californian)…

…sent AT&T, Caterpillar and Deere a sharp letter, questioning the charges and saying he wanted top officials from those companies to testify at an April 21 hearing he has scheduled on the issue.

What, he didn’t get enough validation of his supposed superiority after grilling Mr Toyoda of Toyota motors?

Congress is on a power trip the likes of which I haven’t seen before.

Bart Stupak joined in sending the letter which, among other things presumably, said:

The new law is designed to expand coverage and bring down costs, so your assertions are a matter of concern.

Ah, the ugly head of good intentions.

Some studies (which no doubt the Congress-people held to savagely in order to assuage their own consciences for this dastardly deed) projects savings of $3000/employee for employers under this bill.

Unlike the government, though, businesses have to abide by what are called Generally Accepted Accounting Principles, or GAAP (pronounced “gap”) which requires, among other things, that expenses be reported in the financial quarter in which they are incurred. A significant loss of revenue cannot be offset, on the books, with a hoped for or expected long term savings. The company can report that expected savings in their reports to shareholders in order to rally them up and encourage them to keep their investments. But to use a hoped-for (not even really expected) long term savings to offset a current expense is a serious No-No. And if the government were held accountable for it’s accounting, it might actually know that.

So AT&T and these other companies did what they were supposed to do.

Even the AFL-CIO isn’t very enthusiastic about this particular provision:

Gerry Shea, the A.F.L.-C.I.O.’s chief strategist on health care, stopped short of calling for a repeal of the provision. “We’re very concerned about the disruption that could be caused because of this, with people being pushed out of employer plans,” he said. “With all the changes we’re looking at because of the new health legislation, we feel you don’t need this.”

And the President’s response?

White House officials said the provision would not affect job creation because it does not take effect for three years and any charge for a given year would not be large.

They’re reflecting the reality of the situation reflected, in turn, badly on those who jammed this travesty of a Health Care bill through. And one thing we can be sure about, people on power kicks don’t like being shown to be liars and cheats. And since their on a power kick, in all likelihood they’ll use that power kick to try and arm-twist until they get what they please.

So, word of advice to AT&T and Caterpillar and all those other companies writing down significant losses: Don’t go to Washington. They’re out for your head and they’ll stage a show and the MSM will go along because they don’t like you either. You’ll not get a fair shake.

Instead, take your message to the masses. Use that advertising budget to do PSAs on TV, radio, newspapers, and internet. Go viral with your message on Youtube and the like. I’ll even post it here if you do it.

Show the hollow nature of these good intentions. Show how blinded the Congress was by their own ambition and greed that they crafted this nightmare. Show that it’s not just a nightmare for you and others with large pocketbooks, show that it’ll be a nightmare for us as you have to cut benefits and trim payroll.

Good intentions have once again reared their ugly head. Lets cut it off this time.

Quotes from NYTimes article “Companies Push To Repeal Provision Of Health Law”.

What Is “Business Friendly”?

Big Business means a better life for you
Big business means a better life for you

There are many misconceptions standing in the way of informed consent on the part of the American Electorate.

Bugbears and villains and bogey-monsters are trotted out each election cycle to herd the voting populace into the desired frame of mind.

One of the common scape-goats (ab)used by many is the spectre of “Big Business”. And not merely content to blame big business, the abusers often employ shake-down tactics when they need additional revenue.

After all, nobody likes their boss, and everybody knows businesses are endless sources of greedy men with far too much money, right?

Sticking it to “the Man” is the favorite sport in much of America, and it’s bred and grown in an environment free of logic and fact into a monster few can avoid.

Well, here’s one shot.

Business does good for people.

It’s not that they hold your hand and sing Kumbayah, or even that businesses that contribute financially to causes we agree with are good.

This is a blanket statement without conditions: The average business in America does good.

What is good?

Good is a quality of action or intent that brings about, supports, encourages some reasonable benefit to another.

Me winning the lottery is not good. Yes I get tons of money, but that money to one not capable of handling it wisely will with great consistency, harm me and cause me greater damage than were I not to have such largess.

Me working and earning a reasonable wage is good. I earn the money and therefore know its worth to me. I use that value to trade for other things of value which have greater good to me.

Now what just occurred? Each of the players in that last paragraph exchanged something for something else.

What is that called? It’s an economy.

Let’s look at it closer: The business I work for values my work more than a certain amount of money, so we trade. My work for their money. But I can’t live eating money or in a house made of money, so I trade the money for other things I consider more valuable than the actual cash, usually with other businesses such as landlords, grocery stores, utility companies, etc.

Each of us has something we can trade for something else and it is the constant trading and exchanging throughout America that creates the immense wealth we have.

If you think you have little and you live in America, you’re most likely very, very wrong. And this pernicious lie, that we have little, that helps fuel the constant badgering that businesses ought to do this and that and owe us one thing or another.

There are plethora ways the government inhibits business, and in each and every situation where regulation and restriction purport to keep businesses playing “fair”, it is the consumer, you and I, who are hurt most.

In order for you and I to survive we must efficiently and effectively trade what we have for what we need, hopefully increasing the value of what we have in order to trade it more efficiently and for more.

Education is one key way to increase our value. By increasing our skill, our versatility, our ability, through learning and practice, we increase our value to those we’d trade our abilities to. We make a higher wage when we have more skills.

Looking at our small economy described above, government inhibits the economy, making exchanges more difficult, by taxing. By taking away percentages of the money value being used in the trade, they lower the value of our abilities. When we give a business our labor in exchange for an agreed-upon amount of their money, government takes a significant percentage of that money given to us in the form of income taxes.

They also tax the business itself, not just our wages. In fact, America has some of the highest business tax rates of the industrialized world. The government takes around one-third of businesses reported Net Profit.

Do you want to know why businesses try to write off so many expenses? Because for every dollar they cannot right off as a valid business expense, the government will take 30 cents.

What would happen if the government took 30 cents of your pay check? Well, unless you’re making very little, the government very well may be.

So maybe a better question is: What if you made 30 cents MORE for every dollar you currently make?

Let’s say you make 40 thousand dollars a year now. What would you do with 52 thousand? $12,o00 extra per year would add up significantly. A house payment in just a few years, the kids in private schools (or home schooled, grin), a new business you start yourself.

Instead, the government takes it.

I don’t begrudge the government a fair share of money. After all, government is necessary in a fallen world. And government has reasonable and rational expenses. And they are immense, relative to each of our individual budgets.

But when the government tells us it knows, better than we  ourselves do, how to do things which could either be left well enough alone or by private industry and a knowledgeable populace. Then coerces us into giving it an exorbitant amount of money to perform those services. That is not right. And it hurts us.

A business must, by nature, make more money than it spends. It must be profitable in order for it to stay in business. When people talk about windfall profits and how we ought to tax businesses making more than there fair share, they illustrate only how imbecilic their own level of understanding is regarding the economy.

When a business operates effectively and efficiently and makes an immense profit, those large profits entice other businesses into the same market. When multiple businesses operate in the same market, they must give reason for their consumers to choose them over their competitor.

Competition drives prices lower, as this is the most visible way to differentiate ones product. Competition also drives quality up, as a second, very visible differentiation.

So because a market was allowed to become lucrative, the consumers have better access to cheaper and higher quality products. Sounds great to me.

And it’s not just looking on the outside, at the balance sheets of the business and on the store shelves, at the price tags.

Those businesses that make more profit are able to employ more and more skilled workers to further improve their products.

Sure, this is a sunny picture. But in the market, averages work out in favor of the sunny picture. Your job may indeed suck, but have you tried looking for one that doesn’t?

It may not be the best time, in the present economy, with government ham-handed handling of the economy stifling the recovery and prolonging this downturn. But there are still companies looking for workers.

Maybe leaving the big city, with is stifling regulation on top of already onerous federal meddling causes most businesses to fail or move away, to a smaller city which is more willing to lower it’s regulation and encourage businesses to build and hire is what needs to occur.

But when you hear a politician or government bureaucrat tell you that businesses must pay “their fair share”, remember that business may be employing you with the money the government wants to take.

And what the government takes, it does not give back readily.

Business Friendly means employee friendly.

Employee friendly means you have a job. A good job. One where the employer has the means to take care of you and compensate you well.

As for me, I’m already paying my fair share and more, and I’m getting fed up.

Walmart And The Healthy Free Market

In case you had trouble guessing: I like businesses.

If there weren’t business there wouldn’t be internet, iphones, cars, bicycles, buildings, tents, sleeping bags, fresh produce in the middle of winter, heat and A/C, in cars too, hospitals, medication, surgery…

You get the picture.

We’ve had government since the beginning of time, and it hasn’t done a thing directly to benefit or develop beneficent products and services (except nuclear energy and other war-related items).

We’ve also had businesses since the first person decided he’d rather spread and grow his wealth instead of laboring over the same rows in the same farm for his own families sustenance.

Chipotle is an excellent example of a good business.

Our wealth allows us to pay premium price for food raised and prepared in a reasonably environmentally conscious and sustainable manner.

And it tastes good, too.

Walmart is not too different from Chipotle.

The monstrous store chain that’s easy to hate until we need cheap razer blades and jeans and socks and hand towels and garbage can liners. Then everybody loves it.

Except the unions, who are never going to love Walmart until it caves to their regressive and stiflingly stupid and anti free market strong man tactics and effects.

I pray Walmart never does, and for good reason.

When Walmart enters an area, consumers win as the often cheaper prices at Walmart “encourage” the other stores to moderate their own prices.

The prices are not always better, but they are better enough of the time and for enough products to justify the crowds you normally find at these supercenters.

Does Walmart Save You Money? (read the comments, many people report savings in the $1000’s each year while others disagree with their perception of the business practices)

But enough about prices already, Walmart benefits your health!

Huh?

Indeed, studies are showing that people living near a Walmart or “club store” (Costco, Sam’s Club, etc) are lighter on average.

But don’t all the fat and ugly people shop at Walmart? No, it’s just the ugly people and me.

In an article published in Forbes Magazine, Art Carden, an Professor of Economics at Rhodes College in Memphis TN, reports on studies showing that the increased buying power people experience when benefiting from the Walmart effect has a direct and close correlation to the health of those people.

There are several reasons this may be, and the why or how is always a bit murkier than fact of correlation, but all of the possibilities enjoy sound economic sense.

Those benefiting most from the Walmart affect are…

…women, the poor, African-Americans and people who live in urban areas.

The arguments as to why and how and many, as I noted earlier, and some may find them difficult. Read it a few times if necessary.

Our evidence is indirect, but we think it shows that price changes can have subtle and sometimes hard-to-detect consequences. Any change in price results in two phenomena. The first is the substitution effect: a change in consumption mix due to a change in relative prices. If a bag of salad is $2 and a bag of potato chips is $1, then the price of salad in terms of chips is two bags and the price of a bag of chips is half a bag of salad. If a Wal-Mart opens and reduces the price of salad to $1 a bag and the price of chips to 75 cents a bag, the “salad price” of chips has risen (from 1TK2 bag to 3TK4 bag) and the “chip price” of salad has fallen from 2 bags to 4TK3 bags. In short, salad has become cheaper relative to chips.

This argument is based on basic price comparison. If the salad cost 2 times what chips cost before Walmart,  Jack and Jill are more likely to buy the salad now because it only costs 1.3 times more than the chips now.

Then there is the income effect:

If Wal-Mart sells food at lower prices–even if our incomes don’t change–every dollar can buy more. Therefore, we’re richer.

The crux of their findings is that people, when given a choice and a suitable price range, will purchase healthier foods.

Our data suggest that we buy healthier food when our purchasing power increases. There is a small increase in consumption of fruit and vegetables in places where Wal-Mart does a lot of business and a decrease–or smaller increase–in fatty food consumption relative to places where Wal-Mart doesn’t do business. That is, people might consume more fatty foods, but consumption of those unhealthy goods increases more slowly than it does for the rest of the population.

There are other facts, findings, and arguments in the article. I urge you to read the whole thing: Wal-Mart’s Weight Effect.

The point is, don’t be too quick to denigrate or disparage the current state of our free martket system.

It’s not always pretty, and it’s easy to find fault.

However, compared with any other system out there, capitalism and the free market are the best at providing escalating levels of service and product to the most people most equitably and with the least amount of downside.

It’s been proven time and again, yet we in America now are dangerously close to forgetting completely, if we haven’t already.

The free market and capitalism isn’t about the blind, mindless pursuit of money at all costs, that’s anarchy.

Free markets and capitalism are about working in tandem with those around us to maximize our return by providing the best service or product to others. It’s a mutually beneficial system.

And we’re in danger of throwing it away.