Archive for May 2021

Business in 2021: Lots of Orders, No Employees, Rising Materials Costs

This is an excerpt from an email from one of my suppliers.  This is happening everywhere:

We are not a company that makes excuses as to quality or service. When things are beyond our control, we will not point fingers and say it's not our fault. However, the climate to conduct business is becoming more difficult daily.

...Employees were allowed to file for financial relief thus finding they could make more money sitting at home than working. The snowball effect started and is getting bigger.

Orders that were placed back in the fall are being filled at this time, 6 months later. Because of the shortage of materials some prices have almost doubled. I cannot tell my customers sorry I know we have an agreement for that however I now have to charge you this. We have honored our prices, we have not been able to honor our time of production to shipping because of circumstances beyond our control.

The list is endless of the domino effect in just about every industry in the country.

It is no accident that today we had a really week payroll report -- we have high unemployment, huge demand for labor, but no one wants to work as long as the government is writing checks to stay home and play Nintendo.  We're experiencing 1970's Swedish socialism, something that turned out to be such a mess that Sweden today is probably more free market in many ways than the US.

When Regulation Hammers Those It is Supposed to Benefit -- A Real Example in California

Regulation can be sortof kindof tolerable in stable, predictable, and unchanging markets.  But what markets act like that?  In the labor regulation world, for example, regulatory authorities are doing everything they can to kill a wave of innovation in labor markets.  As I tell everyone I discuss this with -- regulators picture workers as punching a time clock in a Pittsburg mill with their supervisor right there and present every moment, with an on-site HR department, and a cafeteria with huge walls for posting acres of labor posters.  Try to have any other relationship with your employees, and it will be like pounding a round peg into a square regulatory hole.  Even something as staggeringly beneficial to worker agency like letting remote workers schedule themselves tends to run afoul of the shift scheduling laws that are sweeping through progressive jurisdictions.

Here is a great example of the cost of regulation to consumers that our company is experiencing in the insurance market.  Last year after all the fires in California, the property insurance market was left in disarray.  My landlord, in many cases the US government, requires that I insured the assets I am leasing from them against wildfire (leave aside the question of why the Federal government which is supposed to be self-insured is paying for such insurance in the form of lower rents from me).

Suddenly, wildfire insurance on wilderness assets like the ones we operate became unobtainable.  After a LOT of education, we convinced the US Forest Service to allow a temporary moratorium on the wildfire insurance requirement in our agreements.  Good news, right?   Now we can just go out and get a property insurance policy that covers all damage but excludes wildfire.

Not so fast!  It turns out every single microscopic variation in insurance rates in California have to be approved by the state insurance commissioner in a time-consuming process that begins long before the policy year.  Well, it turns out most insurance companies don't actually have an approved rate that excludes wildfire coverage.  They won't sell us a policy with the coverage (too risky) and they can't sell the policy without the coverage (not approved).

Regulation can always be costly but can be particularly so when markets need to react quickly to changing conditions.

This is The Best Idea I Have Seen Related to Equity

There are lots of ways to learn and grow skills and college is just one -- historically, most Americans have gained skills and improved their lives through learning and development in the workplace.  Stop the crazy over-credentialism of work.  Stop demanding a $100,000 education expenditure to qualify for a job where zero of the relevant jobs skills were taught in college.   I understand that college is used as a proxy for being long-term focused and goal oriented, but those can be demonstrated at least as well through work.  This is term would (hopefully) ease the pressure to dumb down education for the truly gifted.

 

Postscript:  I will add that a good portion of my executive team and field managers never went to college.  Has zero effect on their performance, except it gives some of them an inferiority complex I have to keep trying to overcome.

Our Personal Liberties Are Now Hostage to the Least Common Denominator of Mental Health

It is unbelievable we are allowing these people to rule us

Here are just some of the restrictions:

  • Everyone at the camp—including staff and every kid over the age of two—must wear masks at all times, unless they are eating or swimming. They should wear two layers of masks, especially when social distancing is difficult, regardless of "whether activities are indoors or outdoors."
  • Campers should be placed in "cohorts," and their interaction with people outside the cohort must be limited.
  • There should always be at least three feet between campers of the same cohort, and six feet between campers of different cohorts. Staff should keep six feet away from campers at all times, whether inside or outside. Distance should be maintained while eating, napping, or riding the bus: The CDC suggests seating kids in alternating rows.
  • The use of physical objects that might be shared among kids—toys, art supplies, electronics—should be limited wherever possible.
  • Camps should not permit close-contact sports and indoor sports, and should require masks regardless.

 

Why Must I Change My Behavior To Protect Those Who Choose Not To Vaccinate?

We are rapidly approaching the point where people who are unvaccinated are that way because they choose to eschew the vaccine.  Here in AZ, which has had a pretty solid vaccination program, tens of thousands of appointments for *free* vaccinations are going unused.  Vaccination rates are falling because people don't want them.

But states like Michigan still require that every citizen's freedoms be restricted until more people are vaccinated.  What if those folks choose never to get the shot?  Are we doomed to the same east-german-style regime forever?

And why should we?  People are making the individual choice that they perceive the risks and costs of vaccination to be higher than that from COVID.  OK, fine.  I disagree with them, but am happy to respect their right to make that decision.  But why do the rest of us still have to tiptoe around them?  They have made their risk choice, why don't we let them live with it and get on with our lives?

The answer is two-fold, and comes back to political incentives.  First, politicians fear they will be blamed for outbreaks of disease among the unvaccinated that raise their state's numbers -- we have lost the ability to talk in terms of individual responsibility and so somehow even when an individual explicitly makes a risk choice, we still want to blame politicians if this choice goes bad.  The other reason is that politicians really don't want to give up the power they have -- they have gained powers unprecedented in American history through declarations of health emergencies and fanning the flames of irrational fears, and they don't want to give those back.  Any excuse to extend the emergency will be grasped.

Well, It Worked For Bypassing the First Amendment

CNN: Biden Admin Wants to Outsource Spying on Americans to Private Firms to Bypass Fourth Amendment

The Biden administration is considering using private firms to track the online activity of American citizens in order to get around the Fourth Amendment and other laws that protect Americans from unreasonable searches and seizures and surveillance. The report says that the Biden administration wants to monitor “extremist chatter by Americans online” but can’t do so without a warrant, and thinks private firms can get around the legal restrictions.

Biden Proposes Paying More People Not to Worki

I sit on a lot of boards of trade groups and business roundtables of various sorts.  And the #1 exclusive topic -- seriously, we talk about nothing else right now -- is the inability to hire people because the government is still paying millions or people to not work.  In restaurants, campgrounds, stores, manufacturers and scores of other industries, companies are ready right now to put more people to work but cannot because the government is paying people too much money to stay home and they can't get the workers they need.  Bounties, higher salaries, and incentives are all futile when candidate after candidate says that they won't look for work until the government payments stop.

So of course, the Biden Administration is proposing to pay more people not to work:

According to a White House fact sheet, the AFP would create a national comprehensive paid family and medical leave program, funded through tax increases, and paying workers up to $4,000 a month. Under that cap, it would replace a minimum of two-thirds of average weekly wages, rising to 80 percent for the lowest-wage workers.

The proposal does not define "lowest-wage workers," however, and left out details about whether eligibility would differ from current FMLA. Those specifics will be addressed when Congress drafts an actual bill.

Biden proposed that the program be phased in over a 10-year period, guaranteeing 12 weeks of paid parental, family illness, personal illness or safety-related leave by year 10. Workers would receive three days of bereavement leave per year starting in year one.

This is one of those bait and switch programs that are sold on the most extreme forms of eligibility -- ie they talk about leave to help a dying child but in the FMLA there are so many random and poorly defined leave rules that pretty much everyone qualifies.  We had a woman in California who worked for us that liked the job but hated the busy summer season and so scheduled elective surgery every year around Memorial Day to get out of working the summer -- and that was when it was unpaid!  I can't even imagine the abuse of a leave program paying up to $48,000 a year for not working.

Why Most of the Pro-Mask Science Quoted in the Media is Absurd

I have been close to writing this post off and on for almost a full year.  Starting back in the early days of COVID when the media used graphics about droplet spray patterns with and without masks as "proof" that masks work to slow the spread of COVID.

I was going to write about how dumb this was, but I assumed that other scientific voices would soon skewer these studies and thus it would be a waste of my time.  But lo and behold, while many careful scientific minds did recognize the flaws in these studies, the large news and social media companies have been pretty diligent about preventing any heterodox opinions on masks from getting wide circulation.

And so it stood until the other day when someone once again threw these droplet studies at me as proof that masks reduce the spread of seasonal viruses like COVID.  OK, here is the problem:

It is best to think first in terms of an analogy.  You have a car and want to prove that at any time of day, you could drive 60 miles across Los Angeles in an hour.  So to "prove" that, you take the car our to a test track and show that yes indeed, your car can sustain 60 miles an hour for extended periods of time.

Hopefully the flaws with this are obvious.  Proving a car can go 60 miles an hour is not the same as proving a car can drive 60 miles in an hour in real world conditions, particularly in LA at, say, 5 in the afternoon.

In the same way, showing that a clean, new mask can stop the projection of droplets of liquid does not in any way demonstrate that they are effective in limiting the spread of a virus in real world conditions.  Others can probably add more to the logic problems here, but just a few are:

  • Are large droplets even primarily responsible for the spread of COVID  (remember, the COVID virus is WAY smaller than the holes in the weave of most masks)?
  • What happens when the mask is worn for a while and becomes saturated from the virus of an infected person.  Aren't they now just blowing out all day through a film of COVID, like a kid blowing bubbles with a bubble wand?
  • Are masks efficacious when almost none of them are sealed to the user's face?
  • Is there any evidence of transmission in certain environments, like outdoors on a sidewalk, with our without a mask?

The fact is that the sum of studies before 2020 on the efficacy of public mask wearing to limit the spread of seasonal viruses were equivocal as best.  No one thought they did much good.  People will respond, "well, you wouldn't want your doctor to do surgery on you without a mask" but in fact even the evidence on post-operative infection with and without surgeon's mask use is equivocal  (it is also an absurd analogy as I don't think anyone in Walmart will be hovering over an open incision in my body for 4 hours).   And certainly most (all?) of the quality studies since COVID on masks and virus spread have shown little or no mask effectiveness (there have been a few studies that have purported to show mask effectiveness but they had cherry-picked endpoints that compared one geography outside of its COVID season with another that was in it -- see more here).

Postscript:  I am in Knoxville for a day and had two different experiences.  Last night at the Lonesome Dove restaurant was the first time I have been in a restaurant where no one, not even the servers, wore masks.   A small return to sanity.  But then the next morning I went to an indie books store near market square that had a couple of people browsing and the proprietor would not let us in because they were over their COVID capacity limit (as I said to my wife, when your business model is heading for a cliff it is probably best not to stomp on the accelerator).

Postscript#2:  I know others have observed this but it is amazing how many of the people who do where masks when they are not required are under 25 -- and essentially immune from any major consequences.  Is this virtue-signaling?  A gesture of solidarity? Fear of authority?  Scientific cluelessness?  It is a very strange time when the young are mindlessly following authority and the older folks are skeptical.   The analogies I can think of is the German youth movement pre-WWI who were big supporters of war as a romantic endeavor and the young Chinese of the cultural revolution.

Update #3:  As a by the way, in case you every get to Knoxville and are looking for a nice place to stay in the downtown or university area, the Tennessean is the place to go.  Only slightly more expensive than other hotels nearby but has really top quality service and rooms  -- Four Seasons level IMO at a third the price.