Coyote Blog

I bet you thought I was kidding here when I said I might pursue my new niche in parking lot blogging.  Not so - here today is an idea from Ross Mayfield:

My uncle was a guru on wall street when I asked him where I should invest my paper route money. He said to visit the parking lots of Silicon Valley companies during the weekend. If the parking lot was full, there was a good chance they were close to a breakthrough or release.

At the corporations I worked for, this would probably just mean that everyone was working on Powerpoint presentation for an upcoming planning conference.  Anyway, I don't know much about Silicon Valley, so I don't know if it will work, but this is an interesting suggestion to use the Internet to gather intelligence:

But with enough mobloggers, a panopticon of performance may be a great leading indicator.  So this weekend I started the Parking Lot Indicatr group and people have taken interest.

Hopefully, the cars are not all there responding to an SEC inquiry.

George's Employment Blawg has a roundup of a lot of good HR-related blog posts.

Recently, the government announced that it would take over the United Airlines pilots pensions in the government-funded Pension Benefit Guaranty Corp.  This move is irritating pilots, because their pensions get reduced, and it is annoying to me as a taxpayer, that I have to bail out a company that was too screwed-up to fully fund its pension obligations. 

This points up the biggest danger of government guarantees -- it causes companies to be more reckless.  Back in the 80's, banks and S&L's made insanely risky investments with bank deposits.  The people who should have been most interested in this problem - bank depositors - ignored it because they felt safe that the government had guaranteed their deposits.  In the same way, airlines and other ailing businesses with defined benefit pensions cut back on pension funding when times were bad, and the very group that should have been crying foul - the company unions - did not, because they again counted on a bail-out.

I put the blame squarely on the company's management, who made a commitment to employees and then failed to keep it, and now are using government pension gaurantees as a subsidy to close their cash flow gap.  However, it is interesting to look at the role of unions too.  For decades, unions have demanded defined benefit pensions (ones that promise a fixed amount per month at retirement) and have opposed defined-contribution pensions (ones where the company promised to contribute a fixed amount today into an investment fund).  I assume the main reason for this is that unions do not want workers to bear the market risks on investments.

Over time, though, defined benefit plans have, despite this opposition, gone the way of the dinosaur (at least in private companies - most government jobs still have them).  This is for a number of reasons:

• 401-K accounts now offer much of the same tax-deferral benefits for defined contribution programs that defined-benefit plans had
• Defined-benefit plans turn out to have market risk too.  One is inflation - benefits levels may be guaranteed, but unexpectedly high inflation can effectively reduce them, while defined contribution plans, if invested correctly, will likely produce returns to offset these inflation losses.  In addition, during go-go stock markets, holders of defined-benefit plans found out that they did not enjoy the benefits of higher investment returns - their employers pocketed them (by the way, may Americans are discovering the same about their Social Security benefits).
• As employees move around more, workers have found that defined benefit plans are not very portable, and tend to punish workers who do not stay for decades.  401-K plans are much more beneficial to workers who do not stay their whole career, or at least 20 years, in one place.
• As United pilots have found, defined benefit pension plans are hard to police by current employees- there are just too many variables that allow companies to argue that the pensions are OK.  On the other hand, defined contribution plans are very easy to police- one can check the amount of contribution each month against the amount promised.
• Finally, defined benefit plans rely on their company staying in business and fiscally sound for decades into the future.  This may have seemed a good bet at US Steel or United Airlines in 1950, but would anyone make that bet today?  For any company?

Yesterday, my kids and I set out to buy ourselves a Christmas tree.  Instead of going to Home Depot first, like we usually do, we stopped at one of those tent places that grow up this time of year on vacant lots, mainly because the tent was closer.  We soon left the tent, though, moving on to Home Depot, but not before the tree sales person made sure to tell my kids that he thought their dad was a jerk.  Here is how we got there:

I walked around the lot - there were only about 20 trees up, which is kindof a small selection, but they were all sitting in a pan of water, which can be a good sign that they are trying to keep the trees fresh.  I immediately saw a couple of trees that would work fine, so I walked up to them, looking for a price tag -- no price.  I looked around to see a posted price list, or a list of prices per foot - no price list.  I asked the guy working there where the prices were - he said just pick the one I liked, bring the tag to the register, and they would tell me there how much it costs.

At this point, I turned to my kids and said "lets go someplace else".  In my book, businesses can operate and price most any way they like, but I can also decide if I want to do business with them.  I don't like doing business with companies that have no posted prices (similarly I hate doing business with people like car dealers whose posted prices aren't the real prices, but that's another story).

The guy asked me why I was leaving.  I should have known better.  I should have just said something like I don't see one I like.  But I actually tried to explain what I was thinking.  I said, "What would be your reaction if you went into a Walmart and none of the items had prices - if the only way you could find out what the prices were was when they rang you up at the register.  Would you shop there?"  What I left unsaid, because I didn't want to discuss it in front of my kids, was that I didn't want to be put in the position of having my kids fall in love with a tree (they get very emotional about this choice) and then having to tell them a few minutes later that sorry, it was too expensive.  I much prefer the Home Depot approach, where each set of trees is clearly marked, so I can steer them away from even looking at the $100+ trees.

Anyway, I confess I probably was huffy about it, because this is one of my hot buttons, and as I called my kids to me the guy told them their dad was a jerk.

I probably am.  I know this guy is trying to make a living.  He may well not have had prices posted just out of lack of sophistication rather than any sinister desire to trap me into buying more tree than I wanted.  So I probably need to be publicly chastised -- feel free to use the comment section to do so.

Back in Texas in the 1980's, a number of large tottering banks merged, in an attempt at survival.  The result was called two drunks propping each other up, and it seldom worked.  The classic example is the Pennsylvania-New York Central railroad merger which ended in one of the most catastrophic bankruptcies of all time, and the largest industry nationalization in US history.

It was exactly these precedents that occurred to me today when I heard that Sears and Kmart are merging.  Scrappleface apparently was thinking the same thing, but is much funnier than I am.

UPDATE:

Other good examples in the comments.  I fell over laughing at "the EU".