Coyote Blog

The New York Times has a long article on  Harvard Business School's effort to change its culture around women.  Given that both my wife and I attended, albeit 25 years ago, I have a few thoughts.

• I thought the article was remarkably fair given that it came from the NYT.  Men who are skeptical of the program actually are allowed to voice intelligent objections, rather than just be painted as Neanderthals
• I would have abhorred the forced gender indoctrination program, as much for being boring as for being tangential.  I am fortunate I grew up when I did, before such college group-think sessions were made a part of the process everywhere.  I would presume most of these young folks are now used to such sessions from their undergrad days.   I would not have a problem having an honest and nuanced discussion about these issues with smart people of different backgrounds, but I thought the young man they quoted in the article said it really well -- there is just no payoff to voicing a dissenting opinion in such sessions where it is clear there is a single right answer and huge social and even administrative penalties for saying the wrong thing.
• I went to HBS specifically because I loved the confrontational free-for-all of the classes.   It was tailor-made to my personality and frankly I have never been as successful at anything before or since as I was at HBS.   I say this only to make it clear that I have a bias in favor of the HBS teaching process.   I do think there is an issue that this process does not fit well with certain groups.  These folks who do not thrive in the process are not all women (foreign students can really struggle as well) but they are probably disproportionately women.  So I was happy to see that rather than dumb down the process, they are working to help women be more successful and confident in it.
• It is interesting to see that the school still struggles to get good women professors.  When I was there, the gap between the quality of men and women professors was staggering.  The men were often older guys who had been successful in the business and finance world and now were teaching.  The women were often young and just out of grad school.  The couple of women professors I had my first year were weak, probably the two weakest professors I had.  In one extreme case our female professor got so jumbled up in the numbers that the class demanded I go down and sort it out, which I finally did.  I thought it was fun at the time, but now I realize how humiliating it was.
• To some extent, the school described in the article seems a different place than when I was there.  They describe a school awash in alcohol and dominated by social concerns.  This may be a false impression -- newspapers have a history of exaggerating college bacchanalia.   At the time I was there, Harvard did not admit many students who did not have at least 2 years of work experience, such that the youngest students were 24 and many were in their 30's and 40's.  A number were married and some even had children.   To be there, they not only were paying a lot of money but they were quitting paying jobs.  The school was full of professionals who were there for a purpose.  I had heard that HBS had started to admit more students right out of college -- perhaps that is a mistake.
• The fear by the women running the school that women would show up on Halloween wearing "sexy pirate" costumes represents, in my mind, one of the more insidious aspects of this new feminist paternalism (maternalism?) aimed at fellow women.  Feminism used to be about empowering women to make whatever choices they want for their lives.   Now it is increasingly about requiring women to make only the feminist-approved choices.
• I actually wrote a novel where the protagonist was a confident successful female at HBS.   So I guess I was years ahead of the curve.

Postscript:  Below the fold is an excerpt from my novel.  In it, the protagonist Susan describes how an HBS class works and shares my advice for being successful at HBS.

Continue reading ‘Harvard Business School and Women’ »

The well of government absurdity is simply bottomless

In this case, the USDA imposed on the [raisin farming] Hornes a “marketing order” demanding that they turn over 47% of their crop without compensation.  The order—a much-criticized New Deal relic—forces raisin “handlers” to reserve a certain percentage of their crop “for the account” of the government-backed Raisin Administrative Committee, enabling the government to control the supply and price of raisins on the market.  The RAC then either sells the raisins or simply gives them away to noncompetitive markets—such as federal agencies, charities, and foreign governments—with the proceeds going toward the RAC’s administration costs.

I have seen estimates that a Medieval serf had to pay between 30 and 70 percent of his crop to his master.  The RAC seems to be right in line with these numbers.

The story the other day that AIG was considering suing the taxpayers because the taxpayers did not give them a nice enough bailout was so vomit-inducing that I did not even look much further into it.

A couple of readers whom I trust both wrote me to say that the issues here are a bit more complex than I made them out to be.  The Wall Street Journal sounds a similar note today:

Every taxpayer and shareholder should be rooting for this case to go to trial. It addresses an important Constitutional question: When does the federal government have the authority to take over a private business? The question looms larger since the 2010 passage of the Dodd-Frank law, which gave the feds new powers to seize companies they believe pose risks to the financial system.

That vague concept of "systemic risk" was the justification for the AIG intervention in September 2008. In the midst of the financial crisis, the federal government seized the faltering insurance giant and poured taxpayer money into it. The government then used AIG as a vehicle to bail out other financial institutions.

But the government never received the approval of AIG's owners. The government first delayed a shareholder vote, then held one and lost it in 2009, and then ignored the results and allowed itself to vote as if the common shareholders had approved the deal.

In 2011 Mr. Greenberg's Starr International, a major AIG shareholder, filed a class-action suit in the U.S. Court of Federal Claims in Washington alleging a violation of its Constitutional rights. Specifically, Starr cites the Fifth Amendment, which holds that private property shall not "be taken for public use, without just compensation." The original rescue loans from the government required AIG to pay a 14.5% interest rate and were fully secured by AIG assets. So when the government also demanded control of 79.9% of AIG's equity, where was the compensation?

Greenberg is apparently arguing that he would have preferred chapter 11 and that the company and its original shareholders likely would have gotten a better deal.  Perhaps.   So I will tone down my outrage against Greenberg, I suppose.  But nothing about this makes me any happier about bailouts and corporate cronyism that are endemic in this administration.

This is a highly instructive story about Wal-Mart dropping health coverage for part-time workers (hat tip to a reader -- I always forget to ask if they are OK having their name used).  The writer is amazed at unintended consequences that were so hard to envision that complete non-experts like me predicted them days after the law's passage.

• The writer is amazed that Wal-Mart would support Obamacare and then try to evade its provisions.  This is how the corporate state works.  Wal-Mart was an enthusiastic supporter of Obamacare NOT because it believed the law made any sense, and not because it had any intention of complying with its spirit, but because it knew that its size, political clout, and infrastructure would allow it to duck the new costs of Obamacare more easily than its competition.
• We see unintended consequences run wild.  Wal-Mart was guilted into providing some health care coverage of part time workers because of tear-jerker news stories about these folks having no other alternative.  But under Obamacare, they do have an alternative (Uncle Sam) so the pressure on Wal-Mart to provide the care to avoid bad PR is removed.
• I am amazed that we seem to naturally assume that providing health care is an employer's obligation.  This is just bizarre, and applies to none of our other needs.  Employers pay us money, we spend it according to our preferences to fulfill our needs and caprices  (a great phrase I stole from Agatha Christie via Hercule Poirot).   “Walmart is effectively shifting the costs of paying for its employees onto the federal government with this new plan".  I would have said that Wal-Mart is shifting the choice of how to spend their total compensation back on the employee.
• The cat is almost out of the bag on the story I have promised to be the biggest economic story of 2013:  "Several employers in recent months, including Darden Restaurants, owner of Olive Garden and Red Lobster, and a New York-area Applebee’s franchise owner, said they are considering cutting employee hours to push more workers below the 30-hour threshold."  These guys are just being coy in public if they are saying "considering."  I know insiders in the restaurant industry and they have been working on definite plans to part-time their entire work force for well over a year.   By mid-2013, the service worker who works more than 30 hours a week will be a dinosaur
• Some time in the past, we really screwed up the whole concept of health care "insurance."  One person complains in the article:  “The packages Walmart is providing for low-income people aren’t offering very much coverage except for catastrophes."  Gee, I could have sworn this is exactly what insurance is supposed to be.  Her statement is like saying "my home insurance isn't offering much coverage except in the case of major damage to my house."
• Every extra dollar Wal-Mart pays for its employee's health care costs is another dollar added to the shopping bill of the lower income people who shop there.

1.  On the lighter side, a customer came into our establishment in California the other day with a horse.  Claimed it was a "therapy animal" and therefore it would be a violation of the ADA to not allow the horse in.  Not knowing the law but with some experience with California, my managers rightly let the animal in, then researched it later.  It appears that we are safe denying entry to animals that are not licensed service animals, but this is an evolving part of the law, apparently.  Since it costs us about $25,000 a pop to get even the craziest suits dismissed in California, we will continue to err on the side of caution.

2.  Perhaps even crazier, we recently were forced to institute an HR policy in California that working through lunch is a firing offense.  One warning, then you are gone.  Why?  California has a crazy law that allows employees to collect substantial ex post facto compensation if they claim they were denied a 10 minute break every four hours or a thirty minute unpaid lunch break after five.  Suffice it to say we have spent years honestly trying to comply with this law.   The 10-minute break portion is less of a compliance hurdle, but the lunch break portion has caused us no end of trouble.   Theoretically, under the law, the employee has a choice - work through lunch paid, eating at the job post  (e.g. in a gatehouse of a campground) or leave the job post for 30 minutes for an unpaid lunch break.   As background, every one of our employees have always begged to have the paid lunch because they are from a poorer area and need the extra 30 minutes of pay.

Unfortunately, it does not matter what preferences the employee expressed on the job site.  In the future, the employee can go to the labor department and claim he or she did not get their break, and even if they did not want it at the time, and never complained to the employer about not getting it, the employer always, always, always loses a he-said-she-said disagreement in a California Court or review board.  Always.  Sure, it takes someone utterly without honor to make this claim in Court, but there seems to be no shortage of those.  So, we took a series of approaches to getting people on-paper, on-the-record as having asked to work through lunch.  Unfortunately, one court case after another has demolished each safe harbor we thought we had.

A few weeks ago I was advised by a senior case-worker at the California Department of Labor that the only safe harbor left for employers is to FORCE employees to take an unpaid lunch.  This means they clock in and back out, this means they have to leave the job site (because if a customer happens to ask them a question, then they are "working"), and this means we have to ruthlessly enforce it.  Or we are liable for scads of penalties.  So, we find ourselves at the bizarre crossroads of making working through lunch a firing offense, and employees who generally want to work an extra thirty minutes each day to earn more money are not allowed to do so.  Yet another example of laws that are supposed to be "empowering" to employees actually ending up limiting their choices.

Kevin Drum writes:

...for the first time that I can remember, this means that I have a personal stake in the election. It's not just that I find one side's policies more congenial in the abstract, but that one policy in particular could have a substantial impact on my life.

You see, I've never really intended to keep blogging until I'm 65. I might, of course. Blogging is a pretty nice job. But I'd really like to have a choice, and without Obamacare I probably won't. That's because I'm normal: I'm in my mid-50s, I have high blood pressure and high cholesterol, a family history of heart trouble, and a variety of other smallish ailments. Nothing serious, but serious enough that it's unlikely any insurance company would ever take me on. So if I decided to quit blogging when I turned 60, I'd be out of luck. I couldn't afford to be entirely without health insurance (the 4x multiplier that hospitals charge the uninsured would doom me all by itself), and no one would sell me an individual policy. I could try navigating the high-risk pool labyrinth, but that's a crapshoot. Maybe it would work, maybe it wouldn't.

But if Obamacare stays on the books, I have all the flexibility in the world. If I want to keep working, I keep working. If I don't, I head off to the exchange and buy a policy that suits me. No muss, no fuss.

So yes, this election matters, and it matters in a very personal way. It does to me, anyway. It's not just about gridlock as far as the eye can see.

I usually have a pretty thick skin for this type of stuff, but this got to me.  I wrote:

Great.  Those of us who are comfortable actually, you know, working to support ourselves look forward to subsidizing your future indolence.
Sorry, I am not usually that much of a snarky jerk, but really, that is what you are celebrating.  You are not celebrating some medical or scientific breakthrough that allows you to stay healthy at a lower cost.  You are celebrating a system to force other people to pay for your body's maintenance.  All so you don't have to support yourself for over a quarter of your life.

If you were to say that, "wow the health dice really rolled against me and I need help," few would begrudge you the help.  But this notion of an indolent retirement is radically new.  It is a product of our century's and our country's great wealth.  Retirement is a luxury good.  I have no problem with anyone consuming this luxury good out of their savings, but consuming it out of mine, and then crowing about it to my face, is highly irritating.

If I were a Republican, or if I had one iota of trust in them, I might write that this is what the election is about.  Since I don't have such trust, I will instead merely highlight Drum's thoughts as a good representation of modern entitled thinking.  For God sakes this guy is not even trying to use my money to escape, say, a coal mine early.  He wants my cash to escape blogging early, perhaps the cushiest job there is (as indicated by the fact that many of us do it for no compensation what-so-ever).

The government commandeers a company's driver and truck for a drug smuggling operation without the company's knowledge or permission (and without any compensation).  The innocent and apparently overly helpful driver then dies in a hail of bullets that also riddle the truck as authorities screw up the bust.  In the process, police are wounded when they end up shooting at each other.  What a mess.

I will admit, I can get angry, especially when I believe someone has done me wrong.  But over time, I have learned to distrust this anger.  About twenty of twenty of the actions that I have most regretted in life or that have backfired on me have been undertaken during such periods of anger -- from yelling at innocent airline employees to writing scathing business letters that only make a situation worse.  I have learned to impose on myself a sort of count-to-ten rule, where if I am really ticked off about something, I force myself to wait 24 hours before I respond.  It works for me.

Attorney Charles Carreon needs to figure out a parallel strategy, or else he needs a business partner or family member who can perform an intervention for him.  Because last week, he totally lost it.

As you might remember from our last episode, Carreon was representing a web site called Funnyjunk where people post content strip-mined from other sites.  One of those sites, the Oatmeal, got mad about their cartoons ending up on this site without compensation, and called them out online.  No lawsuit, nothing unnatural, just good old American criticism.

I don't know enough about copyright law to know if Funnyjunk was in the right or wrong.  The Oatmeal could have tied it up anyway in copyright suits, but chose not to.  So of course Funnyjunk responded in asymmetric fashi0n by hiring Carreon to threaten the Oatmeal with a $20,000 lawsuit.  Apparently they were really sad and hurt by the Oatmeal's criticism, and argued that the Oatmeal abused their copyrighted name by using it online in the criticism (a hilarious charge given how the whole thing started).  By the way, in case anyone is confused about this, though this approach is tried constantly, courts have routinely held that there is no such copyright that bars someone from criticism or comment using one's name.

At this point, this all constituted irritating but fairly normal (unfortunately) behavior of people and lawyers online who don't really understand the First Amendment.

Then Charles Carreon drove over the cliff.

On Friday, he apparently sued not only the Oatmeal  (for criticizing him online, causing other people to hate him, and for violating his copyright in his own name) but also, get ready for this, the National Wildlife Federation and the American Cancer Society.  Why?  Because when the Oatmeal first got Carreon's demand letter, its proprietor said he would raise $20,000 for charity instead, and send Funnyjunk a picture of the money.  To date, nearly $200,000 has been raised for the two charities by Oatmeal fans who wanted to show their support.

Apparently, according to Carreon's suit  (I still can't believe he actually filed this), the money that was raised for these charities was tainted because it was raised in the name of making him look like a doofus.  Which, by the way, is exactly right.  I am not a huge fan of either charity (they use too much money in both cases for political activism rather than solving problems), but I gave $100 just to help hammer home the point that Charles Carreon is an idiot.

Perhaps this guy has no friends.  But if he does, one of them needs to be grabbing his collar and shoving him up against the wall and explaining in one syllable words how suing two prominent charities is NOT a path to success in the war to reclaim his reputation.  The guy basically kneecapped himself with his opening shot.   He will soon learn that while it may be increasingly against the law on college campuses to hurt someone's feelings with your speech, it is not illegal in the rest of America.  And he will also soon learn all about California's tough anti-SLAPP law, as he finds himself headed to Bank of America to take out a second mortgage on his home so he can pay the legal bills of those he has sued with the intent to suppress their speech.

Update:  Mr. Carreon, welcome to the Streisand effect.  Last Thursday, none of his first page Google results mentioned this incident.  Today, there are five.

Update #2:  Mr. Carreon claims his web site has been hacked.  Maybe.  But I will observe that for the web NOOB, "buying the cheapest Godaddy hosting account that is fine for my normal 12 visitors but crashes when I get 50,000 hits in an hour from Reddit" and "hacking" often look the same.

Update #3 and irony alert:  If you want to see something odd, check out the web site he and his wife run.  The site is full of very raw critiques that would easily land a desk full of lawsuits in the Carreon mailbox if the legal system routinely accepted the type of censorious lawsuits he himself is attempting to initiate.  If he takes the linked site down, the screenshot is here.  As an aside, I am constantly amazed at how liberals, including those who claim to be feminists, seem so obsessed with the sexuality of Conservative women and couch so much of their criticism in terms up to and including rape images (particularly oral sex).

It would be impossible to trace all the ways taxpayer money ends up in the coffers of solar manufacturers like First Solar.  Most of First Solar's money has been made selling panels in Germany to solar plants that, by law, can rape electricity customers with prices 10-15x higher than the market price for electricity.  First Solar also benefits more directly from direct subsidies, loan guarantees, "retraining" subsidies and even government Ex-Im Bank loans to sell panels to itself.  While First Solar vehemently denies it is a subsidy whore, it is telling that when Germany began to cut its solar feed-in tariffs, First Solar's stock price fell from over $300 to around $20.  Just watch day to day trading of First Solar stock, it does not move on news about its efficiency or productivity, it moves on rumors of changes in government subsidies.

Let's look at one subsidy.  In 2010, the Obama administration gave First Solar a subsidy of $16.3 million, ostensibly to help open a new plant in Ohio.  But it is interesting that this private company, which apparently could only raise the $16.3 million it needed by taking it by force from taxpayers, had plenty of money to pay its CEO.  In the 13 months leading up to its $16.3 million taken from taxpayers, First Solar paid its new CEO $29.85 million!  

Rob Gillette, the ousted CEO of First Solar Inc., earned more than $32 million in compensation from the struggling company for his two years of service, according to a regulatory filing Wednesday.

Gillette came to First Solar from Phoenix-based Honeywell Aerospace in October 2009 and was fired by the Tempe-based solar company's board of directors in October 2011....

Most of his compensation came in the three months of 2009 that he worked, when his total compensation, including salary, bonus, stock and options awards and other perks, reached $16.55 million. In 2010 his total compensation was $13.3 million, and last year he earned $2.46 million, which consisted of $763,000 in base salary and a $1.7 million severance.

Yep, they can't scrape up $16.3 million of their own money for a factory but they can find $30 million to give to an unproven CEO they eventually had to ride out on a rail.

By the way, I don't know Mr. Gillette, but I was once an executive at Honeywell Aerospace for several years.  I can tell you that it's a great place to find an executive who is focused on process to manage large complex organizations in a relatively stable business where manufacturing, logistics, and schmoozing large buyers is important.  It is a terrible, awful place to seek an executive for a fast growing business that needs to rapidly shift business strategies and where grinding through the process gets the wrong answer 12 months too late.

My new column in Forbes addresses a topic I wrote about over 6 years ago, and got a ton of feedback on.

The problem with salaries for government workers like teachers is that, in a monopoly (particularly one enforced by law), the usual checks and balances on compensation simply don’t exist.  Let’s say a private school gives its teachers a big raise, and has to raise its tuitions to pay for those higher salaries.  Parents are then left with a choice as to whether to accept the higher tuitions, or to look elsewhere.  If they accept the higher fees, then great — the teachers make more money which is justified by the fact that their customers percieve them to be offering higher value.  If they do not accept the higher tuition, the school withers and either changes its practices or goes out of business.

But what happens when the state overpays for teachers (or any government employee)?  Generally, the govenrment simply demands more taxes.  Sure, voters can push back, but seldom do they win in a game dominated by concentrated benefits but dispersed costs.  On a per capita basis, teachers always have more to fight for than taxpayers, and are so well-organized they often are one of the dominant powers in electing officials in states like California.  This leads to the financially unhealthy situation of a teachers’ union negotiating across the table from officials who owe their office to the teachers’ union.

We might expect this actually to lead to inflated rather than parsimonious wages.  To see if this is true, we have a couple of different sources of data within the Bureau of Labor Statistics (BLS) to help us.

Click through to see the numbers, which tell the story pretty clearly

My new column is up at Forbes, and discusses the proposal by a number of Congressmen for a Constitutional Amendment to strip corporations of speech and other rights.  The post is hard to excerpt but here is just a bit:

This is why this proposed Amendment is so absurd.  In effect, it would mean that we all enjoy the full range of Constitutional rights, except when we agree to assemble and cooperate -- then we lose them all.   If I as an individual bake bread in my kitchen for resale, I could still petition the state to modify regulations relevant to my activity.  If I then join together with my neighbor in a cooperative venture to bake and resell bread, does it really make sense that I would then lose my right to petition the government?

Worse, the proposed Amendment does not limit its scope to just the First Amendment.  It means that individuals, when on corporate property, might have no protection from unreasonable searches and seizures;  corporations would have no guarantee of due process or of a jury trial in civil suits;  corporate assets would no longer be protected from eminent domain seizure without compensation.  Under this provision, the Federal government could seize Apple Computer if it so desired (or even quarter troops in the Apple offices!).  This all sounds like a stalking horse for Socialism, which might seem overwrought until one realizes that Bernie Sanders is the sponsor of a similar proposal in the Senate....

Of all the possible approaches to reducing the ability of private citizens to manipulate government policy to their personal benefit, this is in fact likely the worst.  As mentioned above, there are many different avenues to exercising influence and power, of which election spending and advertising is just one.  But election spending is the most transparent of all of these approaches.  This proposed amendment would in effect substitute highly visible advertising and electioneering with backroom deals and political patronage that is far more hidden from the public eye.  A cynical person might argue that this is exactly the goal.

Via Carpe Diem and a whole string of other sites:

"How will California parents react when they find out they will be expected to provide workers' compensation benefits, rest and meal breaks, and paid vacation time for…babysitters? Dinner and a movie night may soon become much more complicated.

California Assembly Bill 889 will require these protections for all “domestic employees,” including nannies, housekeepers and caregivers. The bill has already passed the Assembly and is quickly moving through the Senate with blanket support from the Democrat members that control both houses of the Legislature – and without the support of a single Republican member. Assuming the bill will easily clear its last couple of legislative hurdles, AB 889 will soon be on its way to the Governor's desk.

Under AB 889, household “employers” (aka “parents”) who hire a babysitter on a Friday night will be legally obligated to pay at least minimum wage to any sitter over the age of 18 (unless it is a family member), provide a substitute caregiver every two hours to cover rest and meal breaks, in addition to workers' compensation coverage, overtime pay, and a meticulously calculated timecard/paycheck.

Failure to abide by any of these provisions may result in a legal cause of action against the employer ("parents") including cumulative penalties, attorneys' fees, legal costs and expenses associated with hiring expert witnesses, an unprecedented measure of legal recourse provided no other class of workers – from agricultural laborers to garment manufacturers."

I know this is exactly the kind of thing you would expect me to oppose, but I have decided this is exactly the kind of thing California needs.  I am tired of average citizens passing crazy requirements on business without any concept of the costs and injustices they are proposing, and then scratch their head later wonder why job creation is stagnant.
I want to propose that California do MORE in this same vein.  Here are some suggestions:

• Every household will have to register for a license to conduct any type of commerce, a license to occupy their house, and a license to hire any employees.  Homeowner will as a minimum have to register to withhold income taxes, pay social security taxes, pay unemployment insurance, pay disability insurance, and pay workers comp insurance.
• Households should have to file a 1099 for every payment they make to contractors
• All requirements of Obamacare must be followed for any household labor, including payment of penalties for even part-time labor for which the homeowner does not provide medical insurance
• No alcohol may be purchased by any individual without first applying for and receiving a state liquor license
• No cigarettes may be purchased by any individual without first applying for and receiving a state cigarette license
• No over the counter drugs may be purchased by any individual without first applying for and receiving a state over the counter drug license
• No eggs may be purchased by any individual without first applying for and receiving a state egg license
• Any injuries of any type in the household must be reported to OSHA
• Form EEO-1 must be filed once a year to catalog the race and gender of anyone who did any work in the home
• Any time one has a dispute in court with another citizen or an employee, they will now be treated the same as businesses in California, which means that the presumption, irregardless of facts, will be strongly in favor of any employee and against the homeowner, and in favor of any other party in any dispute whose net worth is perceived by the jury as less than the homeowner's.
• At least once a year the home's kitchen must be inspected and certified by both the fire marshal and the health department.  Any deficiencies must be immediately repaired before the kitchen can be used.  All code requirements for commercial kitchens will apply to household kitchens, including requirements for a three-basin washup sink, separate mop sink, and fire extinguishers
• All homes will be inspected once per year for ADA compliance.  All parts of the home must be wheelchair accessible, even if there are currently no handicapped residents in residence.  Homes more than one-story tall will require an elevator.  All counters must be of the proper height, and all bathrooms must have ADA fixtures.
• Each home will be required to prominently display all its required licenses as well as state and federal information posters for workers.
• All homes will be audited at least once every three years to ensure that use taxes have been filed and paid on all out of state Internet purchases
• Material Safety Data Sheets must be on file for all household cleaning products and other chemicals and available for inspection by the fire marshal
• All gas tanks (car, lawnmower, portable 5-gallon) will be treated just like commercial gasoline storage tanks, and require monthly leak / loss reporting.  Annually, a complete spill prevention plan must be filed with the state.
• A stormwater discharge plan must be filed annually with the state
• Any dropped thermometer or CFL bulb will require homeholder to call out (and pay disposal costs) of a state hazmat team
• Lifeguards are required at all home pools during daylight hours
• Households should file property tax returns in the same way that businesses must, listing individually every single piece of personal property they own, from their car to their lawnmower to the pink flamingo in the front yard.
• Homeowner must track the number of days any guests stay in their house so they can file and pay lodging taxes on a monthly basis
• Any homeowner who hauls a boat or trailer on US highways must register with the Department of Transportation and receive a DOT number.  They must keep full driver logs and maintenance records available for DOT audit and inspection, and every driver must be drug-tested at least once per year.
• All food on pantry shelves must meet all state labeling laws
• At each entrance to the house, a sign warming those entering must be posted warning that certain cancer causing chemicals may be present

Finally, after spending the entire day complying with these rules, the homeowner must read at least 3 posts each day from progressive blogs explaining why anyone who complains about such rules as unreasonable is just a reactionary who doesn't really know how to run his business very well, and they could certainly do better.

Postscript:  Every single item on this list is something my company has been required to do.  I am sure I left a bunch out.

I am with Megan McArdle in confirming that the non-pay portions of the typical public employee compensation package is at least as important, and as potentially expensive, as the money itself.  In particular, two aspects of many public employee compensation packages would be intolerable in my service business:

• Inability to fire anyone in any reasonable amount of time
• Work rules and job classifications

From time to time I hire seemingly qualified people who are awful with customers.  They yell at customers, or are surly and impatient with them, or ruin their camping stay with nit-picky nagging on minor campground rules issues.  In my company, these people quickly become non-employees.  In the public sector they become... 30 year DMV veterans.  Only in a world of government monopoly services can bad performance or low productivity be tolerated, mainly because the customer has no other option.  In my world, the customer has near-infinite other options.  And don't even get me started on liability -- when liability laws have been restructured so that I am nearly infinitely liable for the actions of my least responsible employee, I have to be ruthless about culling bad performance.

The same is true of work rules.  Forget productivity for a moment.  Just in terms of customer service, every one of my employees has to be able to solve customer problems.  I can't automatically assume customers will approach the firewood-seller employee for firewood.  All my employees need to be able to sell firewood, or empty a trash can when it needs emptying, or clean a bathroom if the regular cleaner is sick, or whatever.

For those who really believe state workers in Wisconsin are underpaid, I would ask this question:  Which of you business people out there would hire the average Wisconsin state worker for their current salary, benefits package, lifetime employment, work rules, grievance process, etc?  If they are so underpaid, I would assume they would get snapped up, right?  Sure.

Bonus advice to young people:  Think long and hard before you take that government job right out of college.  It may offer lifetime employment, but the flip side is that you may need it.  Here is what I mean:

When people leave college, they generally don't have a very good idea how to work in an organization, how to work under authority, how to manage people, how to achieve goals in the context of an organization's goals, etc.   You may think you understand these things from group projects at school or internships, but you don't.  I certainly didn't.

The public and private sector have organizations that work very differently, with different kinds of goals and performance expectations.  Decision-making processes are also very different, as are criteria for individual success within the organization.  Attitudes about risk, an in particular the adherence to process vs. getting results, are entirely different.

I am trying hard to be as non-judgmental in these comparisons as I can for this particular post.  I know good people in government service, and have hired a few good people out of government.  But the culture and incentives they work within are foreign to those of us who work in the private world, and many of the things we might ascribe to bad people in government are really due to those bad incentives.

It is a fact you should understand that many private employers consider a prospective employee to have been "ruined" by years of government work, particularly in their formative years.  This is simply a fact you will need to deal with (it could well be the reverse is true of government hiring, but I have no experience with it).  That is why, for the question I asked above about hiring Wisconsin government workers, the answer for many employers would be "no" irregardless of pay.

Collective bargaining was adopted as a key tactic for labor out of the sense that, by banding together in labor negotiations, workers were able to offset a perceived power imbalance vis a vis employers.  But what happens if the management team on the other side of the table in labor negotiations is not actually an adversary?

We have seen in the last week that the Democratic Party is operating, right up to the US President, as a wholly owned subsidiary of the public employee's unions.  In such a case, where state governments are historically dominated by Democrats, is it any wonder that compensation packages for unions have skyrocketed?  They have been negotiating with themselves!

I have nothing to add to this takedown, but in case you have not seen it you should really this.  A printed magazine called Cooks Source took an online article written by an author (Monica Gaudio) without the author's permission or any payment.  When the author complained and asked for a small bit of compensation (in the form of a donation to the Columbia Journalism School, lol), the magazine editor fired off this amazing email to the author whose work she stole:

Yes Monica, I have been doing this for 3 decades, having been an editor at The Voice, Housitonic Home and Connecticut Woman Magazine. I do know about copyright laws. It was "my bad" indeed, and, as the magazine is put together in long sessions, tired eyes and minds somethings forget to do these things.
But honestly Monica, the web is considered "public domain" and you should be happy we just didn't "lift" your whole article and put someone else's name on it! It happens a lot, clearly more than you are aware of, especially on college campuses, and the workplace. If you took offence and are unhappy, I am sorry, but you as a professional should know that the article we used written by you was in very bad need of editing, and is much better now than was originally. Now it will work well for your portfolio. For that reason, I have a bit of a difficult time with your requests for monetary gain, albeit for such a fine (and very wealthy!) institution. We put some time into rewrites, you should compensate me! I never charge young writers for advice or rewriting poorly written pieces, and have many who write for me"¦ ALWAYS for free!"

For Monica Gaudio, this must have been a bit like the person who stole your car calling you to complain that the car needed to be washed.  Incredibly, the editor then proceeded to dig the hole even deeper.

I have written before about carbon offset scams -- even well intentioned programs are unlikely to achieve their promised benefits because

• The projects they fund are typically not incremental -- many likely would have proceeded without the offset funds, so that the benefits are effectively double counted.
• I have never seen any of these programs submit themselves to 3rd party offset of their supposed CO2 reductions.  In most cases, these are faith-based programs where it is impolite to ask if the promised reductions actually occur.

Randal O'Toole has a good example of a program that makes all these mistakes, and compounds them with absurdly high administrative costs.  One is left to wonder whether the Oregon state-run program is actually reducing CO2 or simply making sure a number of government salaries get paid.

In 2006, Climate Trust spent about two-thirds of its funds on carbon offsets, while most of the rest went for payroll and professional fees. In 2007, the share going to carbon offsets declined to 64 percent. By 2008, as near as I can tell, none of Climate Trust's money went for carbon offsets. Instead, 73 percent of its $1.65 million budget went for salaries, fees, and other compensation. It also spent more than $120,000 on travel and conferences and $95,000 on rent and office expenses. In 2008, Climate Trust paid its executive director $154,000, not counting health insurance and other fringe benefits. At least one other staff member whose title was "director of offset programs" was paid more than $100,000 and a third one received $88,000.

The media is portraying the $20 billion BP spill fund as a result of tough talk from the President.  I think it was a lifeline that BP grabbed with great relish (so does the stock market, as their stock price has risen slightly in the day and a half since).

BP faces absolute bankruptcy from the torts resulting form this current spill, along with some criminal charges.  Its best hope is to negotiate a deal, Chicago-style, with the US government.  In exchange for a cash fund that will sound really large in the press but likely will fall short of actual claims, Congress will pass a law limiting its liability to just+ the settlement fund.  The public justification will be that the settlement fund will provide much quicker and more efficient compensation to victims -- which might even be true.

If one wants a model, just look at the tobacco settlement.  While they vilified them, the government in fact made tobacco companies their partners.  Since the settlement, the government has in fact stepped in to protect the large tobacco companies from competition and price erosion, in large part to protect parties to the settlement from loss of market share to parties who are not on the hook to pay out large sums to the government.  By the way, note that the vast majority of the tobacco settlement money did not go to its stated purpose of tobacco education and health care costs, but into the general funds to support politicians' whims.

This is how things work in the corporate state (and, I suppose, in organized crime).  Once you have an entity like BP vulnerable and under your control, the last thing you want is for them to die.  You want to milk them for years, both for cash and political support, the quid pro quo for being kept alive.

Update: OK, it seems I can't be original.  Others are thinking this too

Readers of the site know that I do not generally join in with the Conservative bashing of unions, except to the extent that they feed at the public trough (e.g. at GM) where I will bash them equally with all other similar hogs.  Unions are perfectly acceptable associations of individuals in a free society for a generally rational purpose.  What upsets this equation is when the government attempts to intervene to tilt the playing field either towards employers or unions in their negotiations -- but this is a government intervention issue, not a union issue per se.

Far more problematic is the growing influence of public employee unions.  Union advocates talk about the need to help private unions in a power imbalance with large corporations, but talk about a power imbalance!  In the public sector, we have hugely powerful unions with absolutely no one willing to take them on.  Government leaders who supposedly should be advocates of taxpayers and pushing back against union demands are typically in bed with unions.  One might say it is a similar case to unions owning the private company in which they work, but in that case there are market dynamics that mitigate against overly high pay or indifferent customer service.  No such balancing mechanisms exist in government monopoly institutions.

There have been a lot of articles on this topic of late that I have been keeping in my reader but have not linked, so to do a bit of tab-clearing, here are some good recent articles on public sector unions.

Carpe Diem shows the direct relationship between increasing public sector unionization and public sector debt.  Chris Edwards appears to be the original source.

Chris Edwards followed up to show an inverse relationship between state management quality and unionization.

Bruce McQuain discusses the $500 billion California unfunded pension liability.  And this does not include the unfunded liabilities of all the state's cities and towns and counties, which typically don't book any liability at all for their future pension and medical commitments.

Steven Malanga on how public sector unions broke California.

The camera focuses on an official of the Service Employees International Union (SEIU), California's largest public-employee union, sitting in a legislative chamber and speaking into a microphone. "We helped to get you into office, and we got a good memory," she says matter-of-factly to the elected officials outside the shot. "Come November, if you don't back our program, we'll get you out of office.'

Traditionally, public sector unions have exercised a lot of power in elections, as evidenced by this example of the success of unions in fielding winning candidates in California school board elections.   Bruce McQuain reports that the SEIU has even formed its own 3rd party in North Carolina.  Its amazing that candidates whose main platform is to shift more taxpayer resources to the pockets of government workers has success.

Finally, according to the GAO, union contracts have a lot to do with why the USPS is failing  (as labor accounts for 80% of USPS costs).  They seem to have all the labor problems GM had, except there is even less pressure to correct the problems, since after all we can't get our mail delivered by Honda or Toyota.  Here is an example:

• USPS workers participate in the federal workers' compensation program, which generally provides larger benefits than the private sector. And instead of retiring when eligible, USPS workers can stay on the "more generous" workers' compensation rolls.

• Collective bargaining agreements limit the amount of part-time and contract workers the USPS can use to fit its workload needs, and they limit managers from assigning work to employees outside of their crafts. The latter explains why you get stuck waiting in line at the post office while other postal employees seemingly oblivious to customers' needs go about doing less important tasks.

• Most postal employees are protected by "no-layoff" provisions, and the USPS must let go lower-cost part-time and temporary employees before it can lay off a full-time worker not covered by a no-layoff provision.

• The USPS covers a higher proportion of employee premiums for health care and life insurance than most other federal agencies, which is impressive because it's hard to be more generous than federal agencies.

• If the collective bargaining process reaches binding arbitration, there is no statutory requirement for the USPS's financial condition to be considered. This is like making the decision whether or not to go fishing, but not taking into consideration the fact that the boat has holes in its bottom.

Ilya Shapiro:

Well of course they aren't "” but that's constitutionally irrelevant:  Corporations aren't "real people" in the sense that the Constitution's protection of sexual privacy or prohibition on slavery make no sense in this context, but that doesn't mean that corporate entities also lack, say, Fourth Amendment rights.  Or would the "no rights for corporations" crowd be okay with the police storming their employers' offices and carting off their (employer-owned) computers for no particular reason? "” or to chill criticism of some government policy.

Or how about Fifth Amendment rights?  Can the mayor of New York exercise eminent domain over Rockefeller Center by fiat and without compensation if he decides he'd like to move his office there?

So corporations have to have some constitutional rights or nobody would form them in the first place.  The reason they have these rights isn't because they're "legal" persons, however "” though much of the doctrine builds on that technical point "” but instead because corporations are merely one of the ways in which rights-bearing individuals associate to better engage in a whole host of constitutionally protected activity.

That is, the Constitution protects these groups of rights-bearing individuals. The proposition that only human beings, standing alone, with no group affiliation whatsoever, are entitled to First Amendment protection "” that "real people" lose some of their rights when they join together in groups of two or ten or fifty or 100,000 "” is legally baseless and has no grounding in the Constitution. George Mason law professor Ilya Somin, also a Cato adjunct scholar, discusses this point here.

The Senate health care bill relies for much of its funding on a tax on so-called "Cadillac" health care plans.  But what happens when employees and employers inevitably change their behavior in the face of different incentives?

History teaches us that tax policy has a huge effect on behavior.  Witness the fact in health care the non-nonsensical fact so many people rely on their employer for health care.  As we see today, this is a really bad idea, but it was hatched because tax law provided incentives for paying compensation in the form of health insurance premiums, since these are not subject to either income or payroll taxes.

Already, employers are offering employees what are effectively buy-outs of health care -- higher pay in return for reduced health care benefits.  For employers, the upside risk on health care costs now outweigh the tax advantages of health insurance as a compensation tool.  Given this trend, what do you think will happen when employees suddenly have the same incentive, to roll back health care coverage to get under whatever bar is set for an insurance package Congress thinks is too rich (hint:  wherever the bar is set, it will be below the health insurance Congress provides itself).  Employers and employees are now going to have a shared incentive to back off on health care benefits in exchange for more cash.  Think of the sharp minds on both sides of a UAW contract negotiation - does anyone really think that these guys won't figure out a win-win to avoid paying the surtax?

Three to five years from now, even before the system goes bankrupt from inevitably expanding costs  (you didn't really buy that stuff about the operator of Amtrak and the Post Office improving the industry's efficiency, did you?), we are going to be talking about the gross shortfall in tax revenues to support these programs, all because people change their behavior in the face of changing incentives.

I have shared before the main problem with all these new fake "rights"  (e.g. right to healthcare, right to a job, etc.).  Our original Constitutional rights were merely checks on government - they said the government could not pass laws to prevent us from doing certain things or invade our homes without some sort of due process, etc.  But these new rights require that some previously free individual be coerced into providing money or labor or both to supply others with these new rights.    I often use the desert island test - if you can't have the right alone on a desert island, its not a right.

But what I had not realized until recently is that many of these new fake rights also share in common a level of compulsion on the beneficiary  (not just the payer and provider).  For example, you have the right to bear arms and engage in free speech, but you are not required to own a gun or speak in public.   But you will be required to use, and pay for, your new "right" to health care, at the threat of a term in prison.   In this light, its doubly perverse to call something like health care a "right."  How can something which government uses compulsion on the payers, the providers, and the users be associated with so clean and moral a notion as a "right."  Freedom of religion is a right.  Health care is a want.

I got to thinking about this even more with "the right to a job at a fair wage," embodied in such laws as the Fair Labor Standards Act.  Proponents of such a right would consider it a victory that employers have been compelled to not pay less than $7.25 an hour for labor.   But the beneficiary is the subject of compulsion as well.  This law also means that I cannot sell my labor at less than $7.25, even if I am willing (even eager) to do so.    This means that if my choices are to sell my labor at $6.00 or for nothing, the government compels me to be unemployed.  My son is 16 and would like a retail job, preferably around books this summer.  Having real job experience and customer contact experience, for him at his age, is worth enough that he would likely work for free.  But he can't work for free, because the Fair Labor Standards Act only allows compensation to be valued in monetary terms - non-monetary benefits like skills improvements don't count.  So, given the economy, my son will likely not work next summer.  All for his own good, of course.

Ken Lewis gets his payoff for knuckling under to Paulson and Bernanke on the Merrill Lynch acquisition

Kenneth Lewis, outgoing chief executive of Bank of America Corp., will get no salary or bonus for 2009, according to people familiar with the matter, the biggest Wall Street name thus far to come under the thumb of the government's pay czar.In fact, Mr. Lewis will have to repay the North Carolina-based bank more than $1 million in salary he has already earned.

The move was demanded by Kenneth Feinberg, the U.S. Treasury Department's special master for compensation, and was agreed to by Mr. Lewis and the bank.

After forcing Lewis to deal fraudulently with his shareholders, they cut his pay to zero. Nice. Lewis will do fine, he has a nice fat retirement, but it is still a pretty scary development for those of us who still care about contracts and individual liberty.  Just ask yourself - what objective standard did Feinberg apply?  Can't come up with one, can you?

A lot of my education was just a cover story that looked good a number of years of partying with no job look good on my resume without any real improvement in my long-term skills.  But my time in business school thinking about incentives and later at McKinsey & Co. doing the same for various employee compensation approaches has served me well through my whole life.  It's not that Congress and the media are bad at thinking through inventives -- its that they don't even try.  They accept the motivations and desires of the person proposing a plan as suffiecient gaurantee that the plan will actually reach those results.

I got a lot of mail last week on my post on incentives.  One loyal reader left me this link at Develish Details, a blog analyzing health care reform proposals.  Incentives are a frequent topic on the blog:

While it's true that paying by procedure creates the incentive to perform more procedures, some of which may be unnecessary, an outcomes based payment system has its own drawbacks. It creates the incentive for doctors to choose to treat patients who are less sick over those who are more sick. Very sick patients require a lot of attention and time, but are less likely to have a bonus-worthy outcome.

On the other hand, less sick patients are easier to treat, are likely to have a better outcome, and will offer a better bonus opportunity for the doctor. Doctors' time is scarce, so they must put it to the best use possible to provide for their families "“ and in a pay-for-outcomes system that means choosing easier to treat patients who will generate the highest bonuses. No matter how much we narrow the arbitrary measure of "outcome", the incentive for the doctor in an outcome based system, where "outcome" is defined by a third party, will always be to select the least sick patients at the expense of the sickest patients most in need of care.

Because human beings are complex organisms, defining what constitutes a "good", bonus-worthy outcome is itself a daunting, if not an altogether impossible undertaking for the third party tasked with producing and evaluating those metrics. Medical outcomes depend on many variables, including, but not restricted to the overall health of the patient (not just the condition being treated) and the patient's compliance with the treatment - a factor over which the doctor has no control.

Over 700 employees of San Francisco's BART transit agency make over $100,000 just in cash wages.  This does not include lucrative benefits that probably add $30,000 or more to total compensation for most employees.  (SF Chron, via Thin Green Line)

From Walter Olson, on the House health care bill:

Contacts on Capitol Hill inform me that Republicans yesterday managed to block a remarkable provision that had been slipped into the House leadership's 794-page health care bill just before it went to a House Ways & Means markup session. If their description of the provision is accurate "” and my initial reading of the language gives me no reason to think it isn't "” it sounds as if they managed to (for the moment) hold off one of the more audacious and far-reaching trial lawyer power grabs seen on Capitol Hill in a while.

For some time now the federal government has been intensifying its pursuit of what are sometimes known as "Medicare liens" against third party defendants (more)....

The newly added language in the Thursday morning version of the health bill (for those following along, it's Section 1620 on pp. 713-721) would greatly expand the scope of these suits against third parties, while doing something entirely new: allow freelance lawyers to file them on behalf of the government "” without asking permission "” and collect rich bounties if they manage thereby to extract money from the defendants. Lawyers will recognize this as a qui tam procedure, of the sort that has led to a growing body of litigation filed by freelance bounty-hunters against universities, defense contractors and others alleged to have overcharged the government.

It gets worse. Language on p. 714 of the bill would permit the lawyers to file at least some sorts of Medicare recovery actions based on "any relevant evidence, including but not limited to relevant statistical or epidemiological evidence, or by other similarly reliable means". This reads very much as if an attempt is being made to lay the groundwork for claims against new classes of defendants who might not be proved liable in an individual case but are responsible in a "statistical" sense. The best known such controversies are over whether suppliers of products such as alcohol, calorie-laden foods, or guns should be compelled to pay compensation for society-wide patterns of illness or injury.

He has a lot more detail.  Ask anyone in a public contact business in California how similar laws for ADA violations have worked out.  Just one more horrible, failed law from California that has driven the state into the ground now being emulated at the national level.