26 November 2022

How the Pandemic and Remote Work May Accelerate The Move Away From Pay as Compensation for Time and Towards Sharing Value

The pandemic may have accelerated a change in how we think about work and pay.

When the US was founded, a vast majority of work fell into one of three categories: children, slaves, and indentured servants. In every one of these arrangements, the "boss" owned your time. If you were a child you were expected to work as part of the family until you were old enough to leave home. If you were an indentured servant, you were expected to work (typically) 7 years to pay off the cost to bring you to this new country of opportunity. And, of course, slaves never saw the end of their work sentence, forced to work as long as the slave owner could wring anything out of them.

The word employee didn't enter the English language until the first half of the 19th century, a word that was largely unnecessary to describe the rare arrangements that looked anything like modern employment.

The industrial economy didn't much change the notion that work essentially meant that your employer owned your time. The factory owner needed someone to work a 12-hour (or, later, 8-hour) shift, as did the store owner. Employees were hired to work shifts and paid by the day, hour or month.
Weirdly, one of the terms often used for pay was compensation, as if everyone involved knew that employment was a compensation for lost time. (What did we call time outside of work? Free time, a term that simultaneously referred to the fact was one free to do as she wanted and also that you were spending this time without compensation.)

The information economy began to change this. Stock options at startups became more common and workweeks became longer and more erratic. Startups prided themselves on all-nighters leading up to product releases and employees who were granted stock options made considerably more than any reasonable salary would grant. (Microsoft stock ownership created 3 billionaires and an estimated 12,000 millionaires among its employees.) In this world of startups the tight link between time and pay was loosened. Someone who was part of a team that created great value would be hugely compensated. If you were part of a team that failed to create much value, your stock options might be worth nothing. And how did you get rich? By having a lot of shares. You were sharing in the wealth you helped to create.

Early in the pandemic when millions were sent home to work remotely, I heard of employers who were taking pictures every couple of minutes to confirm that the employee was “at work,” sitting at their monitor. My immediate thought was, Those supervisors don’t have a clue how those employees are adding value so they are instead measuring time spent sitting at a computer.

By some estimates, about one quarter of employees now work some portion of their workweek remotely, up from about 5% before the pandemic. It is more difficult to know whether such employees are putting in 40 hours, 4 hours, or 80 hours a week. Which is to say, it is more difficult to pay them for their time, the default compensation we’ve had since the days of slaves and indentured servants.

I rather optimistically think this will result in a win for employers and employees alike. Why? Given you can’t hold someone accountable just for showing up, you need to get clearer about how they are adding value. Instead of them casually accepting a task assignment of dubious value that nonetheless results in their getting a paycheck at the end of the month, they and their managers / employers are going to spend more time thinking about and defining how tasks add value and (probably defaulting to) some fair split between what portion of that value goes to the employee as pay and what portion goes to the company to cover fixed costs and generate profits to be distributed to shareholders.

I think this change in how we work will accelerate the move away from compensating you for your time and will increasingly move towards value sharing, making employees partners in the larger endeavor of creating value. This will increasingly mean that your time is yours to manage as you choose and the value you create will be something shared with you, your company and your customers. It may be turn out to be one of the more curiously cool things to come out of our response to this, the first post-worldwide web pandemic.

15 November 2022

Trump's Futile 2024 Run for the Presidency

Trump announced his run for president today.

We will soon see whether Republicans have become less gullible and Democrats less timid. If they have, Trump will be in jail when the next president is sworn in. If not he'll merely lose his election and depress votes for other Republican candidates, threatening to do for the Republican Party at the national level what has already happened to the Republican Party within California. And of course if he loses the primary to someone like DeSantis he will run as a third-party candidate and completely derail Republican chances in 2024, blowing up the party to salve his wounded ego.

Nothing illustrates the arc of the Republican Party better than it starting with President Lincoln who governed with such careful brilliance and ending with President Trump who is such a reckless idiot.

I had a number of early Trump supporters tell me that one reason they loved him is because he is a billionaire and doesn't need their money. And of course Donald has never made more money than he has in fund raising from these same people. Trump's candidacy will garner him a boatload of money. And in his mind, as long as he gets money and attention, he's already a winner. The GOP - even our country - was never more than just a prop in his oddly chaotic reality TV show of a political career, his quest for power destined to go down as history's most desperately tragicomic compensation for erectile dysfunction.

09 November 2022

Increased Life Expectancy Has Slowed Political Change

Increased life expectancy and lower birthrates have slowed political change.

Ronald Inglehart (who died just last year) compiled an enormous database tracking social change across dozens of countries. For instance, in one country in one year, the prevailing belief is that immigrants should have no right to jobs and homosexuals no right to life and then - a few generations later - the majority swings to the belief that immigrants have as much right to jobs as native born and that everyone has the right to marry who they love, regardless of race, religion or orientation. His database suggests that we change over time but that is misleading. As it turns out, societies change over time because people with antiquated beliefs die out to be replaced at the polls by their grandkids with more modern beliefs. Societies change but - after about 20 or 25 - people don't. As we live longer and have fewer kids, that means the pace of social change slows.

Republicans have likely gained control of the House and possibly the Senate in this Nov 2022 election. (Since 1969, control of House, Senate and White House has been divided about 70% of the time, so this is the post-Woodstock norm.)

Young voters 18 to 29 voted Democratic by 63-35% in the 8-Nov-22 election. Life expectancy was 47 in 1900. By 2000 it had hit 77. If life expectancy were still 47, this overwhelming turnout of young voters for Democrats would mean a landslide. (And would mean people 29 were "middle-aged" rather than young.) Now it is just a nudge because so many elderly voters cancel out the youths. Change is slowed because individuals don't change and we all live longer than we did a century ago.

And on that note, Chuck Grassley won re-election as the Republican Senator from Iowa and will be serving for 6 more years. And a good thing, too. I mean, if you're 89, who else is going to hire you?

04 November 2022

It's Donald's (Delusional) Party Now

As far as I know, not a single one of my Republican friends has denounced Donald. That puzzles me.

Like a toddler on his third line of coke, Trump insists that he won the last election. Even everyday Republicans insist that it is better to assuage his hurt feelings than to protect our democracy. Trump. A reality TV star who lost hundreds of millions of dollars and failed in all of his ventures until he took a TV role playing a successful businessman. (How big a failure? From the mid-1980s to mid-1990s he lost $1.2 billion. Year after year his losses were more than that of any other American. He was - literally - America's biggest loser while projecting an image as a successful business mogul. Sad.) He convinced a lot of Americans he won at business last century. And then he convinced a lot of Americans that he won an election in 2020. The word you're looking for is con man.

In 2020 he actually won in the former confederacy by 3 million votes but lost in the rest of the country by 10 million votes. The word you're looking for is loser.

The Republican Party is his now and a lot of Americans are thrilled with that. But there is a real problem with aligning with leaders who deny reality, who insist that you share their delusions. Look at North Korea, for instance, where everyone is aligned with Kim Jong Un's fantasy about the the world and his place in it. It takes the North Koreans all year to make as much as South Koreans make by mid-January. Delusions, like drugs, may make you feel warm and cozy but they actually make your reality worse, not better.

On a related note, a huge swath of Americans believe that a secret cabal is controlling the government. If you're in that group - and there is apparently a 44% chance you are - you may want to do a little soul searching about your preference for delusion over simply confronting reality.

29 October 2022

The Attack on Pelosi and the Stark Contrast Between Where Republicans and Democrats Turn for Leadership (Comparing Kentucky and San Francisco)

An intruder broke into Nancy Pelosi's home yesterday to attack her. Her husband was violently assaulted and has had surgery to repair a skull fracture.

Radicals on the right paint San Francisco as a socialist dystopia and see House Leader Pelosi as one of the reasons that California is such a hellscape. I still marvel at the levels of ignorance required to label San Francisco as socialist. Republicans' answer to Pelosi's congressional leadership is Mitch McConnell, a senator from Kentucky. It's worth comparing Kentucky and San Francisco to get an idea of the sorts of communities from which Democrats and Republicans draw their leadership, and what they hold up as models that deserve to be emulated.

No place on the planet receives more venture capital per person than San Francisco. Venture capital. Arguably the most disruptive, lucrative, and “capitalist” kind of capital in the world. San Francisco gets an average of $75,000 per resident in venture capital in 2021. Kentucky? It got just $44. San Francisco gets about 1,700X more venture capital per resident than Kentucky.

In large part because of this, San Francisco's per capita GDP is nearly 5X what Kentucky's is, $247,000 per resident compared to Kentucky's $53,000. Profits, rents, capital gains and other returns to assets coupled with their monthly salaries makes the average San Franciscan much more affluent than the average person in Kentucky.

This level of innovation and wealth creation attracts people from all over the world and leads to a level of diversity that is stark contrast to Kentucky. People in San Francisco are roughly 8X more likely to speak some language other than English in the home and to be foreign born. Firms are 4X more likely to be owned by a minority.

The right is not threatened by San Francisco being socialist. It is not socialist but is arguably the most dynamic, capitalist community in the world. San Francisco has created a culture that depends on disruption and invention, entrepreneurship and innovation. The right’s value for tradition is so strong that it sees the level of affluence and progress that follows from this disruption as threatening rather than as something to emulate, even to the point of violently rejecting it. The communities from which Democrats and Republicans draw their congressional leaders could not be in starker contrast. Republicans see this level of disruption and progress as a threat. Democrats see it as something to emulate which is why they have continued to make Nancy Pelosi their congressional leader.

06 October 2022

The Most Defining Thing About a Community: Zero or Variable Sum Worldviews

The biggest difference in worldviews seems to be the difference between zero-sum and variable-sum. If your worldview is zero-sum, you believe any gain I make comes at your expense. If your worldview is variable-sum, you are open to the possibility that we both can do better (or worse).
Variable-sum suggests that if we miss on creating opportunity for that kid from a poor neighborhood, we all do worse. He's either creating value for all of us and everyone does better because he is doing better or he is not and we're all doing worse.

Zero-sum suggests that if that kid comes across a border or leaves a bad neighborhood to get a job, it'll be stolen from us. The only way he gets ahead is from us falling behind.

In 1980, the acceptance rate at UCLA was about 75%.
Today it is close to 10%.

We even have a zero-sum worldview when it comes to education, to knowledge, to learning - domains that are so demonstrably variable-sum as to make them the perfect examples of variable sum. If you give me a dollar and I give you a dollar, we leave the exchange no better. If you give me an idea and I give you an idea, we might both be better off. (Or worse off. It could be that we exchange really dumb ideas. This is, of course, the domain of variable-sum.)

We need to do better at making people's lives better. The simplest predictor of future returns is present investments. Any community that wants to prosper has to look for reasons to invest more, not less. We could start with increasing the capacity of our great public universities, making them tools for more young people to create a better future. Because when we leave some young adult's potential untapped it reduces the potential of all of us.

One of the most curious consequences of realizing that you live in a variable sum world? The distinction between selfish and selfless begins to blur. We have to make lives better for other people to make our own lives better. It's a fairly cool reality we've gotten ourselves into.

04 October 2022

2 Major Problems With Musk Owning Twitter

Elon Musk is moving ahead on his purchase of Twitter.

I have 2 problems with that.

1. This means he'll be playing CEO for 5 companies. How I imagine his schedule:
Monday: Tesla
Tuesday: Twitter
Wednesday: SpaceX
Thursday: Neuralink
Friday: Boring Company
Saturday and Sunday: spends time with his 9 kids.

2. Musk has promised to bring Trump back to Twitter. Musk is a free speech guy who doesn't see any need for managing content. A community has a lot in common with individuals. If you maximize for work or money or fitness or socializing or religious piety or relaxing you'll have a lousy life. Life is best when you have the good sense to tamp down any and all of those, alternating what you subordinate to at different times so that your life isn't taken over by any one of the pieces of your life. Any system needs to be subordinated to the goals of the whole system, not one part of it, whether that system is a life or a community. A community needs free speech but to pretend that we should subordinate every other community goal to it is silly. The consequence of abuses from misinformation campaigns, say, or slander or deceit or misleading advertisements or blatant lies is to subordinate too many other good things to an ideal that may hold in some Platonic ideal of a community but don't hold in some Pragmatic ideal of a real community. Musk owning Twitter raises the odds that the US will give way to plutocracy because free speech is a lie in this regard: in an age of platforms, amplification and mass media, speech is NOT free. The more money you have to spread your message, the more it will be believed. Elon's net worth is greater than about 150 countries' GDP. To pretend that his "free" speech has no more influence than mine or yours suggests a high degree of self delusion.

16 September 2022

Trump is the Only Post WWII President to Hold Steady the Portion of American Workers in Manufacturing - Even Though (As With Nearly Every Other GOP President) the Number in Mfg. Dropped

Trump is unique among presidents since FDR.

Under FDR, the portion of workers in manufacturing rose dramatically: from 30.3% to 37.0%. Since then, the portion of workers in manufacturing has dropped under every president. Except Trump. When Trump began his presidency, manufacturing workers were 8.5% of the workforce. When his presidency ended, manufacturing workers were 8.5% of the workforce. 

Curiously, though, the number of Americans working in manufacturing dropped by 182,000 during Trump's presidency.

In Biden's first 19 months in office, the percentage of the workforce in manufacturing has dropped from 8.5% to 8.4%. By contrast, though, the number of Americans working in manufacturing has gone up by 668,000.

In this the two presidents are similar to others in their party.

The number of workers in manufacturing rose under every Democratic president from FDR on - except for Obama. (The number fell 195,000 during Obama's presidency.)

By contrast, the number of workers in manufacturing fell under every Republican president after FDR - except for Nixon. (The number rose 138,000 during his presidency.) 

Just as with farming before it, the portion of Americans working in manufacturing has steadily gone down since the build up of armaments during World War II. It will be interesting to see if Biden can match Trump's accomplishment of holding the percentage steady. 

16 August 2022

Four Books That Shaped My Worldview

Four books that shaped my worldview.

Robert Wright's Nonzero
We can play zero-sum games in which every win comes from someone else's loss or play variable-sum games where the sum of what we win varies. Our modern world is variable sum and we can all lose, win or lose big, most win and some lose, some win and most lose, etc. In my old age I think one of the most defining things about a group or individual is whether they believe the world is zero-sum or variable-sum.

W. Edwards Deming's New Economics
Packed with insights but for me the biggest take away is that you can either focus on measuring how people are doing within the current system (from factory floor to classroom) or focus on measuring how well the system is doing at helping people to realize their potential. Deming's advocacy for getting rid of grades and instead nurturing intrinsic motivation feels more and not less important to me as I get older.

William Deci's Why We Do What We Do
Deci offers three models for parents, managers, teachers or political leaders: control, abandon, or autonomy supportive.
Control defines process and outcomes for your child, student, employee, or citizen.
Abandonment leaves them free but unsupported.
Autonomy supportive supports them to the point of autonomy, teaching, coaching and sharing what you know to get them to the point of pursuing whatever goals they have.

Csikszentmihalyi's Flow
Csikszentmihalyi's exploration of how we get lost in work, play or conversations - become absorbed in doing - left him convinced that a big key to happiness and productivity is attaining flow. I also loved his Evolving Self and at lunch one day asked him if it is fair to characterize Flow as about how to create engagement and Evolving Self about how to create meaning. He paused for a couple of minutes and then nodded. "Yes." Long pause. "Yes. That's a really good way to put it."

All of these are of a piece, it seems. Ultimately exploring the question of how we create the systems that let us realize our potential.

09 August 2022

The Most Interesting Question About Investing

There are at least two elements to personal investing.

The first is the most obvious: how to find investments that promise the most return for the least risk. Anyone who tells you they have a secret formula or shortcut for this is either lying to you or have only been investing for a few years. Still, it is valuable to look for clues and sort out signals from noise in this space. There is a ton that gets said and written about this. Pay attention to some of it from time to time. You might learn something. And stay humble. (And of course you don't have to do the humbling on your own. Investments will inevitably do it for you.)

The other element of investing might be even more fascinating, though. When you invest you are buying futures. Obviously you are trying to pay, say, $100 for $200 in a year or a decade. You are hoping to buy a future that gives you more money than you have now, money enough that you don't have to work at 75 (or maybe you're shooting for 45). But beyond the personal future you're trying to buy, there is the question of what collective future you're trying to buy. If you buy stock in a company that is making flying cars, you are paying for that future. It may fail to materialize but that's the future you're buying, a future where people can fly around as easily as they drive around. If you buy stock in a company that is leveraging mRNA into new cures, that is the future you're trying to buy. Your investments could be an answer to the question of what kind of future you want to subsidize or accelerate.

If you could buy the future, what kind of future would you buy? That's an interesting conversation to have with your kids. Or even your neighbors' kids.