For further clues to where the trend towards disposable labor is headed, we turn to two recent pieces in the WSJ that were published, coincidentally, on the same day.
The first is an op-ed by Jody Greenstone Miller, founder and CEO of the Business Talent Group, a temp agency for the executive and managerial set. Ms. Miller declares that “the surge in temporary workers is not only good news for the economy, it’s the future of the 21st century labor market.” The ongoing conversion of all kinds of worker to perma-temps is simply the “latest sign of our economy’s endless capacity for renewal and innovation.” She argues it’s good not only for firms but for individuals, who can exercise their talents without being restricted to one employer.
Ms. Miller may have a personal–we won’t say crass–reason for her exuberance: “Amid the worst recession in decades, our business is up 70%.” Yet we’re not inclined to dismiss her argument for this reason alone; as we’ll describe in another post, we actually find some aspects of it quite compelling.
For now we point the reader to a report in the same issue of the WSJ which describes a different kind of perma-temp existence than the one envisioned by Ms. Miller, one that may be characterized more often by exhaustion than by renewal.
We find the case of Marty Rasmussen, a former bank executive in California, especially poignant. He and his wife earned a combined income of more than $250,000 a year before he was laid off. Mr. Rasmussen has been reduced to selling furniture he used to make as a hobby. This new vocation has not paid as well as his earlier one, earning him just $11,000 last year. His wife also lost her job and now gets unemployment benefits.
We assume that Mr. Rasmussen is not fundamentally different from the kinds of “top business talent” advised by Ms. Miller, and can’t help wondering what he would make of her celebration of the “new relationship between talent and firms” exposed by this recession.
Un cálculo aproximado del valor de trabajo, por la compañera «Serve the People» de IRTR
(publicado originalmente el 30 de junio de 2005)
(monkeysmashesheaven.wordpress.com) (English)
Intentemos calcular el valor del trabajo abstracto mediano socialmente necesario. Este cálculo nos dará una idea de cuánto producen las personas y de quién es explotado.
Ya que casi toda la economía del mundo entero está integrado en una gigante estructura imperialista, se puede usar la teoría del valor-trabajo del compañero Marx para tasar el trabajo. El compañero Marx señaló que el trabajo es la sustancia del valor. Dijo que la cantidad de horas de trabajo abstracto mediano socialmente necesario para producir una mercancía — es decir el trabajo de rendimiento mediano para este tipo de trabajo, bajo las dadas condiciones — represente su valor. Entonces una hora de trabajo a la cosecha de chirivías se puede cambiar a su justo valor por una hora de montaje de lavadoras (si en ambos casos el trabajo es de rendimiento mediano).
En 2002 el PNB nominal del mundo entero fue 31,9 billones de dólares norteamerikkkanos. (1) Esta cifra represente todo lo que se produjo en el mundo, incluso servicios (que en general son sobrevalorados), en un período de un año. La población es aproximadamente 6400 millones. Supongamos que los 2/3 de la gente trabajan a tiempo completo para 2000 horas por año, como es típico en los e$tragos unidos. Entonces el valor del trabajo mediano es 7500$ por año, o 3,75$ por hora. (En realidad es un poco más, porque la población mundial fue un poco más baja en 2002 que hoy día.)
En otros textos he visto cálculos de la ONU que indican que el PNB nominal del mundo en 2005 es aproximadamente 36 billones de dólares. Según esta cifra, el valor de trabajo sería aproximadamente 8400$ por año, o 4,20$ por hora.
¿Qué significa eso? El salario mínimo en e$tragos unidos es 5,15$ por hora, y aún más en algunos estados y ciudades. Si el trabajo mediano vale 4,20$, aún los que ganen el salario mínimo reciben sueldos excesivos medianos de 23% aproximadamente. El salario mediano en e$tragos unidos está cerca de 18$ por hora, o casi 4 veces el valor del trabajo.
Este ejercicio muestra que es poco probable que quienquiera que trabajo legalmente en e$tragos unidos sea explotado. Al contrario, los trabajadores norteamerikkkanos reciben superganancias sacados del Tercer Mundo por los imperialistas y entonces se benefician de la explotación imperialista. También va por la mayoría de los países de Europa Occidental, cuyo salario mínimo es en general superior a ése de los e$tragos unidos.
Para rebatir esta afirmación, sería necesario probar que los trabajadores norteamerikkkanos producían más de lo mediano. En realidad es probable que producen *menos* del mediano internacional, ya que en el Tercer Mundo se trabaja generalmente con una intensidad muy superior.
Pero sí hay explotación en e$tragos unidos. Los obreros chinos empleados ilegalmente en los míseros talleres de la industria de la confección para 1,50$ por hora y los trabajadores mexicanos del campo empleados ilegalmente para tales salarios sí son explotados. Es posible que ciertos prisioneros son explotados también, aunque en este caso los cálculos son un poco más difíciles. Y quizás hay algunos estajanovistas aislados cuyo rendimiento sobrepasa tanto el mediano que se pueden considerar como explotados.
No obstante, es claro que la gran mayoría de los norteamerikkkanos no es explotada; es en efecto explotadora.
I just flew back from Miami, and boy, are my arms tired. But seriously. I loved the Super Bowl. The weather was great. The food was terrific. The mood was extraordinary, mostly due to the joyous, friendly, tipsy presence of the Who Dat Nation. At times it seemed like there were 100 Saints fans for every Colts fan. Maybe it was the proximity of Miami to the Big Easy. Maybe it was just the overwhelming feeling that it was time for New Orleans to have some good news. But even people from Indianapolis were saying “Who Dat?” to each other.
A word about “Who Dat?” For those who have been living in a cave in Waziristan, this is the greeting that Saints fans offer each other upon sighting of any sign of mutual fandom, like the wearing of a Fleur de Lis or the painting of one’s body black and gold.
The great thing about “Who Dat?” is that if one is offered the salutation, one is absolutely, positively required to return it. It functions, in a very interesting way, like a Pavolovian response mechanism to those who are part of the gestalt. So, for instance, if you see two people wearing the colors engaged in a serious conversation about something totally and obviously peripheral, and you offer them a polite “Who Dat?”… they must respond. If you see someone tying their shoe and you walk by with a perfunctory “Who Dat?”… they must reply with an immediate “Who Dat?” It became kind of a fun parlor game, to walk up Collins Avenue and make people say “Who Dat?” or an occasional “Who Dat who say Who Dat?” like you were a doctor tapping on a patient’s knee with a little rubber hammer.
It turns out that the whole “Who Dat” thing dates to the 19th century, like much of the city that invented it. Those who are interested in the phenomenon as an anthropological phenomenon may read a very interesting article in Wikipedia about it here.
The best thing about the Who Dat Nation is how nice they all are. I’ve been to a lot of conventions, some of them in New Orleans, but also in Houston, Miami, Dallas and of course, Vegas, and this Super Bowl was, without question, the most pleasant gathering of happy drunkards I have ever attended. Some people get annoying or mean when they’ve been sopping up alcohol and shrimp for three consecutive days. Not this bunch. This was simply a gathering of excited, happy people bobbling around like kids saying “Who Dat?” to each other until game time.
The game, of course, was historically excellent. It was exciting up to the very last minute, which was awesome news for the NFL, the broadcasting industry which rotates showing the spectacle each year, and most of all for Madison Avenue, which poured a lot of money into the broadcast and was awarded for its confidence by the best ratings in more than 20 years, up 10% from the year before.
While that is news, there was also the added comfort of hearing the same wonderful catchphrases encapsule this totally unique event. I believe I will close with the great, well-polished phrases that come to mind this morning after, toasty chestnuts that may be used year after year to describe totally discrete events:
It was clear that both teams came to play;
Nobody left their A-game at home;
To go home victorious they had to play to win;
… because, as we all know, it’s a game of inches…
… and the game is won and lost on the line.
The winning team had to mix up the playbook, move the ball down the field one down at a time, and punch through the red zone, but most of all…
To win, you gotta play all four quarters.
In the end, the Super Bowl is not just an emotional exercise or a great sports event. It’s an economic phenomenon like no other, where people exchange money for products and services like no other. The size and ferocity of the financial exchange is a bit hard to fathom. Why is a beer suddenly worth $10? A tee-shirt for $33? A ticket for $6,000? Is it because one is sitting in the same space with Angelina and Brad, Adam Sandler and Jennifer Lopez? Attending an event being watched by more than 100 million people at that moment?
Or is it something more mysterious still? On the way out of the stadium, scruffy guys were paying $30-$50 for tickets to the event, which was now over, these tickets therefore worth absolutely nothing to those who had purchased them. I guess, in the end, things are worth what people will pay for them. Yet one more reason to distrust economics as a science, I think.
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Good morning! The last week before the whole of Asia takes a siesta for Chinese New Year next week.
Let’s pick up where we left off on Friday. Last week I spent a lot of time talking about inflation and the looming sovereign debt crises facing the globe. The two are, of course, related – given than there is much debt coming due which needs to be refinanced. Run-away inflation would result in significantly higher interest payments, something even economies like the US simply cannot afford. We are on a trajectory where projected interest payments on US Governement liabilities will soon become the single largest expenditure of the Federal Budget. When you repair a road or build a hospital or increase the salaries of teachers this is a “cost”, but on the other side of the ledger there are benefits to this which usually result in long term benefits to the economy. In fact, this type of Federal expenditure should not be considered as costs, they are investments. What do you get when you pay interest to foreign counterparts? Nothing, Zilch, Zip, Didly-squat.
You will recall I also made a throw-away comment on Friday about the “surprise” of downturns and how sell-offs like the one we have just seen rarely come at times we expect.
In my opinion, this is a typical sell-off in the markets. They never happen when you expect them to, do they? That’s because they are sparked by a sudden change in sentiment and sentiment is notoriously hard to predict. But because this is a psychological issue I can deduce two things:
There is not much substance to this sell-off
There is a lot of substance to this sell-off
If you see what I mean… or in other words: I have no idea why the markets have chosen the last 3 weeks to stage their sell-off. It seems to be 3 weeks like any other in my opinion. If anything Earnings looked to come in line with expectations and the GDP print was much higher than we thought it would be. It’s a funny old World.
While I was being a little facetious here, the truth is, there rarely seems to be logic behind the timing of market corrections. This is because, while underlying fundamental conditions could be argued, bears and economic pessimists are best known for how long they are “wrong” before they are “right”. The “trigger point” for a sell-off is largely psychological, which makes them incredibly difficult to predict and, as we know from the adage; the market can remain irrational much longer than you can remain liquid. This is often where the opinions of market participants diverge from economists (no surprises there). We must be humble enough to realize that there are things we do not always understand even in the market place – it is dangerous to follow economic theory right to the bitter end in a market dominated by a psychology which is continuously moving and evolving.
A physicist, a chemist, and an economist are shipwrecked on a desert island. Starving, they find a case of canned pork and beans on the beach, but they have no can opener. So, they hold a symposium on how to open the cans. The physicist goes first: “I’ve devised a physical solution. We find a pointed rock and propel it at the lid of the can at, say, 25 meters per second –”
The chemist breaks in: “No, I have a chemical solution: we heat the molecules of the contents to over 100 degrees Centigrade until the pressure builds to –”
The economist, condescension dripping from his voice, interrupts: “Gentlemen, gentlemen, I have a much more elegant solution. Assume we have a can opener…”
Macro Data to Watch:
Swiss Jobs
Markets
On the psychology of the markets still; Mauldin quotes Rogoff and Reinhart’s book “This Time It’s Different” where they try to make sense of market psychology – the crucial link between underlying economic fundamentals and market activity. This concept is important as it connects everything I’ve been saying about debt, federal deficits, sovereign creditworthiness, fiscal and monetary policy and how this relates to the psychology of the market place.
A Crisis of Confidence
Let’s lead off with a few quotes from This Time is Different, and then I’ll add some comments. Today I’ll focus on the theme of confidence, which runs throughout the entire book.
“But highly leveraged economies, particularly those in which continual rollover of short-term debt is sustained only by confidence in relatively illiquid underlying assets, seldom survive forever, particularly if leverage continues to grow unchecked.”
“If there is one common theme to the vast range of crises we consider in this book, it is that excessive debt accumulation, whether it be by the government, banks, corporations, or consumers, often poses greater systemic risks than it seems during a boom. Infusions of cash can make a government look like it is providing greater growth to its economy than it really is. Private sector borrowing binges can inflate housing and stock prices far beyond their long-run sustainable levels, and make banks seem more stable and profitable than they really are. Such large-scale debt buildups pose risks because they make an economy vulnerable to crises of confidence, particularly when debt is short term and needs to be constantly refinanced. Debt-fueled booms all too often provide false affirmation of a government’s policies, a financial institution’s ability to make outsized profits, or a country’s standard of living. Most of these booms end badly. Of course, debt instruments are crucial to all economies, ancient and modern, but balancing the risk and opportunities of debt is always a challenge, a challenge policy makers, investors, and ordinary citizens must never forget.”
And this is key. Read it twice (at least!):
“Perhaps more than anything else, failure to recognize the precariousness and fickleness of confidence-especially in cases in which large short-term debts need to be rolled over continuously-is the key factor that gives rise to the this-time-is-different syndrome. Highly indebted governments, banks, or corporations can seem to be merrily rolling along for an extended period, when bang!-confidence collapses, lenders disappear, and a crisis hits.
“Economic theory tells us that it is precisely the fickle nature of confidence, including its dependence on the public’s expectation of future events, that makes it so difficult to predict the timing of debt crises. High debt levels lead, in many mathematical economics models, to “multiple equilibria” in which the debt level might be sustained – or might not be. Economists do not have a terribly good idea of what kinds of events shift confidence and of how to concretely assess confidence vulnerability. What one does see, again and again, in the history of financial crises is that when an accident is waiting to happen, it eventually does. When countries become too deeply indebted, they are headed for trouble. When debt-fueled asset price explosions seem too good to be true, they probably are. But the exact timing can be very difficult to guess, and a crisis that seems imminent can sometimes take years to ignite.”
Mauldin then goes on to summarize:
The point is that complacency almost always ends suddenly. You just don’t slide gradually into a crisis, over years. It happens! All of a sudden there is a trigger event, and it is August of 2008. And the evidence in the book is that things go along fine until there is that crisis of confidence. There is no way to know when it will happen. There is no magic debt level, no magic drop in currencies, no percentage level of fiscal deficits, no single point where we can say “This is it.” It is different in different crises.
While it is difficult to predict the timing of such macro volatility, this type of environment never-the-less suits those who seek to opportunistically trade upon this market volatility when it occurs, in particular those portfolios which seek to maintain a “long volatility bias” for the next few years. This degree of indebtedness, inflation uncertainty and macro economic fundamentals inevitably leads to market which are hypersensitive to psychological flippancy. This is fodder for active and deliberately-focused long term volatility products.
The Dollar Rally continues as I expected, there is still some juice left in this I think. The Euro and GBP are getting smashed.
As investors sought safety the not only piled into Dollars, they fled from risk assets and ploughed into Euro Bonds. Graph of the day is a 2 year picture of the 5 year swap rate for European Bonds dropped to a 52 week low… actually that’s a 3 year low… errmm, actually 10 year low…sorry… I mean, the lowest level ever recorded. You’ll just get a measly 2.5% return on your investment in Euro Bonds and this is supposed to be an inflationary environment?
Source: Bloomberg
Global Stocks to Watch:
I think as the Dollar continues to rebound it’s worth revisiting those company revenues which will be affected by the Dollar rally. Obviously unhedged US exporters but also those who stand to gain such as unhedged exporters to the US in Europe.
The biggest movers on Friday were the banks and resource stocks in Europe and Japan. I’d expect a bit of a rebound given the late rally in the US, but I’ve been wrong before!
It would be odd if I let the week go by without mentioning the event that’s taking place this Sunday evening. We’ve all heard that you can’t call the event by it’s real name for fear of legal action. Most people throw out the generic term “the big game,” and I’ll take the same course of action in this post.
In the United States, this is one of the few remaining shared media experiences that we have each year. I’m sure sociologists have devoted many books to examining the impact of the big game on social interaction. There are plenty of people who view the big game as a holiday in the same vein as Thanksgiving, New Year’s Eve or Independence Day. The actual game is an excuse to get together and share food, beverages and friendship.
From a business perspective, we look at the big game as the single biggest “captive” audience for television advertising each year. The game’s reputation for outlandish or groundbreaking advertising led to as many people watching the game specifically for the advertising as for the action on the gridiron. Are you one of those who will tune in on Sunday “just for the ads”?
If so, I want you to do me a favor. The next day when you’re talking with friends or co-workers about the ads you watched the night before, think a little bit about which ones were your favorites. Then I want you to think about why these were your favorites and whether or not you’ll buy the product that appeared in the ad. At nearly $3 million for 30 seconds, the companies that bought the commercial time are certainly hoping for a return on their investment.
The ads you like and whether or not they translate into you purchasing a product may not be related at all. This was examined in detail by author Martin Lindstrom in his book Buyology: Truth and Lies About Why We Buy. I don’t need to spend $3 million to tell you that this summary could open you eyes about advertising and the actual brain functions that trigger our buying impulse.
Enjoy the big game, but after it’s over, check out what Lindstrom has to say. It might surprise you!
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RMR: A Message From Transport Canada
I just flew back from Miami, and boy, are my arms tired. But seriously. I loved the Super Bowl. The weather was great. The food was terrific. The mood was extraordinary, mostly due to the joyous, friendly, tipsy presence of the Who Dat Nation. At times it seemed like there were 100 Saints fans for every Colts fan. Maybe it was the proximity of Miami to the Big Easy. Maybe it was just the overwhelming feeling that it was time for New Orleans to have some good news. But even people from Indianapolis were saying “Who Dat?” to each other.