Unions Have No Shame

Nothing would inspire the werewolf to indefinitely forsake professional car-washes more quickly than to learn that they have been unionized. If the macro-circumstances weren't so pathetic, this NY Times article on the steel workers' union attempt to strong arm the dudes that wipe down your car into a union would be somewhat funny. However, it isn't funny and it is freakin' disgraceful. First of all, the fact that the steel workers are out there footing the bill to try and agitate the mostly illegal Mexicans workers who are the backbone of LA's car-washer workforce show how desperate and fakakta the unions have become. This is nothing more than a racketeering attempt to squeeze struggling small business owners.

The national unemployment rate is cresting 10%, consumers are afraid to spend, employers are terrified to invest capital in hiring, and the American public has the overall confidence of an awkward pubescent dweeb at his 8th grade sock hop. How out of touch can the unions really be? These guys have out-lived their structural usefulness in an era of heightened consumer awareness and expectations, and via their greed have clearly demonstrated that they are impediments to American recovery.

One car-wash operator states the obvious ramifications in the article.

"Mr. Crestall said the unionization push would hurt everyone. “Having a union will mean higher wages, and that will lead to higher prices,” he said. “That will mean fewer consumers coming to carwashes, and fewer jobs for these workers.”

This lame micro-push is just a regional symptom of larger flaws in our governance structure and understanding of how leverage markets to betterment of all participants. Who knows if this push will succeed or not, but believe me you, this wolf's wheels will never be touched by a union member. (This acknowledges that his wheels were born of union hands, but that was beyond my control.)

The irony will be when the proponents of real corporate social responsibility (CSR) understand how adversely unions impact cost and operating structures, and ditch de-couple themselves from out-dated left-wing ideology for the potential third-way benefits that the concept of CSR can offer.

The dumb desire to homogenize.

Downtown Nashville will soon become home to one of Jimmy Buffet's kitsch, but well liked Margaritaville cafes. Given the touristy vibe of lower Broadway this is a good thing. The werewolf has no problem with national restaurants chains. They succeed because they represent a consistency, familiarity, and comfort for segments of dining-out 

Nashville's daily newspaper, The Tennessean, has outdone itself in the department of stupid recommendations. Their website features a list of brain numbing chains that some twat thinks Nashville is missing. While there are a few chains that may merit consideration, the werewolf is flummoxed by the need for people to seek validations through homogenization. One of Nashville's most alluring features was how it had successfully resisted the homogenization that frequently possess other cities. Nashville is home to several decent local burger joints, Mexican restaurants, cafes, BBQ pits,  ice cream parlors, and bakeries, some of which the werewolf imagined had decent expansion and franchising potential themselves.

There is nothing wrong with wanting to diversify a local culinary scene with new editions, and having some of those new editions be chains. However, to think that the addition of the aforementioned chains is somehow validating and a source of credibility, well that is just tragically vanilla-esque and boring. Over-reliance of homogenization runs the risk of dampening the very features that make a city like Nashville such a gem. I guess it begs the question, is homogenization a sign of success and prominence? If so, where is the optimal balance achieved?

Barone - Unions Bleed Taxpayers

Michael Barone pens another superb piece on the economic hurdles imposed by unions on taxpayers, consumers, and business. Some very alarming trends are emerging. The article points out that private-sector union ranks are collapsing (a good thing), yet more than a third of public-sector employees are now unionized ( a scary factoid). Unions are no longer stewards of decent wages, improved workplace conditions, and agents of disenfranchised stakeholders. They are the new entitled fat-cats that have been very effective at eroding America's competitive advantage in key industrial and manufacturing sectors. From a sustainability and corporate responsibility perspective their needs to be an honest assessment of the costs they incur on all of us. Here are some well articulated highlights on impact of unions on the auto industry from Barone's article.

"Private-sector unionism is adversarial. Economic studies show that such unions do extract premium wages and benefits from employers. But that puts employers at a competitive disadvantage. Back in the 1950s, the Big Three auto companies dominated the industry and were at the top of the Fortune 500. Last year, General Motors and Chrysler went bankrupt and are now owned by the government and the UAW. Ford only barely escaped.

Adversarial unionism tends to produce rigid work rules that retard adaptation and innovation. We have had a three-decade experiment pitting UAW work rules against the flexible management of Japanese- and European-owned non-union auto firms.

The results are in. Yes, clueless management at the Detroit firms for years ignored problems with product quality and made bonehead investment mistakes. But adversarial unionism made it much, much harder for Detroit to produce high-quality vehicles than it was for non-unionized companies." 


With that kind of well documented legacy, do we really want to straddle our already obese and incompetent governmental infrastructure with a new bracket of unsustainable obligations? 

Social Security: Ticking time bomb

For the first time in 25 years, social security is paying out more than it receives in taxes.

"Don't look now. But even as the bank bailout is winding down, another huge bailout is starting, this time for the Social Security system.

A report from the Congressional Budget Office shows that for the first time in 25 years, Social Security is taking in less in taxes than it is spending on benefits."

Somehow the werewolf doubts this intergalactic Ponzi-scheme will survive to the point when he is ready to retire. People were rightly outraged by the likes of Bernie Madoff who ran a similar operation. Why does the government get a pass?

British Bureaucratic Idiocy: Quantifying Bravery

Tim Ripley of The Time of London has a scathing piece "Quota rules rob troops of medals" on how out-of-control government bureaucracies become slaves to quantifying the unquantifiable to the detriment of the people they are attempting to serve. In essence, White Hall has decided that a quota must be in place to recognize bravery on the battlefield in the case of British troops deployed in the very active combat theater of Afghanistan. Bravery, or courage under fire, is like laughter or love, it is something that can't be quantified based off of a rigid quota system and capped for allocation. Sure, rigorous standards must be established to meet a threshold to be recognized for bravery, but the werewolf thinks of few things as sinister as valuing courage through a rigid quota system. That sends a very perverse signal throughout the ranks and it is likely very demoralizing.

It also got the werewolf thinking that if governments instinctively want to set quotas for courage and bravery, imagine how treacherous they are when it comes to allocating the scarce resources of a health care system. Another reason for the United States to avoid a nationalized health care system like herpes from a crack-house hooker. Once you get it, it sticks with you forever, and you never treat or value life with the same dignity.

Loving husband beats wife!

This Google news image of a Reuters headline is courtesy of Instapundit. It highlights the inherent bias of journalists, especially when covering politics. People aren't stupid, but reporters seem to be. As long as coverage is conducted like this, the integrity of journalism will be under fire. Could a headline be more contradictory?

The exemplified bias has contributed to the segmentation of the media/news industry and eroded the profits of old media outlets, and allowed entities like Fox News to not only be economically viable, but to thrive. From a consumer perspective, the creation of choices is good and healthy. The werewolf's only complaint is that the legacy media still pretends that its rank and file are not biased, yet the headlines and tone of the above article prove the exact opposite. Will they ever learn?

Teaching econ is a full contact sport: Meet Owen Professor Luke Froeb

Luke Froeb is the man! Despite being a goofy academic, with a tragically unkempt sense of style, Luke Froeb was a highlight of the werewolf's business school experience. This little promotional featurette from Owen barely skims the surface of Froeb's addictively caustic, yet effective teaching style.

Froeb's blunt personal style, in your face attitude, and take-no-prisoners approach not only made his Managerial Economics class provocative and challenging, but also helped drive the key take-aways home in a stark and memorable fashion. Like the Yin and the Yang, his abrasiveness is balanced by his talent for being appropriately self-deprecating. He's a real gem of an instructor and memories of his classroom will stick with the werewolf for the foreseeable future.

The werewolf has always enjoyed the themes of economics, and the casual informal pursuit of it, but was always disappointed by how poorly the subject had been taught while he was an undergraduate. If the field had more professors like Luke Froeb, he thinks students would be more drawn to it.

Raise your Glass to Gov. McDonnell: Virginia is For (Liquor) Lovers!: The case to privatize booze sales.

Some things speak for themselves. Great move by Governor McDonnell.

The werewolf was in a Virginia ABC last fall and was shocked by how poor the wine and liquor selection were. Needless to say, the werewolf and his compatriots went back into DC to procure the much needed swill to get them through the evening.

That being said, $17K for Scotch! Talk about diminishing returns. Yowza.

The no-fun crowd across the pond.

Via The Economist, there is a movement currently afoot in the United Kingdom to legislate price floors for discount alcohol. In an attempt to "save lives," (that's the worst lie these people will ever tell you, it's all about power and control) they are considering mandating a price increase for bottom-shelf booze by more than a factor of three, in order to curb the consumption of the bottom-shelf booze by increasing the acquisition threshold. What ignorant sluts!

Firstly, this is highly punitive against low-income earners. Why limit their access to something they enjoy? It seems highly elitist and classist. This law will not change middle and high income earner consumption patterns. The werewolf firmly believes that all decent citizens of any civilized nation should have access to alcohol. It's a human right.

Secondly, this assumes that these people whom they are maliciously targeting will be dissuaded by the new cost barrier. They are likely to reallocate the funds from elsewhere in their budget and switch to a mid-tier brand to consume at the same rate. Being a hard drinker is like being a smoker, you'll find ways to support your habit. Additionally, it may give rise to home-brewing or other alternatives. It may even give rise to a small black market for the current inventory to be moved. Therefor nothing has been achieved except anti-poor people taxes being passed in the name of do-gooderism.

Thirdly, it targets the manufacturers of cheap swill. What have they done wrong other than find and fulfill a market need? While the bottom shelfers get hammered, other producers of mid and higher shelf brands and products may experience an influx of new consumers as the consumption hierarchy realigns itself. It will also likely impact retailers, as the ones who moved the cheap stuff in volume will likely see their primary market vanish. It is a perverse meddling in the market, that will benefit some producers at the expense of others, while sodomizing low-income earners. Where's the justice in that?

London prepares to "hoist with own petard."

There is irony in this Daily Telegraph article about a pending skirmish between London's boy-wonder Mayor, Boris Johnson, and Labour's Treasury Select Committee, a.k.a., the taxmen. As the financial downturn has crushed major western financial centers like New York, London, Hong Kong, Chicago, Geneva, and Zurich, governments have experienced sharp reductions in tax revenues as jobs vanished. It's the natural order of things. However, this clash between Johnson and the taxmen could have some interesting implications for the full recovery of London.

The taxmen want to target wealthy bankers, by imposing a windfall tax of 50% on bonuses in excess of £25,000(about $44,800). While this is estimated to impact between 9,000-10,000 bankers in London, the long-term impact could be devastating to London's financial service sector recovery. Dropping aside the odious elements of class warfare and populist exploitation that are partially fueling Labour's rationale, the werewolf is shocked that the British government is seriously picking a fight on this issue. This sends a clear signal to all financial service employers that the British government isn't serious about recovery and could potentially prolong London's downturn by compelling bankers to do business somewhere else. Recall, that London's primary business is financial services. (Could you imagine Hollywood taxing all actors an extra 50%) Is the deliberate hamstringing of your long term prospects worth a brief spike in revenue collection? For the werewolf, it boils down to the alignment of long-term versus short-term incentives. The self destructive desire to score short term points by destroying long term prospects, leaves him completely flummoxed. London is slaughtering the cow for a sirloin tonight, but is forgetting it will lose the cow's precious milk flow, and it'll be thirsty for a long time to come.

He feels that for too long, most decisions have been predicated on short-term considerations, including those decisions that laid the foundation for the current financial predicament. When leadership jobs vanish, they are hard, if not impossible to recreate. If there is a further exodus of London's bankers to New York, Hong Kong, Zurich, or wherever, a decent amount of capital will have been committed to locating personnel in those new locales, thus increasing costs for a potential return to London. A bad cycle will have been initiated. Wouldn't this be the time to make London as attractive as ever, to retain it's position as a pack leader in financial services? Because whoever makes it to the top of the mountain tomorrow, will fight to retain their perch.

Three cheers to Mayor Johnson for looking at the long-term and thinking about London's tomorrow, rather than trying to fight yesterday's class war. Here's to hoping that long-term thinking returns to the decision making process sometime soon. The werewolf doesn't want to be in exile forever.

Saab-story Saga Continues...

The reporters at the Daily Telegraph, have an interesting story about the latest potential development of GM's neglected Swedish brand, Saab. Despite proclamations of Saab's pending doom, and the inability to find a proper suitor to acquire the brand, it looks like there is a slight chance of salvation via F1 racing guru and bizarre billionaire eccentric, Bernie Ecclestone, and a Luxembourg based private equity concern. As a taxpayer with a forced equity interest in GM, the werewolf hopes our government is able to salvage some sort of value from this neglected GM division, as GM is already getting hosed with write-offs by shuttering Saturn and Pontiac, not to mention the disgrace status of its brand equity. (That's a whole other can-of-worms, the long term viability of the GM's brand and business)

This leads the werewolf to wonder, given the doom and gloom shrouding the Saab brand, along with GM and Washington's complete incompetence managing the enterprise, how does a prospective buyer attach an optimal value to Saab? The clock is ticking before Saab goes bye-bye. As the werewolf types, it's being unwound and dismembered by financial advisors and management consultants. Therefore, the werewolf would think that the value erodes with each passing day. As a perspective buyer, would I get a better deal buying Saab's assets post-liquidation, for pennies on the dollar, including the naming rights, and starting the whole endeavor over from scratch, as opposed to acquiring all of the liabilities and baggage currently associated with the brand? There are dozen of financial and strategic concerns at play, both for GM and any potential suitor, yet, the perception that nails are be driven into the coffin, I would think strengthen any potential buyer to drive down the price, extremely weakening GM's hand, and giving suitors all of the leverage. The only play for GM is to try and get suitors into a bidding war with each, however, that seems highly unlikely at this point.

The fate of Saab was likely sealed years ago when GM shamelessly assimilated it into the heinously conformist and bland Detroit collective. However, there may be some interesting lessons on corporate valuation and both seller and purchaser behavior during Saab's death throws. The werewolf will be watching.

Addition: The werewolf would like to clarify some details around valuing an enterprise as it relates to this post. Traditional metrics include, comparables (the whole auto industry is getting squeezed at the moment, and Saab was a niche player, so that's not really helpful), projected earnings or discounted cash flow (normally several models could estimate these, but when you announce your exiting existence, this goes to zero), assets (Saab has these still, but the inventory isn't moving, and who wants a bunch of pampered unionized Nordic workers?), Market value (GM is such a charlie foxtrot, that this method is murky and imprecise), plus there are the softer value points like technology, pipeline, etc. These can probably be factored and are likely the basis for the pending pricing, but again, as a potential suitor, the werewolf would think all the cards are in your hands. This goes to a secondary take-away from the werewolf's business school Corporate Valuation class (also known as Corpse Val), the bankers and advisory folks love to push corporate valuation as a science, but when you drill down to realities, such as the one Saab and GM are facing, corporation valuation begins to look less like a science and more like an art.

Amazon rises! Drowning the academic book racket.

Via Istapundit. Although several years too late for his own salvation, the werewolf's black heart get's a little lift when he reads about Amazon's frontal assault on the quasi-monopoly that university bookstores maintain on pricing for academic texts. During his undergraduate years at Emory, the werewolf would frequently enroll in reading heavy political science and history courses. He was also a fool, and frequently bought all of the books required for these courses. It wasn't until graduate school that he wised up a tad. He recalls certain bizarre texts of marginal content costing north of $100, only to have a salvage value of three dollars five months later when the course had ended. Yet, the pricing would promptly return to the triple digits for the marginal text at the start of the next semester. Talk about getting sodomized without the courtesy of some spit.

Being the sole distributor of these texts, the campus bookstore operations enjoyed the perverted pricing metrics because they weren't truly subjected to the efficiencies a market compels. Having options, and slightly more reasonable pricing metrics entered into the fray, should empower students everywhere. This unto itself is a small victory worthy of a smile.

Word of caution, just because texts are getting subjected to market pricing metrics doesn't mean that universities, in collusion with their bookstore partners, have found a new method to sodomize their students. Beware of "course packets." These vicious, and extremely expensive little buggers are a collection of relative articles, cases, and material drawn from a variety of sources and neatly bound into an expensive little packet. They change slightly with each academic year, so it is hard to re-use and create a secondary market for them. It is also a way to compel you to keep purchasing over-priced additions to advance your education and keep the bookstores in business. The upside is that these little buggers are very focused and deliberate in how they tie into the material of the course. Plus, they don't take up the same of amount of shelf-space or weigh as much. Here's a quick hat tip to the werewolf's alma mater, the Owen Graduate School of Management, for making nearly every required text available on reserve to its students in the library, and only compelling us to buy the dreaded course packets. It's the little things that make life bearable.

The Business of Governmnent.

Politico has an interesting article about the American public's thoughts on what to do with the portfolio of assets currently controlled by the US Government and how to use these assets to address America's considerable debt.

There is an interesting contrast embedded in the article regarding perceptions on the government's ownership of feasible business enterprises versus the ownership of land. According to the Rasmussen polling data used for the article,"57 percent think the government should sell Amtrak to private investors as soon as possible,"while "Seventy-six percent say the government should sell its ownership of the auto companies to private investors as soon as possible," however, "Fifty percent are against any government land sale" to pay-off the debt. What gives?

It's no secret that the government can't run or value a business.

However, what drives this perception that the government is an intrinsically superior steward of the land? Or perhaps, is it that land isn't a suitable asset to sell to pay off the debt? Do we cling to some romantic notion of Teddy Roosevelt birthing the national parks in all their glory and those would be the parcels of land up for grabs? For every national park, there are thousands of acres of nothingness or defunct military bases that may have higher values elsewhere than just sitting idle.

As an advocate of smaller government across the board, the werewolf views most, but not all, federal/state assets as worthy of consideration for sale to pursue both a reduction of debt and better internal management practices. I am thrilled that the public tends to be skeptical of government run businesses, but, still wonder where the line of demarcation exists between business and land.