Archive for the ‘General Business’ Category.

I Don't Think Gillette Would Complain If You Used Their Blades Without Their Razor

Apparently it is some kind of scandal surrounding Juicero, who I must admit I have never heard of until the recent spate of coverage.  In an emulation of Keurig, which I also know little about since I am not a coffee drinker, they have this juice-press thing that sells for $400 and that takes $7 proprietary bags of fruit or vegetables or whatever that the machine squeezes into juice.  Apparently, the scandal is that you can squeeze the bags just as well without the $400 juicer.

To which I answer:  duh.  I will bet my Harvard MBA that this company's business model really does not anticipate making most of its money from the machine.  The machine itself may actually not have any profit margin at all.  The bags at $7 certainly do.  The machine is the excuse for you to buy lots and lots of their high margin juice bags.  If you buy one a day for a year, that is over $2500 of revenue at a high margin vs. the original equipment sale of $400 at a low or no margin.  Telling this company their machine is not necessary is like telling Gillette you can use their $5 blades without having to use the razor that they pretty much give away anyway.

This is the joy of capitalism:  I absolutely guarantee you that within 60 days someone will be selling hand-squeezed juice bags for $5 each.

My Customer Service & Communication Advice to the United CEO

My company serves nearly 3 million visitors a year.  Though we always try for 100% satisfaction, some customers are going to slip through the cracks and be dissatisfied.   Each year, I get maybe 10 visitors who are severely dissatisfied, think they were mistreated, want to call their Congressman, are going to sue me, etc. I would say that these complaints eventually land on my desk but I actually look at every single comment card and letter and review that we get from customers and personally am involved with every single complaint of any sort.  Anyway, 10 or so are severe issues with a very upset customer that get to me without having been resolved in the field.

Folks who are involved in customer service will tell you that of these complaints, there will likely be a range of blame.  In some cases we screwed up.  In some cases no one screwed up but there was a mismatch of expectations.  And in some cases the customer was acting like a total asshole and was entirely to blame for the whole affair.  Sometimes it is hard to parse out after the fact which case is which -- something I wrote about here.  When these major complaints get to me, here is my guide to how I respond:

When we screw up:   "I am very sorry we did a poor job and you had a bad experience.  I am going to personally investigate immediately and we are going to make changes so this does not happen again -- but in the mean time, I want to refund your money and give you a certificate for some free camping so you can come back in the future and give us another chance to serve you well."

When the customer broke the rules and acted like a total jerk:   "I am very sorry we did a poor job and you had a bad experience.  I am going to personally investigate immediately and we are going to make changes so this does not happen again -- but in the mean time, I want to refund your money and give you a certificate for some free camping so you can come back in the future and give us another chance to serve you well."

When the exact situation is unclear:    "I am very sorry we did a poor job and you had a bad experience.  I am going to personally investigate immediately and we are going to make changes so this does not happen again -- but in the mean time, I want to refund your money and give you a certificate for some free camping so you can come back in the future and give us another chance to serve you well."

In any of these cases, if the customer describes poor behavior by my employees, I will tell them that "the behavior you are describing is absolutely unacceptable and, as I said, I am going to investigate personally as soon as we get off the phone."  You don't have to admit the behavior.  It is common that angry customers will dress up a story with a few added descriptions of outlandish employee behavior that may not actually be what happened.  You will try to figure that out later in the investigation.   But give the customer as much as you can.  If the customer said the employee used profanity, then it is perfectly fine to say "you are right, ms. customers, use of profanity by our employees is absolutely unacceptable" even if you suspect the employee did no such thing.

Giving this very positive response to customers who may have been bad actors or may be exaggerating can be hard because my local managers want to get very mad at me -- "Warren, don't you understand, he was a BAD customer.  You can't reward him for being a BAD customer."  To which I will say:  "First, you and I have not talked so I don't know yet if he was truly a BAD customer.  We may be the ones who screwed up.  But second, even if they were bad in some way, I am not rewarding a bad customer, I am trying to avoid a bad Tripadvisor review which will sit there on the Internet forever like a turd you can't flush.  And third, you seem to be trying to teach this customer a lesson, and make them realize they have been bad.  Even if the customer is really a jerk, this is never, ever ever ever going to happen.  You will never ever convince a jerk that they are a jerk, because almost by definition jerks last self-awareness, so stop trying."

We do a lot of training on this.  I tell folks all the time that if we have a customer like this who gets to me, I AM going to apologize and AM going to give them a refund and AM going to give them some free camping.  It doesn't mean that I am undermining the folks in the field, it means that this is smart business practice, particularly in this age of Internet reviews.  I tell my managers that they are letting their ego and pride stand in the way of having a customer walk away more satisfied, and if they refuse to check their ego, they are delegating the task of being humble upwards to me.  And over time, the good news is that most of my managers have gotten the message and have started emulating me so fewer and fewer of these ever reach me, they are solved much earlier in the field.

Postscript:  The first reaction I get from other business people is -- "don't you get taken advantage of and give out refunds to people who are just posturing about bad service just so they can get a refund?" And my answer is "yes".  But recognize that we have had over $100 million in revenues in this company since I started it, and we have perhaps paid $500 or $1000 is false refunds, or about .001% of revenues. I don't think .001% is very much to pay for the very high customer satisfaction rate we have.  But you would be surprised at the number of people that just can't let it go.  I don't know what this is called psychologically, but I will give another example.  We have a number of sites where the entrance station is not staffed on certain days and payment is on the honor system.  I have people who work for me who really get upset with me, telling me I simply HAVE to staff that gatehouse because some people are not paying.  You are being CHEATED!  I say that I am perfectly aware people are not paying, but it costs, all-in, probably $120-$150 to have a person sit in that gatehouse for 8 hours.  In that time perhaps 15 cars will come in.  At $6 apiece, even if every single one of them is cheating (and they do not, we have very good compliance in most honor system locations) I would be paying $150 to collect an extra $90 of revenue.  That would be insane.  But somehow the thought of lost revenue just makes some people crazy, no matter how expensive it is to chase it down.

Looking for Some Help -- Business Owners with 10-40 Employees

I am doing a paper on labor market regulation which I hope to get published through a prominent think tank.  I run a service business with about 300-400 near-minimum-wage employees, so I am familiar with a lot of labor regulation.  However, to make sure I am not missing something that may seem small to me but might be a big deal for a smaller company, I am looking to interview a few owners of small businesses.  I am looking for folks who run companies from 10-40 employees.  My preference is that most of the employees be average income or lower -- in other words, I don't really need to talk to the owners of 15-person hedge funds about overtime rules.

Interviews will be entirely private and no one will be quoted or referred to by name or even anonymously.  This is just background for me.  If you fit these criteria and are willing to help with a 30-minute phone interview, drop me an email at the contact link above.  I am out for a few days so you may not hear back for a week or so.

I Never Meet With Young Women Alone

Apparently Mike Pence is being criticized for refusing to meet alone with young women.  Seriously?  Because I have pretty much the exact same policy.   I never meet with young women one-on-one any more.  If I am interviewing a young woman for college, we meet in the Starbucks rather than my office.  I try to meet with sales people via the web rather than face-to-face, but if a young female sales person does show up at my door and I really must meet with them, we do it downstairs in the lobby and not in my office.

Am I being "dudely"?  ( I swear to God this is the world the Atlantic uses).  The explanation is simple, and can best be illustrated with this comment highlighted by Glen Reynolds:

1. Greatly expand definition of sexual harassment.
2. Make any accusation of sexual harassment career-ending.
3. Proclaim that women should always be believed when they accuse a man.
4. Complain that men won’t have 1-on-1 meetings with women.

Postscript:  To clarify, there is in Mike Pence's policy an element of avoiding temptation.  That is not my rational.  After nearly 30 years of testing, I find myself to be immune from temptation (at least in deed if not in thought).  This policy is pure self-protection.

Do Toner Cold Calls Really Sell Any Toner?

Every entrepreneur, I think, has his or her weird ticks.  One of mine is that I answer the main phone for our office here.  Granted, there are only a couple of us here (99.5% of our parks management people are actually in the parks, something that differentiates us from the government agencies we work with).  But answering the phone and sometimes directing calls is one way I sort of keep on top of what is going on.

Anyway, one result of this is I personally hear all the spam calls that come to our company,  of which calls to sell us merchant (ie credit card) processing services and to sell us toner are by far the most common.

Since I assume rational behavior by whatever firm is paying these people to make calls, I suppose they must get results.  But that amazes me.  Does some business after the 27th call asking to speak to the person who buys toner suddenly wake up and say, "Sure, send me some toner!" on the 28th call?  Ditto on merchant services.  In fact, though I put toner in the headline, merchant services amaze me even more as they are likely much closer to a buying company's core customer service processes than is printer toner.   Do people really buy based on cold calls?  I suppose they must.

It has been observed to me that this is just like the Nigerian email scam -- people are amazed folks still try this.  But in my mind it is different.  With an email scam, the costs are virtually zero so it costs nothing to spam zillions of people on the off chance one might be a hit.  For business sales, though, there has to be more of a cost to spam people.  (By the way, for this reason I proposed long ago that a tenth of a cent per email charge would end most spam and phishing.

My Favorite Description To Date of the Problems and Appeal of Trump

Scott Alexander has a great article on the problems with Trump's approach to economics.  I want to begin, though, with an analogy he uses at the end because it is the best single framework I have seen about understanding Trump's appeal:

Suppose you’re a hypercompetent billionaire in a decaying city, and you want to do something about the crime problem. What’s your best option? Maybe you could to donate money to law-enforcement, or after-school programs for at-risk teens, or urban renewal. Or you could urge your company full of engineering geniuses to invent new police tactics and better security systems. Or you could use your influence as a beloved celebrity to petition the government to pass laws which improve efficiency of the justice system.

Bruce Wayne decided to dress up in a bat costume and personally punch criminals. And we love him for it.

I worry that Trump’s plan for his administration is to dress up in a President costume and personally punch people we don’t like, while leaving policy to rot. And I worry it’s going to work.

Basically, Trump is acting like a small state governor, focusing his economic efforts on getting the Apple factory to come to town

So based on these two strategies, we are in for four years of sham Trump victories which look really convincing on a first glance. Every couple of weeks, until it gets boring, another company is going to say Trump convinced them to keep jobs in the United States. The total number of jobs saved this way will never be more than a tiny fraction of the jobs that could be saved by (eg) good economic policy, but nobody knows anything about economic policy and Trump will make sure everybody hears about Ford keeping jobs in the US. Every one of these victories will actively make the world worse, in the sense that these big companies will get taxpayer subsidies or favors they can call in later to distort government priorities, but nobody’s going to notice these either.

It seems appropriate to end this with a bit of Bastiat:

In the economic sphere an act, a habit, an institution, a law produces not only one effect, but a series of effects. Of these effects, the first alone is immediate; it appears simultaneously with its cause; it is seen. The other effects emerge only subsequently; they are not seen; we are fortunate if we foresee them.

There is only one difference between a bad economist and a good one: the bad economist confines himself to the visible effect; the good economist takes into account both the effect that can be seen and those effects that must be foreseen.

Yet this difference is tremendous; for it almost always happens that when the immediate consequence is favorable, the later consequences are disastrous, and vice versa. Whence it follows that the bad economist pursues a small present good that will be followed by a great evil to come, while the good economist pursues a great good to come, at the risk of a small present evil.

As Predicted By Coyote Over a Year Ago, Other Car Manufacturers Have An Emissions Cheating Problem

Back in November of 2015 I wrote:

I would be stunned if the Volkswagen emissions cheating is limited to Volkswagen.  Volkswagen is not unique -- Cat and I think Cummins were busted a while back for the same thing.  US automakers don't have a lot of exposure to diesels (except for pickup trucks) but my guess is that something similar was ubiquitous.

My thinking was that the Cat, Cummins, and VW cheating incidents all demonstrated that automakers had hit a wall on diesel emissions compliance -- the regulations had gone beyond what automakers could comply with and still provide consumers with an acceptable level of performance.

So we have this:

U.S. environmental regulators accused Fiat Chrysler Automobiles NV of using software that allowed illegal emissions in diesel-powered vehicles, the latest broadside in an unprecedented government crackdown on auto makers for alleged pollution transgressions.

The Environmental Protection Agency, days before the end of the Obama administration, delivered a violation notice to Fiat Chrysler accusing the auto maker of using illegal software that allowed 104,000 recent diesel-powered Jeep Grand Cherokee sport utilities and Ram pickup trucks to spew toxic emissions beyond legal limits. The affected vehicles have model years ranging between 2014 and 2016.

Regulatory compliance can be a royal pain in the *ss, but I comply with everything I know about and can figure out in my own business.  There just is no percentage in cheating.  Where regulation has made my business untenable, such as in certain parts of California, I have closed the affected parts of the business.

So if I see no good reason to cheat in my own business when the rents for doing so would flow directly into my own pocket, how in the hell do middle managers on a salary with little or no share in the marginal profitability gains of the company convince themselves to take these risks?

Why Is the Diet Coke Always Out of Stock?

As a purchaser of Diet Coke in the medium-sized bottles, I have come to notice that all the other Coke products are often fully stocked, but the Diet Coke is sold out.  In hotels, when I hit the vending machine, if one type of soda is sold out, it will be the Diet Coke.   Here is my grocery store this morning, with a sight I have seen many times at each of the three stores where I shop.  Note that there is full stocking of all the Coke SKU's with a huge gap where the Diet Coke should be.


I like business analysis conundrums like this, so I can think of three explanations:

  1. Observer bias:  It could be all the other SKU's are out of stock an equal amount of time, but since I am not looking for them I do not notice.  I will say that I began thinking about this years ago and over the last year I have tried to pay special attention each time to what is and isn't stocked, but this is still a very likely possibility.
  2. Diet Coke loses money:  It is possible that Diet Coke has the lowest margins for the local distributor.  They are committed to stocking it by Coca-Cola, but they intentionally keep the shelf stock short to minimize sales of a bad product for them.
  3. Lack of granularity in distributor stocking plans:  By this I mean, if a distributor uses one stocking plan and set of product ratios in all stores, it may be that certain products sell out in areas that are over-weighted towards liking that product.  My gut feel is that Diet Coke, vs. Coke, skews more suburban and affluent.   So if they stock to a single standard plan across Phoenix, there may not be enough Diet Coke inventory in suburban grocery stores and fancier hotel vending machines.  This is a sort of variation of the observer bias issue -- Coke has a stocking problem only in a few locations, but I preferentially shop in those locations.

The Problem With Parsing Feedback From Customers

We have a number of ways to collect customer feedback and I ensure that any negative score or comment we get from any source comes right to my email box so I can investigate personally.  We don't get that many negative comments, perhaps a couple a month (which is pretty good with over 2 million visitors last year).  The most common negative comment is something like "your employee was very rude to me."

This comment is a good illustration of how it can be hard to parse customer comments.  Because from my experience, the comment "your employee was rude to me" tends to mean one of two very different things:

  1. My employees were actually rude to the customer, requiring an immediate intervention on my part
  2. My employees were as patient and polite as can be expected, but were giving the customer an answer the customer did not want to hear (e.g. "you can't park on the grass, I need you to move your car.")

This year, I would say explanation #2 is in the lead by about 70%-30% over explanation 1.  As an operator of a public campground, we must enforce the rules set by the public agency.  We frequently encounter customers who simply do not like the rules and therefore consider the existence of the rules to be a violent aggression against them.  A great example is food storage.  In areas of high bear activity, it is important that customer properly store their food so as not to attract bears to the campground -- campers in these areas are given literature about food storage and our hosts come by to explain the rules and answer questions.  But there are folks who simply won't comply, and these folks frequently complain to me that my people are being rude.

Postscript: As an added bonus, I will give you one example of why businesses often tear their hair out over online reviews.  A year or so ago we got a Yelp review at a lakefront campground saying that the customer had been "lied to" because she was not allowed to use her jetskis in the lake.  I was surprised at this, since the no jetski rule is set in stone by our government partner and I thought we had made it pretty clear on the web site.  So I contacted the customer asking what we had done to mislead her.  She said that her dad promised her that she could jetski and we wouldn't let her so that is why she said we lied.   There are times in life when you just have to move on, and this seemed like one of them, so once I assured myself there was nothing we could do to correct errors in our web sites, I said "thanks for the feedback" and hung up.

Example of the Impact of Minimum Wages on Consumer Prices

I thought folks might be interested in a letter I just wrote to the US Forest Service.  I have left some of it out, but these are the guts of it.  As many of your know, we manage parks and campgrounds under concession contract for public entities.  As such, we typically must get changes to customer fees approved in advance by the agency.  This is a version of a letter we just wrote to a number of US Forest Service offices in California explaining the substantial increases to camping rates that must occur over the coming years to accommodate the new California minimum wage laws.

2017 Fee Proposal & Impact of California Minimum Wage Increases on Camping Rates

The purpose of this letter is to make you aware of the substantial effect that the recent increase in California minimum wages will have on use fees. I will get into details below, but in short the newly-legislated 50% increase in the state minimum wage is likely to increase our costs by about 22%, even ahead of inflation in other categories of expenses. Just to stay at parity and to avoid cuts in service, we (and other California concessionaires) are going to need substantial increases in fees over the next five years. Frankly, this does not make me very happy – our company will have to struggle with public resentment of the new fees without making an extra dollar in profit – but it is the reality we must face together. The only other alternative would be large cuts in service (e.g. bathroom cleaning frequency) which frankly I am not going to accept.

Background on the Minimum Wage Increase

California minimum wages have already risen over the last three years by 25% from $8 to $10 an hour. The new California law, which will apply to most concessionaires, demands the following timetable for minimum hourly wages (smaller companies with fewer employees than we have will have one extra year to comply):

2016: $10.00

2017: $10.50

2018: $11.00

2019: $12.00

2020: $13.00

2021: $14.00

2022: $15.00

Note that given the terms of other portions of labor law, these same sorts of percentage increases must trickle up to all managers and salaried employees in California as well.

Background on Concessionaire Cost Structures

Not surprisingly, as a labor-intensive service business, a substantial portion of concessionaire costs are directly tied to wage rates. The minimum wage increase will increase at least three categories of our costs:

  • Wages
  • Payroll taxes (which are calculated as a percentage of wages, so will go up by the same percentages as wages go up)
  • Workers compensation insurance premiums (which like payroll taxes are calculated as a percentage of wages and go up by the same percentage wages go up)

Looking at our financials for our California permits (we have three large permits in the Inyo NF and one in the Cleveland NF) these three categories make up 44% of our total costs.

Preliminary Estimated Fee Impacts

Let’s look, then, and how much our costs may rise between now and 2022.

For the labor and labor-related charges discussed above, we know that costs will rise 50% between now and 2022. A 50% price increase on 44% of our costs raises our total cost structure by 22% (0.5 * 0.44).

But all of our other costs will also continue to rise during this period by at least the national rate of inflation. It is very possible that these costs will increase faster in the future due to this minimum wage increase – for example, our waste disposal costs will almost certainly go up as the labor costs of waste disposal companies rise. For a starting point, we will assume 3% general inflation in 2016 and 2017 and 4% in the years after that. This would yield a 24% increase in the other 56% of our costs for an impact on our total costs of 13.4% (0.24*0.56). Combining these two effects, we can expect a total cost increase to operate campgrounds in California by 2022 of 35.4%.

Note that though we bid based on trying to earn a profit margin around 9%, our actual profit margin in the USFS campgrounds we operate in California has been between 3% and 7% of revenues (5% in 2013, 7% in 2014, 3% in 2015). There is simply no room in that margin to absorb a 35.4% cost increase. We are going to have to therefore seek fee increases over the next 6 years in the 35% range, or between $6 and $8 on the $18-$23 camping rates that currently obtain. This is about a dollar or year, or two dollars every other year.

Competitor Analysis

We understand that the USFS wants to justify fee increases based on market conditions. One problem we will have is that even though we don’t open until April or May at seasonal locations, we need to get fee approval the previous September or October. We fully expect private operators will have to pursue fee increases of a similar magnitude; however, they may not announce their new higher rates in time for our very early fee-setting process. This makes local competitive analysis misleading.

Fortunately, in California we have another large public campground provider, California State Parks (CSP), that has many of the same public service and land management goals as has the US Forest Service. They therefore make a very good comparison. While rates vary by park, CSP is typically charging $35 a night for a no-hook-up campsite in parks that are very comparable in their natural settings to USFS campgrounds.

We currently charge no more than $23 for a no-hook-up site in the USFS in California (both in the Inyo and Cleveland NF). Even with a $6 fee increase, we would still be offering no-hookup campsites at 17% lower cost than does the State of California today (and presumably even lower in 6 years given that CSP is likely to continue to increase its camping fees).

[Rest of the letter on exact fee recommendations and other contract issues omitted]

China Doesn't Kill American Jobs, Politicians Do

I am simply exhausted with the notion that seems to have taken over both political parties that trade with China is somehow the source of US economic woes.

Remember that voluntary trade can't happen unless both parties are benefiting from each trade.  Remember the masses of academic evidence that the (largely hard to see) benefits of trade in terms of lower costs and more choice tend to be greater than the (easier to see) job losses in a few trade-affected industries.  But even if none of that is compelling to you, consider that our trade deficit with China is just 2% of GDP.  It's almost a rounding error.

If politicians want to know why lower-skilled laborers struggle to find employment, they need to look past imports from China and Mexican immigration and look at their own policies that are making it more and more expensive for businesses to hire people in this country.   I have written about this many times before, but some of the most prominent include:

  • minimum wage laws, rising to $15 an hour in many parts of the country, and increasingly draconian overtime rules, both of which substantially raise the cost of hiring someone.
  • minimum benefit laws, including expensive health care requirements in Obamacare and a myriad of other state-level requirements such as mandatory paid sick leave or family leave
  • payroll taxes that act as sales taxes on labor  -- we understand that cigarette taxes are supposed to reduce cigarette purchases but don't understand that payroll taxes reduce purchases of labor?
  • employment regulations, such as chair laws and break laws in California, that make employing people more expensive and risky
  • employer liability laws, that make employers financially responsible for any knuckleheaded thing their employees do, even when these actions violate company policy (e.g. making racist or sexist statements)**
  • laws that make hiring far more risk, including those that limit the ability to do due diligence on potential employees (e.g. ban the box) and those that limit the ability of employers to fire poor performing employees.

And this is just employment law -- we could go on all day with regulations that make life difficult for lower income workers, such as the numerous laws that restrict the housing stock and drive up housing prices and rents for these same folks who are struggling to find a job.

Let's say you live in California.  Who has killed more jobs in your state -- China or the California legislature?  The answer is no contest.   The California legislature wins the job destruction race in a landslide.   While California's high-tech community enjoys a symbiotic relationship with China that has created immense wealth, the California legislature works overtime to make sure low-skilled workers in the state don't benefit.


**Postscript:  Of all the factors here, I won't say that this is the largest but I think it is the most underrated and least discussed.  But think about it.  If you are going to be personally financially libel for ignorant, insensitive, or uncouth remarks made by your employees, even when you have explicitly banned such behavior in company rules and don't personally tolerate it, how likely are you going to be to hire a high school dropout without a good work history to interact with customers?

Government, Arrogant Ignorance, and the Power of Incentives

As most of you know, my company operates parks on public lands, so I work with government agencies a lot.  Years ago, from this experience, I coined a term called "arrogant ignorance."  It comes from numerous times when government employees will be completely ignorant of some process, perhaps even their agency's own rules and procedures, but will fight to the death any suggestion that I might be able to enlighten them or that they are doing something wrong.

For a while, people had me believing that I had just rediscovered the Dunning–Kruger effect.  But I am now convinced that this is not the same as my "arrogant ignorance".  And the difference between the two highlights a key point about failure of government I have made for years, which is that government does a bad job not because the people are bad, but because it hires good (or at least average) people who have terrible incentives and information.

First, here is Dunning-Kruger per Wikipedia:

The Dunning–Kruger effect is a cognitive bias in which relatively unskilled persons suffer illusory superiority, mistakenly assessing their ability to be much higher than it really is. Dunning and Kruger attributed this bias to a metacognitive inability of the unskilled to recognize their own ineptitude and evaluate their own ability accurately.

Like most people, I see Dunning-Kruger all the time.  But I see it equally frequently in private and public settings.  I don't think it is necessarily unique to the public sphere, and may be over-represented there only to the extent that it is much harder to eliminate under-performers from public rather than private jobs, so they may tend to concentrated more in public positions.

But my concept of arrogant ignorance is not really a cognitive effect, I think, but rather a symptom of incentives.   The problem with most government jobs is that they have no service or output metrics so that they are instead judged mainly on conformance to procedure.  And even that is not quite correct, because most agencies I work with do not even have formal standards or quality review processes for their employees, at least below the executive level.

I want to take an aside here on incentives.  It is almost NEVER the case that an organization has no incentives or performance metrics.  Yes, it is frequently the case that they may not have clear written formal metrics and evaluations and incentives.  But every organization has informal, unwritten incentives.  Sometimes, even when there are written evaluation procedures, these informal incentives dominate.

Within government agencies, I think these informal incentives are what matter.  Here are a few of them:

  1. Don't ever get caught having not completed some important form or process step or having done some beauracratic function incorrectly
  2. Don't ever get caught not knowing something you are supposed to know in your job
  3. Don't ever say yes to something (a project, a permit, a program, whatever) that later generates controversy, especially if this controversy gets the attention of your boss's boss.
  4. Don't ever admit a mistake or weakness of any sort to someone outside the organization
  5. Don't ever do or support anything that would cause the agency's or department's budget to be cut or headcount to be reduced.

You ever wonder why government agencies say no to everything and make it impossible to do new things?  Its not necessarily ideology, it's their incentives.  They get little or no credit for approving something that works out well, but the walls come crashing down on them if they approve something that generates controversy.

So consider the situation of the young twenty-something woman across the desk from me at, say, the US Forest Service. She is probably reasonably bright, but has had absolutely no relevant training from the agency, because a bureaucracy will always prefer to allocate funds so that it has 50 untrained people rather than 40 well-trained people (maintaining headcount size will generally be prioritized over how well the organization performs on its mission).  So here is a young person with no training, who is probably completely out of her element because she studied forestry or environment science and desperately wanted to count wolves but now finds herself dumped into a job dealing with contracts for recreation and having to work with -- for God sakes -- for-profit companies like mine.

One program she has to manage is a moderately technical process for my paying my concession fees in-kind with maintenance services.  She has no idea how to do this.  So she takes her best guess from materials she has, but that guess is wrong.  But she then sticks to that answer and proceeds to defend it like its the Alamo.  I know the process backwards and forwards, have run national training sessions on it, have literally hundreds of contract-years of experience on it, but she refuses to acknowledge any suggestion I make that she may be wrong.  I coined the term years ago "arrogant ignorance" for this behavior, and I see it all the time.

But on deeper reflection, while it appears to be arrogance, what else could she do given her incentives?  She can't admit she doesn't know or wasn't trained (see #2 and #4 above).  She can't acknowledge that I might be able to help her (#4).  Having given an answer, she can't change it (#1).

You may think I am exaggerating -- how could people react so strongly to seemingly petty incentives.  But they do.  In my example above, this is probably her first job.   The government is the only employer she has known.  The confidence you might have to ignore these incentives to do the right thing likely come from jobs and experience that this woman has not had.

I will give you a real example.  One government contract manager asked us to spend $10,000 to do something, promising that the agency would reimburse me.  I told her that I had never heard of this type of spending being reimbursable, but she said we would be reimbursed.  So we did it.  Later, her boss's boss heard about the reimbursement and said it was not correct under the rules.  Eventually, our contract manager was challenged on it.  You know what she said?  She said our company spent the money without permission and that we were never promised reimbursement.  She sacrificed her honor out of the fear of #1 and #3 - the incentives were that powerful for her.  She knowingly lied and -- by the way - cost me personally $10,000 and a reprimand in our contract file.  When I called her afterwards and asked her, "what the hell?" -- she apologized to me in tears and said she just would be in too much trouble once her boss's boss was involved to admit she had authorized the expense.

So, I try to learn from this.   One thing, for example, I always do is ask myself when someone who works for me screws up, "Is this really my fault, for not training them well."  A surprising number of times, the answer is a reluctant, "yes".

Tesla and SolarCity: Two Drunks Propping Each Other Up

This is honestly one of the weirdest acquisition proposals I have seen in a long time:  Elon Musk's Tesla offers to buy Elon Musk's Solar City.

This makes zero business sense to me.    This is from the press release:

We would be the world’s only vertically integrated energy company offering end-to-end clean energy products to our customers. This would start with the car that you drive and the energy that you use to charge it, and would extend to how everything else in your home or business is powered. With your Model S, Model X, or Model 3, your solar panel system, and your Powerwall all in place, you would be able to deploy and consume energy in the most efficient and sustainable way possible, lowering your costs and minimizing your dependence on fossil fuels and the grid.

I am sure there are probably some hippy-dippy green types that nod their head and say that this is an amazing idea, but any business person is going to say this is madness.  It makes no more sense than to say GM should buy an oil production company.  These companies reach customers through different channels, they have completely different sales models, and people buy their products at completely different times and have no need to integrate these two purchases.  It is possible there may be some overlap in customers (virtue-signalling rich people) but you could get at this by having some joint marketing agreements, you don't need an acquisition.  Besides, probably the last thing that people's solar panels will ever be used for is charging cars, since cars tend to charge in the garage at night when solar isn't producing.

One might argue that some of the technologies are the same, and I suppose some of the battery and electricity management tech overlaps.  But again, a simple sourcing agreement or a battery JV would likely be sufficient.

So what do these companies share?  I can think of three things.

The first is Elon Musk.   When one sees a deal like this, one is immediately suspicious that there is some kind of game going on where the owner combines holding A with holding B and somehow in the combination ends up with more wealth.  This is a game conglomerates played in the 1960's -- you could create a lot of (paper) value if you had a high PE (stock price to earnings ratio) company and went around buying low PE companies, instantly creating paper wealth if you could buy their earnings cheap and then have them suddenly valued at your higher PE.   Its hard to guess if this sort of game is going on here, as neither company has earnings (or rather both lose a lot of money).   Further, I have no read on Mr. Musk's personal ethics.  If this were Donald Trump, we would all immediately be suspicious such a game was at play.

The second thing these two companies share is that they have business models based on consuming massive amounts of government subsidies.  They get subsidies directly (each by selling various sorts of tax credits or fuel economy credits to power companies and auto makers), they have both gotten sweetheart deals from governments for production facilities, and their customers get subsidized as well in the purchase.  However, while there certainly are economies of scale for cronyism (large companies have the pull to get the loot), I shudder to think that there might be even more for these two companies to grab if they were larger.

The third thing these two companies share is that they both have huge financing needs, are losing lots of money, and are burning through tons of cash.   And here I think is the real heart of this deal, and if I am right, we may be able to answer the question on Elon Musk's ethics.  While both companies are burning through cash and are constantly going out to the market for more money, Tesla still has a (not totally justified in my mind) fabulous reputation with investors** and people seem to be falling over themselves to throw money at it.  With Apple languishing and Google old news, there is no hipper, trendier company out there.   On the other hand, SolarCity is starting to suck wind.  A few months back JP Morgan downgraded the stock:

SolarCity is having trouble attracting new investors, as the company has launched and canceled programs and altered its accounting methods, JPMorgan wrote in a note, according to MarketWatch.

Additionally, some of SolarCity's lower-income customers could be at risk of "slow-pay or default in the event of an economic downturn," the firm continued.

...SolarCity's weaknesses include its generally high debt management risk, weak operating cash flow, generally disappointing historical performance in the stock itself and poor profit margins.

They are also seeing more competition from local contractors and, perhaps most worrisome for their business model, various government subsidies are being scaled back and many states are changing their power metering rules to pay customers only the wholesale rate, rather than the retail rate, for power they put back in the grid.  They have said in most of their annual reports as a risk that their business model likely would not be viable (if it could be called that even today) without current or higher levels of government subsidies.

I have no inside information here, but this is the best hypothesis I can put together for this deal.  SolarCity has huge cash needs to continue to grow at the same time its operating margins are shrinking (or getting more negative).  They are having trouble finding investors to provide the cash.  But hey!  Our Chairman Elon Musk is also Chairman of this other company called Tesla whom investors line up to invest in.  Maybe Tesla can be our investor!

The reason I call this two drunks propping each other up is that Tesla also is also burning cash like crazy.  It is OK for now as long as it has access to the capital markets, but if it suddenly lost that, Tesla would survive less than 6 months on what it has on hand.  Remember, SolarCity was a golden child just 3 years ago, just like Tesla is today.  Or if you really don't believe that high-flying companies that depend on access to the capital markets can go belly up in the snap of a finger when they lose their luster with investors, I have one word for you:  Enron.

There is a substantial minority of the investment community that thinks that Tesla's headed for chapter 11, even before taking on the SolarCity albatross.  Here is one academic paper.  Here is another such opinion.  Non-GAAP reporting has proliferated like a cancer among public companies, with so many creative non-GAAP numbers that I am not sure the Enron folks would go to jail nowadays.  Tesla is a master of this game.    Even if Tesla is not headed for chapter 11, the absolute last thing Tesla needs to be doing is taking on a new acquisition that burns a lot of cash, while simultaneously diluting their management focus.

When I watch SpaceX launches, I so want to love Elon Musk.  But I am increasingly convinced that this is a terrible deal, an insider game he is playing to try to keep one of his investments alive.  I am seldom a fan of most minority shareholder lawsuits, but if I were a minority shareholder of Tesla I would be suing to block this acquisition.

By the way, many investors must be reading this the same way, because SolarCity stock prices are up and Tesla stock prices are down (at lot) today.

Disclosure:  I have been short Tesla for a while.  I shorted SolarCity this morning when the acquisition was announced, after its price popped up.  I consider this merger announcement as the moral equivalent of announcing that SolarCity is in financial distress.  These investments are tiny, the equivalent of a bar bet rather than any substantial investment on my part.

**Footnote:  I have to say this every time -- The Model S is a great car.  I would love to have one, if Santa put it under the tree for me.  But just because they have one great product does not mean that the company will be a success or is a great investment or that it is worth massive amounts of my tax money in subsidies.

Appliances: Apparently the Last Bastion for Bricks and Mortar Retail

Sears is opening an all-appliance store:

Sears, which has been struggling financially due to falling sales, is opening a store that will be dedicated solely to the sale of appliances.

The retailer says that the 10,000 square foot store opening in Ft. Collins, Colorado on May 19th will be its first solely featuring appliances, the product category that has been one of its core businesses.  .

“Appliances is one of our best categories,’’ said Leena Munjal. senior vice president, customer experience and integrated retail, for Sears Holdings.  “We’re trying to figure out how you take the physical store and complement it with the online capability to make it a really powerful experience for our customers.’’

I essentially predicted this here several years ago:

 I see the same thing now at Best Buy, with workout equipment and other oddball products.  I told my son on a visit a year ago to Best Buy to expect to see the a larger appliance selection next time we visit.  He asked why, and I said "because Wal-Mart does not generally sell them, and not a lot of people buy their large appliances at Amazon."  Sure enough, you see more appliances nowadays.

And here:

But it probably was no accident that the article was illustrated with this picture:


What don't you see there?  CD's, DVD's, speakers, DVD players, computer games and most of the other stuff that used to make up a lot of Best Buy's floor space.  Because they have already been demolished by online retailers in those categories.   The picture above is of appliances, one of the few high dollar categories that has not migrated to the web.   Go to Best Buy and you will see appliances, health equipment, and TV's, all categories where bricks and mortar stores have some advantages over online.

This makes perfect sense, but don't tell me Best Buy is ready to take on the online retailers.  They are bobbing and weaving, ducking this competition wherever they can.

I wrote specifically about the Sears appliance business here

A Blast From My Childhood

Apparently, the sea monkey and x-ray glasses business empire is being fought over by several people.  I would have bet that the business did not exist any more, but apparently it still sells several million dollars a year of the little engineered brine shrimp.  This is a fascinating article throughout, both on the history of sea monkeys, the marketing genius that made it work, and the current legal fight.  Link via Tyler Cowen.

The Downside of Web/Cloud Enabled Devices (Including My Oddest Analogy of the Week)

Google's parent Alphabet is abandoning support for Revlov's Smart Home Hub (which they bought a while back).  In and of itself this part of an irritating strategy (pursued enthusiastically both by Alphabet and Apple) of identifying edgy new devices with enthusiastic user bases, buying them, and then shutting them down.   I was a SageTV fan and user back in the day until Google bought it and shut it down (as a potential competitor to GoogleTV and its other streaming products).  The bright side is that this pushed me to XBMC/KODI, which is better.  The dark side is that I am sure Google could easily write those guys a check and then they will be gone too.

Anyway, after SageTV was shut down by Google, I could still use the hardware and software, it just did not get improved or updated or supported any more.  But increasingly new electronic products are requiring some sort of cloud integration or online account activation.  To work, the product actually has to check in with the manufacturer's servers.  So what happens when those servers are shut down?

Alphabet-owned company Nest is going to pull the plug on the Revolv smart home hub and app on May 15, rendering the hardware unusable next month.

Just to be clear on how much of a big deal this is, the company isn't only out to stop support but to really disable the device and turn the hub into a $300 teardrop-shaped brick. How much does a pitchfork go for nowadays?

...Needless to say, existing users are outraged by the development, and they have very good reason to be so."When software and hardware are intertwined, does a warranty mean you stop supporting the hardware or does it mean that the manufacturer can intentionally disable it without consequence? Tony Fadell seems to believe the latter. Tony believes he has the right to reach into your home and pull the plug on your Nest products," Arlo Gilbert, CEO of Televero and formerly proud owner of a Revolv hub, says, emphasizing that "Google is intentionally bricking hardware that he owns."

Video game enthusiasts have worried about this for years, and have started to encounter this problem, as the new most-favored copyright protection scheme is to require an online account and an account-check each time the game is run.  They try to say the online component is adding value, and they do a few things like leader boards and achievements, but the primary rational is copy protection.    Personally I find this generally easier to work with than other types of copy protection that have been tried (I really like Steam, for example) but what happens when the login servers are shut down?

This sort of reminds me, oddly enough, of cemeteries.  There used to be a problem where private cemetery owners would sell out the cemetery, fill it up, and move on.  But then the cemetery itself would fall apart.  It's not like the owners are still around to pay association dues like condo owners do.  Once people figured out that problem, they quickly began demanding that cemeteries have a plan for long-term maintenance, with assets in trust or some such thing.  Perhaps the hardware and software industry will do the same thing.  I could see a non-profit trust getting set up by the major players to which manufacturers pay dues in exchange for having the trust take over their servers after a product is abandoned.

Corporations Don't Want to Report Their True Earnings. Why is The Financial Press So Eager to Help?

I totally understand why corporations may wish to push the envelope on earnings adjustments to make their stock look like a better buy.  But why is the financial media generally complicit with this?  Take any earnings announcement you read about or hear on the TV -- almost every single time it turns out that the earnings number quoted by the press, at least in the headline or the TV sound bite, is the company's non-GAAP adjusted number, not their actual GAAP number.

I might be OK with this if this were being done for good reasons, ie if the financial press thought the adjusted number was somehow more representative.  But I don't get this sense at all.  It feels more like the press is just lazy and accepts whatever number is in the press release without digging further.   Often in a longer story you will find the GAAP number, but buried many grafs in.

Oh, and by the way, the two numbers are diverging:

click to enlarge

A good way to think about this chart is that, if you are not careful, you are paying for the bar on the right but getting the bar on the left.  Note that without adjustments, earnings fell pretty substantially in 2015.  It is not at all clear to me why we have not seen this story.

When I Make My Biggest Business Mistakes

As you probably can guess, I am spurred to write this post as I finally and forever bury the last traces of one of my larger business mistakes (which means that hopefully, the last of the restructuring charges are behind me).  I believe there is one constant element that permeates most of my major business mistakes:

My greatest mistakes have been made when I allow someone else's enthusiasm to overcome my rational business judgement.

I don't claim that this is everyone's problem, just mine.  I will say that the one thing about business disasters that follow a pattern is that it becomes easier to spot and avoid this pattern in the future.

Postscript:  I will add that I think this problem is a common feature of politics.  I personally fell into this trap with my initial support of the Iraq war, and I think a lot of others would say the same.  I feel like I avoided this trap with Obama.  In some sense, the political process has always used enthusiasm, or fear, or shame, or some other emotion to overcome the public's rational hesitation to have the government doing any number of things.  The Iowa caucus process is practically designed to allow group enthusiasm to trump people's rational voting intentions.

There is Still Awesomeness In The World

The world can't be that bad of a place if the money and nervous energy of several billionaires has been channeled into competing with each other at space travel.

Unemployment Insurance Fraud Tricks

Typically, I see a LOT of people with no intention of working or looking for work collecting unemployment insurance payments.  For example, we have summer workers who take the winter off but still collect unemployment in the winter as if they were looking for work.  Most state governments have no desire to hear about this.  In fact, in California (at least a number of years ago) if you call the unemployment fraud number the only kind of complaint they take is reports of employer fraud.  You can't actually report employee fraud, and the one time I tried to do so I was threatened by a California State employee with dire legal consequences for "harassment" and "retaliation".

The new dodge I saw the other day is when Company A goes to an employee of Company B and offers to hire them away for higher pay.  When the employee leaves B for A, A tells them that they should file for unemployment, claiming they were forced out rather than quit (essentially constructive termination).  In most states, if an employee says one thing (I was forced out!) and an employer says another (She quit!), the employee is almost always believed unless the employer can bring an absurd amount of written evidence to the table to prove otherwise.

Anyway, having convinced the state the employee was terminated rather than quit, the employee collects unemployment benefits.   Then, company A pays the employee in cash under the table an amount per hour less than minimum wage but which in combination with the state unemployment payments does indeed add up to more than they were making at B.  They end up paying less than minimum wage and pay no employment taxes (since it is cash under the table) and the state makes up the difference with an unemployment check.  Company B, by the way, sees its unemployment taxes go way up because these rates are experience-based.

Missing From the Volkswagen Diesel "Fix" Messaging -- How Much Performance Will Your Car Lose?

Nowhere in this video does it mention how much of a performance hit one's car will take in the modifications.  My guess is a lot, or else they would not have risked so blatant of a legal evasion in the first place.   If I had a VW diesel there would be no way I would take the car in for this modification, certainly not before others have had a chance to share their experience.   My guess is that VW will require dealers to make these changes whenever a car comes in for any sort of service, so I wonder if there will be a boomlet for non-dealer VW shops who are willing to fix your air conditioning without implementing these changes?

Three Reasons It May Be Time To Short Automobile Stocks

As always, take this with a grain of salt given my past history of investment advice.  I am frequently correct on my calls to short something, but tend to be really early, such that a person (ie me) can likely be short-squeezed into oblivion before the fall takes place.

That being said, I think autos would be a good short.  Why?

  1. They are riding positive sentiment, based on a strong October.  But October was strong because it had 5 weekends rather than 4 and recent results reflect a lot of channel stuffing.   Shorting means finding the top, and this feels like the top
  2. I would be stunned if the Volkswagen emissions cheating is limited to Volkswagen.  Volkswagen is not unique -- Cat and I think Cummins were busted a while back for the same thing.  US automakers don't have a lot of exposure to diesels (except for pickup trucks) but my guess is that something similar was ubiquitous.  **
  3. Apparently, the recent rebound in auto sales has been driven by a huge spurt of sub-prime lending that looks remarkably similar to the housing market 7 years ago:

This comes against a backdrop of rising US auto sales (see the numbers for October, out earlier today) and it's not difficult to explain the gains. Just take a look at the following data from Experian on the lunatic loan terms being extended to borrowers (from Q1):

  • Average loan term for new cars is now 67 months — a record.
  • Average loan term for used cars is now 62 months — a record.
  • Loans with terms from 74 to 84 months made up 30%  of all new vehicle financing — a record.
  • Loans with terms from 74 to 84 months made up 16% of all used vehicle financing — a record.
  • The average amount financed for a new vehicle was $28,711 — a record.
  • The average payment for new vehicles was $488 — a record.
  • The percentage of all new vehicles financed accounted for by leases was 31.46% — a record.

** Postscript:  The biggest problem with the emission cheating is that it caused the world to under-estimate the cost of emissions mandates.  When performance of cars starts to drop noticeably when emissions cheating is fixed, it will be an eye-opener

Flattery is Death for an Organization

The WSJ wrote the other day about Hillary Clinton's emails:

A common thread running through the tens of thousands of emails that landed in Hillary Clinton’s in-box in her time as secretary of state is that aides and assorted advisers believe she is, well, awesome.

With a few exclamation points tacked on.

In notes sent to the private email account Mrs. Clinton used, various advisers routinely heap praise on the person who gave them their jobs or elevated them to her inner circle. Email flattery of this sort is a common tactic in the everyday workplace, but the Clinton emails show how it comes into play at the highest levels of government.

Employees tell Mrs. Clinton she is doing a “spectacular job,” that she has many admirers and that her remarks were “pitch perfect.” They assure her she looks “gorgeous” in photos and commend her clothing choices.

Look, I guess everyone has their own leadership style but from my experience it is a terrible idea to promote this kind of thing in one's organization.

Why?  Well, my organization has 350 people in it.  We can either think with just one person (me), working to improve our operations, or we can think with 350.  Those 349 other people know many of the ways in which we are screwing up and can improve -- the problem is getting them to come forward with those ideas.  And getting them to do so is far less likely if we are maintaining some sort of North Korean style personality cult of the CEO.

I have written about this before, but it's why I consider my Ivy League degrees to be a negative in running the company.  Many of my employees have only a high school education (at best) and are intimidated in bringing up an idea or telling me I am screwing up because they assume since I have these Ivy League degrees I must be smarter than they are and know what I am doing.   But in their particular job, in terms of my knowledge of what they see every day from customers and operationally, I am dumb as a post and completely ignorant.

Anyone who has worked for me for more than a few months can likely quote my favorite line which I use in most of my employee talks -- "If you see something that seems screwed up, don't assume Warren is smarter than you and wants it that way, assume that Warren is screwing up and needs to be told."

Postscript:  This sort of flattery also makes me deeply uncomfortable on a personal level, so much so I have a hard time understanding people who revel in it.  I once had an employee that could not stop with this sort of personal flattery, and eventually we ended up terminating them.  We terminated them for other good reasons, but I must admit to being relieved when they left.

My New Worst Business Ever: YP

YP is the modern name for what used to be the Yellow Pages.  Obviously, yellow pages are a dying business.  Ten years ago the Phoenix Yellow Pages had to be broken up into two books, each a couple inches think.  I happened to see one the other day, and it was the size of a short novel.  They tried to move to the web, but who goes to (vs. google or Yelp) to find a business?

Even in the glory days of yellow pages, it was always hard to cancel their service.  If you did not tell them by like August, they would start billing you for the next year and sic a collection agency on you if you disputed it.

However, it appears that now that YP is a dying business, and knows that each lost customer will likely never be replaced, it has turned into the Hotel California.

In 2013, I left a location in Ventura County.   We had advertised in the Yellow Pages for years (back when it made sense) and had never been able to cancel it in time -- by the time we remembered it each year it had already auto renewed.   Soon after we left, I notified them that we needed to cancel.  At the time, I tried to negotiate a reduction in the 2014 charges but figured I probably would have to pay them, which I did.

Then, in 2015 I started getting bills.  I called each month patiently explaining and sending letters that we had already cancelled.  They would say that they had no record of my ever calling, but they swore they would mark the account as closed and that it would be fixed.  Then the next month it would all repeat -- a bad customer service Groundhog Day.

Finally this week I started getting legal threats and collection agency notices that I owe $499 for 2015 and that my life would be left in ruins with the ground salted if I did not pay immediately.  So I called today and AGAIN they had no record of my cancelling -- in fact, it was on a path to renew again for 2016.

Look, I am the first to tell folks to never chalk up to conspiracy what can as easily be explained by mass incompetence.  But at some point one has to suspect there is fraud going on here to retain customers as long as possible for a dying service.

So here is what I am left with -- I found someone in their organization who may be willing to settle my non-debt for non-services for a couple of hundred.  I told them this was absurd, since I did not owe it, but that I would pay a couple hundred dollars if they would give me a letter that said the account is closed and fully settled.  From the outside, this may seem a bad trade.  But I have enough lawyers in my life and hiring lawyers would be the only way to solve this any other way.  And besides, $200 is cheap compared to the thousands of dollars of my personal time I have spent farting with this.

Update 9/27/15:  God, this is Groundhog Day!  YP said that I should send a certified letter to such and such address to make absolutely sure that my account was cancelled.  I sent it to that exact address, braving a 30-minute line at the post office to do so.   So of course, the letter just came back undeliverable.  I have held off saying this, but these guys are total scam artists.  They seem to have no intention of ever letting me leave.

Worried about your privilege? Want to be treated like an abused underclass? Start a business!

John Scalzi tries to explain privilege to non-SJW-types by saying that being a white male is like playing life on "easy" difficulty.

I'll grant I benefited from a lot of things growing up others may not have had.  I had parents that set high standards, taught me a work ethic, taught me the value of education, had money, and helped send me to Ivy League schools (though the performance there, I would argue, was all my own).

Well, for those of you concerned about living down a similar life of privilege, I have a solution for you: start a business.  Doing so instantly converted me into a hated abused underclass.  Every government agency I work with treats me with a presumption of guilt -- when I get called by the California Department of Labor, I am suddenly the young black man in St. Louis called out on the street by an angry and unaccountable cop**.  Every movie and TV show and media outlet portrays me as a villain.  Every failing in the economy is somehow my fault.   When politicians make a proposal, it almost always depends on extracting something by force from me -- more wages for certain employees, more health care premiums, more hours of paperwork to comply with arcane laws, and always more taxes.

Postscript:  I will add an alternative for younger readers -- there is also a way to play college on a higher difficulty:  Try to be a vocal male libertarian there.  Write editorials for the paper that never get published.  Sit through hours of mindless sensitivity training explaining all the speech limitations you must live with on campus.  Learn how you can be charged with rape if your sex partner regrets the sex months later.  Wonder every time you honestly answer a question in class from a libertarian point of view if you are killing any chance of getting a good grade in that course.  Live every moment in a stew of intellectual opinion meant mainly to strip you of your individual liberties, while the self-same authoritarians weep and cry that your observation that minimum wage laws hurt low-skilled workers somehow is an aggression against them.


** OK, this is an exaggeration.  I won't likely get shot.  I don't want to understate how badly abused a lot of blacks and Hispanics are by the justice system.   I would much rather be in front of the DOL than be a Mexican ziptied by Sheriff Joe.  But it does give one the same feeling of helplessness, of inherent unfairness, of the unreasoning presumption of guilt and built-in bias.