Stephen Roach, in an op-ed piece in the NY Times yesterday, talks about the difference between productivity gains and just plain working more hours. Roach cites a number of statistics regarding employment and productivity to call into question the so-called productivity gains that are supposedly fueling the new round of growth in US activity. If you remember, for the last bubble of just a few years ago, the explanation of why it was no longer useful to measure a company’s worth in old fashioned terms like assets, earnings, cash flow, etc. –take your choice—was that the new age of computers and, of course, that monstrous champion, the Internet, was making it possible for workers to be much more efficient, thereby creating a new kind of measurement of productivity that included a new magic multiplier: “information”.
We were, after all, now part of the “information age”, a time when information becomes currency and assets could be measured in “eyeballs”. Some of you sitting in your cubes might have wondered if all those hours of computer down time spent on the telephone with tech support were really adding to your productivity. Others, might have thought about the amount of web surfing done on company time as being just another of the miracles brought by the information age. It seemed, even if you wasted half the day tracking stocks, ordering your Christmas gifts, or running a business on EBay, you somehow were getting more productive.
The information age has brought many miracles, including the ability of yours truly, to sing his song of doom and destruction for the American (should I say, World?) economy, in a forum where interactive communications (Google Search, RSS, Radio Userland Cloud, List server, etc.) make possible an interactive readership. But, you can bet your bottom dollar that it hasn’t made many of us more productive. Measure the time you spend working and compare it to a time when people came and went at regular hours and left work with the comfort that they weren’t even vaguely expected to put in another workaday thought until they arrived bright-eyed and fresh the next morning at 9 AM. Are there many of us left, at the least in the US, who don’t check our emails –not just the personal ones—many times over during the evening? How people don’t have mobile phones that keep them in business conversations, morning, night and weekend? Who among us, can say, “I get out of work and if someone sends me a text message on my phone, I won’t answer until I am back on company time tomorrow”?
Roach obviously has it right: We aren’t getting any more productive, just putting in more hours at work. I had a boss who kept quite strange hours and who would call me every night at around 11 to go over the day’s critical business issues. Now many of you would say, if you’ve got that kind of a boss and you keep on working there, you deserve to be awakened at any hour of the night by such a maniac!
But part of the work ethic is the entrepreneurial zest for start up and ownership. The stock option, a concept that has been so clearly corrupted by those who inherited the system and brought us the last bubble, is now about to get accounted out of business. In Silicon Valley there is consternation over shareholders demanding reform. “How,” the VC’s and entrepreneurs of tomorrow ask, “are we going to get all those zealous (fools, my word) cube-dwellers to give up family life, sane hours, decent meals, sex lives (some would say I’ve gone too far), communication with the outside world?” After all, it was about reaching the promised land called bonanza, when after all the struggling, the golden spade called IPO was finally viewed by Sir Moses cum CEO, riding, of course, his trusty red Porsche.
The plebs worked day and night, burning out in their cubes while the stock options mounted. Meanwhile, crafty CFO’s and the top investors made sure they held real equity, uninhibited by reserve clauses, that could be flipped should the magic day arrive.
The actual purchasers of shares after the IPO, why they were just some turkeys who happened to play in the after market. They wouldn’t even know how many stock options were granted and how their holdings might be diluted if the plebs in their cubes ever made it to the big payoff. By the way, if you are new to this game, ask an older friend about the AMT—clue, it’s not a cash machine but a reverse one owned by the government. The ANT is an income tax the government put in to tax stock option holders on vested shares they purchase, even if those shares can’t be sold for at least a year because of some restriction clause or other.
I know of a guy who ended up owing the US tax man $6million, that’s right, 6million bananas! on a stock that tanked before he could sell any. Poor guy, I wonder what happened to him.
So yeah, hard work does make a difference. But whenever you hear that somehow it is the boost in productivity that is keeping down job growth, think again. We are borrowing more; credit card debt in the US is up to a per capita $6,000. That means that, on average, every man, woman in child in the US owes that much in high interest debt. You might also note that the federal government is spending this year roughly a $half trillion (over $500billion) more than it is taking in and that we, as a nation, are buying about the same amount, $500billion worth, of goods more than we are selling to the rest of the world.
Is there anyone out there that thinks that George Bush and buddies will put the breaks on all this before the election? Not, I believe, if the only cost we have to pay is a very weak dollar that makes all of us dollar holders that much poorer vs. the rest of the world, at least all that part of the world with currencies that can rise against the dollar. That, of course, leaves our major supplier of manufactured goods, China, out. They will continue to sell their goods to us and take dollars no matter how little they are worth. That, somehow, is the bet our leaders are making. Because if China does feel compelled to raise the value of their currency, the Rmb, against the dollar, then the price of everything will jump and the Fed will have finally got their wish, real inflation again.
Hold onto your dollars and find out or, maybe, spend until you are maxed out –not my recommendation, though-- because one thing is sure, you will be paying off those happy holiday debts in cheaper dollars in the future.
BTW, too bad the cheaper dollar didn’t help Boeing with the Aussies. For some reason, even though in theory we have been cheapening the dollar to help bring jobs to Seattle and other big manufacturing cities for that matter, it didn’t work in this case. Maybe, they will get a few more defense related contracts to make up for it. Fair and square this time, of course.
Still in Rome (where they don’t work so hard) and suffering every time I hit the ATM (cash-machine),
Regards,
rmb
dymaxionweb@verizon.net
Copyright 2003 Richard Mendel-Black All Rights Reserved
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