a quote from Burke: “There are a set of writers who work hard every day trying to create a framework where the only right answers can be some kind of dogma, who will never for one passing second acknowledge the legitimacy of evidence which contradicts their own pet doctrines, who are never even momentarily in any danger of being persuaded by any countervailing viewpoint. For these writers, all online discussion is a colossally elaborate manipulation.”
http://text-patterns.thenewatlantis.com/2010/04/colossally-elaborate-manipulation.html
Early in his career Wendell Berry wrote for the Whole Earth Catalog (motto: “Access to tools.” Later: “Stay hungry, stay foolish”). Steve Jobs considered the Whole Earth Catalog to be a “conceptual forerunner to Google”. It was a catalog of sustainable products and information sources. And it was the product of two of my hippie heroes: Stewart Brand and Kevin Kelly.
This week, Stewart Brand talked about the dangers of underpopulation.
Kevin Kelly talked about the Shirkey principle, which states that institutions can become so dedicated to the problem they are the solution to, that often they inadvertently perpetuate the problem. He uses the example of unions, and their codependency with management. His conclusion is brilliant – relevant to the food discussion, concern for the poor, and more:
In a strong sense we are defined by the problems we are solving. Yin/Yang, problem/solution, both sides form one unit. Because of the Shirky Principle, which says that every entity tends to prolong the problem it is solving, progress sometimes demands that we let go of problems. We can then look to marginal solutions and ask ourselves, what marginal problem is this solving that might be a more appreciated problem later on?
Public Power
Public Water
Public TV Broadcasting
Public Weather Service
Public Food System
Public Roads
Public Fuel
Public Financial System
And then libertarians tell me I’m crazy or leftist to want local food, rain barrels, solar power, and a local currency! Where is the disconnect?
Artificial refrigeration was perfected throughout the 1800s, but wasn’t available to consumers in the US until the early 1900s. There was some health concern at the time about “articifial ice” as opposed to the natural stuff cut out of rivers and lakes.
Pastor Wilson dislikes the rhetoric of Michael Pollan, the “food-like substances” bit. The Velveeta he’s given thanks for in childhood is food, indeed. But it’s hard to deny the rhetoric when manufacturers themselves use it. No real ingredients = food product:
I read this somewheres and it resonates with my limited personal experience.
When we tell stories, we start at the chronological beginning and move to the chronological end. The most important part is the *plot*.
When the poor tell stories, they start at the chronological *end* or the part with the greatest emotional intensity. They tell the story in vignettes with audience interaction in between. It ends with a comment about the character’s values. The most important part is the *characterization*.
I don’t think it’s controversial to say that different classes have different bodies of common / assumed knowledge, and to change classes or work to interact well with a different class might necessarily involve a sacrifice of ease in ones current relationships.
< A Story of Three Builders (Taken from "Running a Successful Construction Company," by David Gerstel, Taunton Press 2002)
Three Builders put up identical small additions. Each of them worked 125 hours at project management and carpentry. After paying for labor, materials, and subcontractors, each had $5,000 remaining, but they viewed their $5,000 very differently.
The least experienced divided his 5k by 125 hours, came up with $40/hr and concluded he had made a "good profit" on the job.
The midlevel builder looked at the $40/hr and concluded "at least I broke even." He figured that, though he had made no profit, at least he had $40/hr to show for his work on the project.
The veteran builder looked at the 5k and concluded, "I lost my butt on this one." He realized that he had lost money three ways:
#1 The $40/hr was $20 less than he would have had to pay (in wages and labor burden) to a good lead to work in his place on the job. Therefore, he had lost about $20 of the value of the labor for every hour he had worked.
#2 He had incurred $1,000 in overhead, none of which he had recovered.
#3 He had no profit to show for the job. He had taken on all the risks and responsibilities of building the addition without any compensating profit at all.
Though only the veteran builder recognized it, all three builders had lost money three ways. They had lost part of the value of their labor, their overhead costs, and a fair profit.>
The first time I read this, I got hung up on the “least experienced” builder scenario. The guy made $40/hr, what’s so bad about that? I finally figured it out and moved on. I was knee-deep in business management, and Gerstel made sense. It still makes sense, but only if you assume this “profit” idea.
Let’s do the math a different way. 5k minus 1k for overhead (cell phone, office, truck, license, etc) = 4k. I will grant Gerstel the overhead point, you need to charge for that. So, let’s add the 1k in overhead and say he charged 6k for the project. 6k minus 1k= 5k/125 = $40/hr. That covers all the expenses that the builder had, and means he took $40/hr home (before his taxes). If he made that wage 40 hrs/week for 50 weeks out of the year, he’d take 80k home for the year. Almost no matter where you live, 80k is nothing to sneer at. It is a very, very nice income.
And here’s another thing, there was a directly proportional relationship between what was done and the money that it cost the homeowner to have it done.
Let’s do the math again, Gerstel’s way. If the guy charged the $60/hr for the wages + labor burden he would have had to pay a good lead, he would be at 7.5k. Then he would need to tack on overhead, 7.5k+1k=8.5k. Then he would need to figure in his profit. Gerstel offers a range of percentages for different types of construction, but 10% is on the low end of his recommendations for the sort of work this project entails. 8.5kx1.1=9.35k.That means that this project, if the veteran had charged what he ought to have charged, he would have taken home $66.8/hr. Do the yearly math again, and you get 133,500k/year.
And the other thing; there is an indirect relationship between what was done and the money that it cost the homeowner to have it done.
The reasons for charging profit, Gerstel says, are:
1 Estimating errors
2 Project delays and disruption due to:
A Extreme weather
B Man-made and natural disasters
C Loss of key employees
D Subcontractor failure
3 Equipment failure and loss
4 Uncharged or unchargeable change order
5 Callbacks and warranty work
6 Difficult and labor-consuming clients
7 Litigation
8 Management errors
9 Recession
When I read this list, several thoughts come to mind. I am a contractor and I know the risks we take first-hand and they are real. But honestly, I just can’t get the risks to justify the profit numbers. #’s 1,5 and 8 are mistakes the builder made, not the homeowner, as is #2D. #’s 4 and 6 are risks that the contractor can either mitigate or simply charge to the client if and when they occur. #’s 2B (the first part), 2C, 2D (Whatever isn’t covered by the above mentioned 2D) and 7 are almost entirely avoidable by certain business practices. That leaves us with #’s 2A, the latter half of 2B, and 3, acts of God and broken tools. In an alternate setup, those could be charged to a customer if and when they are realized. But let’s not think about that yet.
So let’s figure those in. The guy that made 80k could lose 10% of that/year and still make 72k/year. In reality, the guy that made 133,500k/year is going to either: lose 50k of that in the risks Gerstel mentions and still clear 80k or get smart, minimize his losses, and take home 120k (after he loses 10% due to the acts of God and broken tools).
Hot Damn, I want to be a builder! Really though, how can we justify this idea of profit-beyond-wages if we can’t justify it with risks? Why am I entitled to more money than my wages? What is this idea of profit? Where did it come from and why is it built-in, assumed?
This arrangement looks a lot like an insurance policy that the homeowner is paying for. The money all goes into the builder’s pocket until something happens, then it goes to any number of other parties listed in Gerstel’s risk lineup. Let’s say it’s a given that something does happen and the builder loses all that insurance money every year. That’s 50+k every year going to something that has nothing to do with the homeowner’s addition. In this scenario the cost of doing business far exceeds the cost of building. It just seems downright wasteful.
Gerstel’s other point that I get stuck on is #1 in his story. The fact that it would have cost you $60/hr if you hired someone else (I desperately need to figure out how to do italics in this posting setup) = you should charge $60/hr for yourself, even though it does not cost $60/hr for you to do the work. YOU are doing the work, so charge what it costs YOU. Unless this whole thing is based on you not wanting to actually do the work, but to sub it out. If so, then we create a beast where the best-paid guy is the one who figures out how to get other people to do work he could do himself. That beast devalues the worth of the guy who actually does the work. Hmm, this sounds way too familiar. What’s more, in this scenario a sizable chunk (30-50%) of the $60/hr goes to parties that have nothing to do with building (insurance, taxes, workman’s comp, payroll, etc).
Someone will no doubt object to my saying that the builder pockets 70k or 120k. He won’t pocket it because he will take his wages out of that amount and then put the rest back in to the company. That sounds right, but the company is him and he is the company. Otherwise there is this entity out there that Chris described as “pathological,” it has no one’s interests in mind and does no one’s bidding. It’s just out there, making money for itself. This just isn’t the case. Companies make money for people.
So, how about this for a setup: I work for a homeowner, building him an addition. I arrange with him to build it for 10k. I came up with 10k by figuring out how long it will take me to build it at a wage that will support my family, and the materials/subs it will take to complete the project. I also arrange with the owner that he cannot take over my project, and I will charge more if he does. If acts of God slow us down, he pays for it. I also stick to my bid, if he changes anything, I charge for it. But, if I screw something up, I eat it. This means that if I’m good at what I do, I will bring more money home at the end of the job. In a scenario like this, the homeowner doesn’t pay for something he doesn’t get. If it doesn’t snow and take me longer, he doesn’t pay for it. If it does snow and I take a day longer because of it, he pays for it. This setup still gives me incentive to work hard and get better at what I do. The faster I complete the job (due to skill and hard work), the more I make per hour.
I only bring this scenario up to provide an alternative. Maybe it’s not a good one, but I’m sure there are others.The main question I have is the notion of deserving profit-beyond-wages.
“wise man leaves an inheritance” and such. I have a few to kick it off. Help me add to the list:
Your office job.
Anything you bought from Walmart.
Your iPhone, TV, etc.
