Monday, March 19, 2012

Uncertainty

The media, especially those who claim to be experts in financial matters, like to say that the markets don't like "uncertainty," I think they are wrong. Some investors don't like uncertainty, but that creates opportunities for other investors. All-in-all, as usual, the big players win.

The rest of us?

We are the ones who really don't like uncertainty. Even in a so-called recovery - where all of the benefits of the turn around have accrued to the One Percenters - we are left with uncertainty. As a microcosm of that take my wife and I.

I've been laid off twice in the past two years. The first time was when the (then) largest company in the world figured they weren't making enough money (that was the year they made more money in a year than any company ever) and outsourced the work of the group I was in to Brazil. The second company was just a mess, but here I am again: unemployed, over 50 and trying to find a job. My wife has a great paying job for that same large company (still in the top 5) but - once again they are claiming they are not making enough money - there are rumors that the division she works for is up for sale. The corporation has not said anything to its employees yet - they discovered their new helping of uncertainty in an article in the Financial Times. What will happen to her when they are sold? What will happen to her if they can't be sold?

You want to talk about uncertainty?

Here in Rochester, Xerox has sent most of the jobs paying liveable wages overseas; engineers, researchers, etc. But they've gotten big press here lately for opening up a call center where they will hire 500 workers. I got a call from a recruiter recently about one of these "wonderful" jobs; it pays $25K a year. What a great deal Rochester got for the tax breaks I'm sure they gave Xerox to bring those jobs here!

Meanwhile, the One Percenters only have to worry about where they will buy their next home or where they will shelter their next million dollars. They are uncertain about how they can keep their tax rate in the single digits. They worry about how their companies can outsource more and more services so their earnings can get larger and larger. They are uncertain about how to get the unemployed to take a urine test for drugs before they get their unemployment payments so they can keep their single digit tax rates (there's your trickle down). They worry about how they can funnel more money to their favorite lawmaker so that those tax rates will never rise.

That's uncertainty I could live with.

6 comments:

Erik Perez said...

Nice example of the "you owe me something mentality"!

below is point by point

You have a blog, which means you have a computer with internet access. You also have a second blog about photography which means you also have a nice SLR camera and time to use it! Wow, life does not sound that bad. Yet, you still write with a sense of entitlement. Where is is written anywhere that you are owed "certainty" in any part of life? Ever think of the possibility that your life situation is a result of your decisions?

Any company, anywhere, takes a look its material and labor costs. Perhaps you just got too expensive in terms of health care, government taxes, retirement benefits or perhaps your salary was just too high. You write like it is a personal attack, it is just politics and business. If I were creative enough to have my own business, I would evaluate the same set of facts.

Maybe you should ask your self why you did not become a machinist, welder or auto mechanic. The going rate for those skilled trades are nearly $80 an hour. What I am getting at is, the appearance in your writing that it is always someone else's fault and it s nothing you did or did not do.

Not Xerox's fault your standard of living is set so high... I'll bet there are plenty of people who would love to have those jobs in NY. Again I ask, where is it written you are owed something more? If the job market does not match your skill sets then either change your skill sets, move or adjust you expectations.

So wait, you are ok with illegal use of tax payer funded welfare benefits?

The American capitalist based system is mean, nasty, unfair, sometime corrupt and often inconvenient..... Problem is that every other system out there is even worse. The "terrible" system that you politically tear done often has pulled more people out of abject poverty and created more wealth than any other system in history.

In interests of truth in advertising.... Neither my mother nor father have ever made more than $30,000 in one year, ever. Both my wife and I went to college on scholarship and still had some $60,000 in college loans. My wife is a naturalized citizen originally born in a communist country. My country and it's system provided me the opportunity to prosper and for that I am forever grateful. If I the future, I fail or fall on hard times in some way, the first thing I will do is look in a mirror.

A slave to government is still a slave.

Charles Perez said...

@Erik; Nice example of jumping to conclusions about my motivations.

I don't ever claim that I am owed anything. My point was - and remains - that the market actually likes uncertainty. As long as it's not theirs.

Also, as is so often that case, you've conflated capitalism with the U.S. as a nation or system of governance. The "markets" are a tool; something man-made. They are not a "natural" outcome of any particular set of physical laws such as quantum mechanics, General Relativity or evolution.

As such, when tools no longer serve those for whom they were supposedly developed, they can be - and I postulate - should be discarded for something that works better. So if it is, as you state "mean, nasty, unfair, sometime corrupt..." then why keep it? Because nobody has yet come up with something better - most likely because it would not benefit those at the top - is no reason to dismiss out-of-hand that such a thing cannot exist.

Our laws, our markets, our rules are tools. When they no longer work for most of us, they should be improved. If they cannot be improved they should be discarded for new ones. If you want to remain a slave to the current paradigm, that's okay.

A slave to the market is still a slave.

Erik Perez said...

So this is a good conversation, can we pull the thread and foster understanding between a conservative and liberal mindset ?

At my level of understanding, I see the Xerox call center providing a service that cost Xerox a certain amount of money to provide. They are a business and as such they expect to profit from those products and services. If $25K a year wage is not enough to attract a quality employee then Xerox would recognize the need to offer more money, or not. If the service Xerox provides are of such quality that I as a customer keep buying them, then Xerox is justified and stays in business and someone has a job. If on the other hand Xerox provides poor quality goods and services then I as a customer DO NOT buy them and Xerox goes out of business and then those call center jobs are gone. Overly simplified I grant you, but I’m not writing a thesis. I do agree 100% with your discomfort at tax breaks… I do not think government should EVER pick winners and losers. YES, GM should have gone out of business and EXON should not get tax breaks.

Correct me if I am wrong here but I see the liberal mind set as saying $25K a year is NOT a livable wage and Xerox should offer more. I ask you then, who decides the definition of livable? A livable wage is likely VERY different between Colorado Springs and New York city. Who decides that 500 people with jobs is LESS good then 250 people with $50k a year jobs and 250 more on unemployment? Who decides how livable is livable? In college, my wife and I rented a 600sq/ft apartment but now I own a 3500 sq/ft home. Technically speaking, my family could still manage to make 600sq/ft work, but we choose to have more space.

So in a “more fair” liberal world there would need to have rules set. Correct? My core problem with the liberal mind set is who sets the rules. Government is nothing more than people and people by definition are prone to error. Government is VERY prone to working the lowest common denominator. Does that logically mean liberals are more comfortable with accepting of an error prone government set system of rule then they are of individuals making their own choices? If a “fair” government sets the rules for Xerox to offer the livable wage, you introduce an entire new set of problems brought about by the error prone nature of government, people and the lowest common denominator. Garbage in equals garbage out.

You very much dislike the economic system we have now but I can make a very good case we are anything BUT a market driven economy. Government has been making the rules and selecting winners and losers for decades now and we are going downhill.
At the VERY least with the partial capitalist system we have now I get to choose with my feet and with my wallet some of the time. I am NOT forced to accept the lowest common denominator which happens to be set by all those error prone people I just spoke of. Want a hard example? In 2010 I bought my wife a Ford Escape. At the time government was pushing hybrids hard. I did the math and it would take five years or more at $4 a gal of gas before I would break even. I also did not want to reward GM for VERY poor business behavior. I’m sure more “fair” rules would have forced Ford Motor Company to continue with VERY liberal UAW work contracts which already add some $2000 of per car of additional long term worker benefits. Ford had and has very different worker contracts than GM. Ford makes money and did NOT take a bailout AND I bought a Ford product. In your liberal world with additional “fair rules” would I have had the same ability to make my own decision?

I want some liberal, ANY LIBERAL to explain to me who gets to define fair and how it is possible to administer fair at the individual level.

I’d rather be a slave to a market because I am smarter than the lowest common denominator of government

Charles Perez said...

First let's dispense with "liberal mindset." There isn't one. Ask any of my centrist to what-passes-for-Liberal-these-days friends and they will each have a different answer to any question about good governance and market accountability.

The fact is in Rochester, unless you are right out of high school, or managed to get through a secondary education without any debt AND if you don't have any family, $25K is NOT a liveable wage. My disappointment with Xerox is not that they brought those jobs here, but that our laws and regulations - bought and paid for by corporations like Xerox (look up Citizens United and lobbying) - are set up so that they are not penalized by outsourcing all their 6-figure jobs and replacing them with non-living wage jobs.

No real society can live without rules. There can be no such thing as a civilized market without regulation (look up The Gilded Age, followed by The Great Depression; then look up The Triangle Shirtwaist Company). You have fallen prey, as even many of my centrist friends have done, to the idea that "government" is something apart from us. If you believe that "government" is the "least common denominator" that's because the people who make up our government - the people we elect - are not the smartest people out there.

I do not want (nor do any liberals I know) an error prone government; I want smart people in government. People who are PhD's and multiply-degreed. People who are experts in their fields; polymaths who are experts in several fields. But over the years many conservatives have denigrated education and smart people; calling them "egg-heads" and "wonks." Actively working to undermine the smartest among us.

If government is the least common denominator, it is NOT centrists and liberals fault.

And my desire is that the system be fair. Nobody would want to "administer fair at the individual level." At least no liberal I have ever heard - that's a strawman that wouldn't stand on its own. Not even held up by all the other strawmen in your post... As for who gets to define "fair," it's the same way we define many things in our mostly-democratic society, by consensus.

And be careful with your disdain for unions. Union jobs made middle class citizens of many of our relatives and they put many of our cousins through college. And if you like weekends, paid vacation, health insurance (of any kind), worker safety laws, etc., etc., - pretty much anything that's civilized about modern jobs - you can thank a union for that. Are they perfect? No. Have they been a boon to the modern worker? If you know ANY history, you'll know that answer to be yes.

And I will fight to not be a slave to anything; not the market, not government, not religion.

Erik Perez said...

Fair point about liberal mindset, I shall try not to be so broad with my brush strokes.

Your feelings are justified about laws being bought and paid for. Now you know how many conservatives feel about the "green agenda". Any given administration has their groups that fund them and those groups want their payback in the form of laws which benefit only a small focus group. I shall point back at my earlier statements that government should NOT pick winners and losers and our current capitalist form of economy has not really benefited from market forces for the better part of five decades. Dare I say we might have found common ground?

I do agree that no society can live without rules. I also submit that rules can go overboard as well. One single bill (Health Care) had nearly 2500 pages to the law and a pending 10,000 pages of supporting regulation. I will bet a shiny penny if you name a topic in life and give me fine min on the internet I'll show you a federal law that governs it. Where do rules stop? As far as my opinion of government, I see it as a necessity that we must have but not go overboard with.... just like real life.... balance. Perhaps more common ground here between you and me, the American people consistently can be counted on to elect some real dopes from time to time.

I would offer a word of caution about overeducated political leadership. I work with rocket scientists on a daily basis (no really, they build satellites) and I wish I had 1/10 the brain power of some of my co-workers. That being said, the majority of them do not have very good social skills and I would NOT trust them to change a tire on my car. Education DOES NOT equal leadership, vision, nor good ideas. Jimmy Carter was a nuclear submarine officer with a huge IQ and the nation did not exactly do well under his leadership. Reagan was just an actor and he won the cold war and his policies created VERY low unemployment. I do have a big bone of contention. I have NEVER ONCE in my entire voting life have ever heard a right leaning mainstream politician bring down the value of education. Need I remind you the "No Child Left Behind Act" was brought about by BOTH Bush (R) and Kennedy (D) in the hopes of getting better educated children. Now it was a good intentioned idea, VERY poorly executed and torpedoed by the teachers union. (We all know the road to hell is paved with good intentions.) 

"Actively working to undermine the smartest among us"?????? REALLY, Man you have been watching too much Rachel Meadow. I am no brain surgeon but I'm not a garbage collector either. I have never experienced a sinister right wing conspiracy to bring me down......

"As for who gets to define "fair," it's the same way we define many things in our mostly-democratic society, by consensus."  So does that mean we would vote on what defines a living wage???? Would we also vote on who gets to drive which car?  I'm sorry if I am making fun of your example, but those are exactly the dangerous rabbit holes I don't want government taking us down.

Unions- YES, they once served a very good purpose. Their day has passed and as evidence I point to current union membership being quite low. As for our relatives, I remember growing up and sitting in uncle Charlie's living room with him and my dad talking. Uncle chuck related a story about the union complaining about toilet paper in their contract negotiations so the union would have something to give up to management. Wow, that sounded like BS even to an eleven year old. Again, unions have outlived their time.... Besides, I have all these wonderful government rules spelling out in painful inflexible detail guidelines for my job.

"And I will fight to not be a slave to anything; not the market, not government, not religion." I read your sentence and think the government rules and regulation you want so dearly exactly FORCE your life on a give path not of your chosing. That my cousin, is a slave.

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