The Multilevel Marketing Scam

I don't have a big audience, but if I did, I would expect a lot of backlash from what I am about to write.  If you come across this and your knee jerk reaction is to call me an idiot who is trying to take away your chance at success, please take a step back, and consider everything I am about to write objectively.  If you can find a flaw beyond unintentionally insulting your intelligence, feel free to call me out on it.  Otherwise, perhaps you should consider rethinking some of your choices.

Multilevel marketing is inherently dishonest.  If you are involved in multilevel marketing, odds are really really good that I am not saying you are dishonest.  A vast majority of people involved in multilevel marketing do not recognize the dishonesty.  If they did, they would realize that they are the ones getting ripped off.  Over 95% of Amway distributors lose money in the system.  If you are losing money, you are probably not part of the dishonesty; rather, you are a victim of it.  The 0.5% of Amway distributors (Direct Distributor and up) are the dishonest ones, but even many of them don't realize it.  While Amway is probably the worst culprit, all multilevel marketing schemes are dishonest at some level.

The first dishonesty of multilevel marketing is the lie that participation makes you an independent business owner.  If you don't have a business license, you are not a business owner.  Businesses are legally protected property.  If you cannot sell it, it is not a business.  If you cannot transfer the right to the profits coming to you from your downline (those who you have recruited) to someone else, it is not a business.  If it is a business, you should be able to sell it and then notify the company, and from then on, the checks will be sent to the new owner.  "Why would I want to do that?" you might ask.  It does not matter!  If you can't, then it is not a business that you own.  Nearly all multilevel marketing companies use the word "distributor" or "consultant".  Why don't they say, "franchise owner" or "business owner"?  Because you aren't!  As a distributor, you are nothing more than a sales person, and in the typical scheme for multilevel marketing, you are not even selling the product.

The second lie is the recruitment claim that you are being recruited to sell product.  Nobody cares if you sell product.  Most multilevel marketing companies don't even try to teach you to sell product.  The first thing they tell you is that you need to use your own product, so that you can provide objective assessments when you sell it to people.  This makes sense, if they are going to teach you to sell it, but they aren't, because they don't care.  The secret is this: Multilevel marketing is about recruiting customers, not distributors.  They say you are an independent business owner, they give you the title of distributor or consultant, but in reality, you are just a customer.  This is the secret to multilevel marketing.  Note that it is not called "multilevel selling".  That is because it is not about selling products.  It is about marketing the "dream" to recruit customers.  All of those conventions that teach how to run your business focus heavily on recruiting other people, because that is what the business is about!  As a distributor, you are not distributing product.  You are buying product for yourself, and you are lying to other people, weaving grandiose dreams for them, for the sole purpose of getting the company another customer.  "You will be your own business owner."  Congratulations.  You just told your victim the first lie.  "You can make a lot of money through your own hard work."  You just told your victim the second lie.  Odds of making any money is 1 in 200.  You are not pitching a business opportunity.  You are marketing a lie to recruit a customer.

The third lie is that there is a significant chance of making substantial amounts of money.  Only about half a percent of Amway distributors make a significant amount of money.  Over 95% lose money.  Less than half a percent make more than about $1,500 a month (which is not enough to live on in most of the U.S.).  Barely over 0.1% make more than $60,000 a year.  (With a 4 year CS degree, I can make starting wages significantly higher than that for only 40 hours a week, not including benefits, and I am actually doing something valuable to the world.)  And less than 0.004% of Amway distributors make $120,000 or more a year.  (Within 2 years in industry I could make more than that with my bachelors degree in CS, and given my teaching experience and skill level, I could probably start fairly close to that.)  The chances of making enough to live on with Amway is far less than 1 in 200.  The chance of making a decent middle class income with Amway is around 1 in 1,000.  The chance of an upper middle class or higher income is 1 in 25,000.  It's a better gamble than the lottery or a Las Vegas casino, but given the cost of running an Amway business (in annual dues, conventions and other functions, various fees, and the recurring costs of products like tapes and books), the actual risk is not a lot lower.  The fact is, a vast majority of people lose money on Amway.  Out of those that do make money, most would get a higher income working as a manager at a fast food joint, and with less time and energy spent working.  Amway is not the only option though.  There are other multilevel marketing schemes with significantly higher chances of making money.  Among them are Doterra (and other essential oil companies), LuLaRoe, and Mary Kay.  These companies are focused more on selling than Amway.  They still push the dishonest marketing aspect harder than selling, but their product lines are far narrower, meaning that distributors (or consultants) will build up a stock, and that will help motivate them to sell stuff to avoid consuming too much space.  Like Amway though, a vast majority of distributors lose money, and the focus of the businesses is on recruiting customers, not selling product directly.  In general, the odds of making money with multilevel marketing are very poor.

Those are the three main lies of multilevel marketing.  It sells itself on dreams of becoming an independent business owner, selling products, and making lots of money, but in reality it provides none of these things.  Now, to be clear here, I am not trying to bash these goals.  Becoming an independent business owner, selling valuable products, and making lots of money are great goals, but multilevel marketing won't help you achieve them.  "Distributor" or "consultant" is not the same as "owner".  Selling products is not the same as recruiting people who will buy the products entirely independently of you.  Making lots of money is not the same as a 1 in 200 odds of making what you would at an entry level job or a 1 in 1,000 chance of making a middle class income.  There are better ways.

This is not all though.  You may or may not have that 1 in 1,000 odds of making a middle class income or better.  Even outside of multilevel marketing, most businesses fail within the first year.  There are some essential things that are almost required to create a successful business.  The first is a solid business plan.  Businesses without a solid business plan have a much higher chance of failing within the first year.  The second is market research.  It does not matter how good your business plan is, and it does not matter how good your product or service is, if there is not enough demand.  Market research involves finding out who your most likely customer demographic is and then determining if that demographic is big enough in your region to provide enough business for you.  For example, a posh British tea house is far less likely to be successful in a city of mostly middle and lower class residents in the Western U.S. (for example, Wasilla, Alaska) than it is to be successful in an East Coast city with a significant population of upper class (like Boston, Massachusetts).  Likewise a cheap, discount clothing store probably won't be successful near an upper class neighborhood, but it probably would be near a lower middle class or poor neighborhood.  Market research includes culture (in the tea house example, East Coast culture is more likely to be interested than West Coast culture), income (rich people can afford an expensive posh tea house, but they are less likely to be interested in cheap clothing), and availability.  For example, attempting to sell expensive, high quality household products, cosmetics, and wellness products in a college town where Melaleuca already dominates part of those markets is probably going to fail.  First, trying to start a new business in an already saturated market is not the best decision.  Yes, you might be able to compete, taking business from established businesses, but they have the advantage of brand loyalty, and if they are larger businesses, they have a price advantage due to economics of scale.  In short, you are not going to get much.  Second, college students don't have much money.  They are not going to care much about quality, if it costs more.  And in general, if a household product or cosmetic does its job, no one cares about quality anyway.  Trying to market more expensive products to poor college students is just plain a poor decision.  College students are looking for convenience (they are already going to the store to buy other products, so they are not going to go out of their way to buy something somewhere else that they can get there) and cheapness (they don't have much money, and getting their clothes washed cheaply is more important than the quality of detergent they use).  The market research suggests that in a college town, a business buying and delivering the cheapest products would be more profitable.  Your customers don't have any choice in brands (perhaps there could be an extra fee for that, so that students who need special products, like hypoallergenic detergents, still have an option), and that means you can shop around, buy in larger quantities from the cheapest store in town for each product, and then you can save your customers a little bit more money and save them the time they would spend shopping.  A few extra hours a week for homework or recreation might be valuable enough to college students for a reasonable delivery fee.

The takeaway from all of this is that when you get into multilevel marketing, you are a customer.  You are not a business owner.  You are a product buyer, not a product seller.  If you are selling anything, it is a dream that is largely a lie.  Your odds of making money are worse than your odds gambling in horse races.  If you are still determined, instead of picking the most attractive option, at least do your market research, because otherwise, your odds are very likely to be even lower than what I stated above.  Your odds are far better if you pick a multilevel marketing scheme with high odds of success in your area.  Better yet though, drop the multilevel marketing entirely, and actually start your own business.  Good market research will often help you to identify needs in your area that are not well met, and that will have higher odds of success than the best multilevel marketing scheme in the best location, and you will probably start making a profit far sooner as well.  And don't forget a good business plan.  No matter what you are doing, business owner or not, if you are in charge of your own schedule and your own work create a business plan and follow it.  This should include a budgeting plan and an exit strategy if you find your business is not profitable enough to justify continuing.  Because sometimes, McDonald's is the better option.



I used this article as reference for the numbers.  It is an excellent analysis of multilevel marketing in Amway, from someone who was a distributor for three and a half years.  If you want more solid evidence against Amway being a profitable option, read this.

https://www.cs.cmu.edu/~dst/Amway/AUS/stats.htm

Sales Tax Parity

The subject of whether states should be allowed to legally obligate retailers based in other states to collect sales tax has been something of a hotbed recently.  On the conservative side, the claim is that brick and mortar stores suffer, because they have to collect sales tax, while online businesses only have to collect tax if they have a physical presence in the state.  The liberal claim is that sales tax tends to stay low enough that normal price fluctuations for many goods make a significantly bigger difference.  If this is true, then the claims that people can usually find products for cheaper online, because the sellers don't have to collect tax, is unfounded.  There seems to be several important details that are ignored though.

The first is shipping.  Brick and mortar stores ship everything to a central location.  This allows them to take advantage of bulk rates for larger shipments.  The customers then come to the physical location, eliminating any obvious outward shipping costs.  Online retailers have to ship to their own location, and then they have to ship to individual customers.  They cannot get bulk rates on the outward shipping, because the destinations are residential and the products are individually packaged.  Depending on the particular product, shipping can easily be much higher than even the highest state sales tax (as of 2014, the highest state sales tax was 7.5%).  This does depend on the particular product.  A diamond ring worth $5,000 could cost $5 to ship, skipping things like insurance, and even with insurance, the price barely approaches 1% of the value of the item.  An online retailer would definitely benefit from not having to collect sales tax.  Most products, however, do not have such a low shipping cost to value ratio.  A vast majority of lower cost products cost enough to ship that shipping can run as high as 50% to 75% of the value of the product, and for products worth less than $20, you can easily end up paying several times the cost of the product in shipping.  The important fact, however, is that a vast majority of products you can buy online cost more shipping than sales tax would cost (and, in case you want to discuss free shipping, someone is paying for it; usually it is worked into the price of the product or other products commonly purchased with that product).

The second detail is the fact that a vast majority of online retailers are small businesses.  In fact, there are many times more online businesses at this point than there are brick and mortar stores.  What this means is that forcing online retailers to collect tax is going to do far more harm to small businesses than the current situation, even if the claims about taxes and pricing were true.  The big argument right now is that small brick and mortar stores deserve a fair playing ground, but the comparison is always against huge online retailers like Amazon.  Amazon does not have lower prices because they don't have to charge sales tax.  They have lower prices because they operate at a much larger scale than small businesses.  Compare these small brick and mortar stores to small online businesses, and you will find that the big pull for online sales is not price.  Prices for small online businesses are often comparable, if not higher than small brick and mortar stores.  People shop online for niche products because they cannot find a nearby brick and mortar store selling what they want.  Forcing these small online businesses to collect sales tax is going to bankrupt many of them, not because of lost sales, but because the extra work involved is too expensive.  We are not talking about collecting tax for one state here.  Online businesses will have to keep track of sales from every state with sales tax.  They will have to keep track of what state what tax collection goes to, and they will have to do all of the tax paperwork for every state they sell to.  Brick and mortal stores only have to collect tax for the state they are located in.  Online stores will have to deal with that on a grand scale.  It is beyond absurd to expect small businesses to do this.

The third ignored detail is the purpose of sales tax and of taxes in general.  Brick and mortar stores cost the state money.  There are law enforcement costs associated with protecting the physical property of the business.  There are costs associated with utilities and traffic.  The tax is actually paid by the customers.  Just like the businesses, the customers cost the state money.  It is reasonable for a brick and mortar store in a state to be required to collect sales tax, because all parties involved in the transaction owe a debt to the state for protection, social programs, and state administration.  In online transactions across state borders, this is not the case.  Customers living in a given state might owe the state, but the seller does not.  If the seller owes anyone, it is the state that the seller is located in.  Placing the burden of collecting sales tax for other states on the seller is unethical, because the seller is entirely unaffiliated with that state.  It comes down to the same thing as before: We are talking about forcing millions of small online businesses to collect an manage tax for a huge number of states.  Now, a bunch of one person businesses suddenly have to keep track of tax rates for every state.

To help understand the magnitude of forcing online businesses to collect sales tax for all states, consider the following.  In the U.S., only 5 states do not have sales tax.  That is 45 states that do.  State sales tax rates range from 7.5% to 2.9%.  Changes in state sales tax rates are fairly common, so an online business would have to keep close track of when state tax rates change and by how much.  It would have to track 45 different values, and it would have to keep a close watch on the other 5 states as well, because there is no guarantee that they won't suddenly decide to add a sales tax.  It would also have to keep track of where each sale came from, how much tax was charged, and when it was charged (in case of rate changes).  It would have to sum all of the taxes for each state every year, and it would have to do tax paperwork for 45 states every year.  This is the kind of work that most businesses have to hire a tax lawyer for.  Small businesses cannot afford a tax lawyer, and if a small business owner was skilled enough to keep up with all of this, it would probably pay better to get a job doing it exclusively.  In short, dealing with taxes at this level is a full time job, and small business owners already tend to work 60+ hours a week.  This is not just economically unwise.  It is downright unethical.

The real problem is that forcing online businesses to collect state sales taxes does not increase fairness.  It removes an imaginary inconvenience from brick and mortal stores, and it utterly destroys online businesses.  Brick and mortar stores only have to track sales tax for one state, making online businesses track sales tax for 45 states in no way makes things more fair.  It cruelly eliminates a huge section of the competition for small brick and mortar stores, and it dramatically increases unemployment.


http://taxfoundation.org/article/state-and-local-sales-tax-rates-2014

The Problem With House X

X is typically some kind of technology.  Maybe it is an operating system.  It is commonly an office suite.  In graphics, it is probably an image editor or a suite of image manipulation tools.  In businesses with any kind of tech department, it is a programming language.  House X always seems like a good idea to the management who imposes it.  Sometimes it even seems like a good idea to the victims.  In the long run though, it tends to cost the company more money, reduce job satisfaction, and reduce productivity.  House X, whether anyone ever realizes it, frequently costs far more than it saves.

Probably the two most common house Xs are operating systems and office suites.  The operating system is usually Windows, except in the graphics industry, where it is Mac OS X.  The office suite is almost always MS Office, though Word Perfect has some market share as well.  The excuse for picking a house X is that it will avoid compatibility problems if everyone uses the same thing.  If everyone uses Windows, tech support will be easier.  If everyone uses MS Office, there is no file format drama.  These are good reasons for supporting a house X, but without looking at the costs, an informed decision cannot be made.  If a business forces all of their workers to use Windows, a good portion of employees will loose some productivity.  There is no perfect user interface, and different employees will have an easier time with different ones.  Some might be more familiar with one or the other.  Some might have an easier time with resources in one place than another.  Forcing everyone to use a house OS is bad, because it limits productivity of those who are less experienced and less comfortable in that environment.  For office suites, cost is a major factor.  Forcing everyone to use MS Office is going lock the company in.  The regular upgrades necessary to keep up are extremely expensive.  The software is so complex that expensive training will be necessary with each upgrade.  The user interface stuff applies as well.  The company could save tons of money encouraging employees to use simpler and less expensive software.  The file format problem is easily solved by either requiring a specific file format or by requiring document submissions to be in PDF format.  This is much better than limiting employees to something that is going to have very high long term costs, and it is much better than limiting employees to something that many will have a hard time using.

The worst house X is not OS or office suite.  The worse house X is programming language.  The reason is that different programming languages have different strengths and weaknesses.  There is no general purpose programming language.  Low level languages can do anything, but they tend to take longer to develop in.  High level languages tend to be designed for specific purposes, and for those purposes they are much faster to develop in.  For other purposes though, they are often much slower to develop in, and they are also often harder to debug when used for other purposes.  Programming languages are like tools.  A programmer that knows many languages has a lot of tools in the box.  A programmer that knows few is much more limited.  The problem comes when a CTO that knows few or no languages decides that the company would be better off if it did everything in one language.  It turns out that most CTOs have only heard of one programming language, and they think it is the perfect language for everything.  That language is Java, a language made for networking household appliances.

Java's one benefit is that it will run on most platforms (which would matter more if the company did not already have a house OS).  There is really nothing that Java can do that there is not another language that can do better.  When a company selects a house programming language, it is like discarding all of the tools in box except for the duct tape.  Duct tape is extremely versatile.  It can do nearly anything.  In a pinch, it is awesome.  You also don't use it when you have another tool that is better.  Duct tape can do almost anything, but there is nothing it can do that something else cannot do better.  It is an excellent emergency solution, but nothing more.  Java is like duct tape in this way.  It can do almost anything, but it cannot do anything especially well.  Imagine a carpentry company that takes away all of the tools and leaves the carpenters with only a hammer and nails.  Maybe they could carve nice wood work with those tools, but it would take forever, and it would not be as nice as it would have been with a set of chisels.

In general, house X is a bad idea.  Sometimes it is necessary, and maybe the benefits outweigh the costs.  Most of the time, it is a "good idea" coming from someone who is not qualified to make the call.  When solutions are chosen dynamically by those qualified to choose, the right tool for the job is far more likely to be used.  When an unqualified CEO or CTO chooses a house X, it prevents those more qualified from using the right tools, which results in major costs to the company that are totally unnecessary. 

What it comes down to is: If you think you are educated enough to make the call, then why do you need that IT department in the first place?  If you are going to hire people with focused education in other areas than your own, trust that they are more qualified to make decisions in that domain than you are.  If you don't, you are going to end up with a bunch of Java programmers that don't have any other tools or education outside of Java, and that is going to result in crummy software that takes too long to write, because no one competent wants to work for you.

Real Life is Broken

Jane McGonigal says reality is broken.  She believes that we need to make the world more like a game.  While designing a college course for game design, I realized the full truth of this.

The biggest reason that gamers prefer game worlds over real life is that game worlds offer consistent rewards.  Each time a player finishes a task, a reward is provided.  The biological effects of this reinforce playing the game as positive behavior.  In other words, the rewards tell the brain that playing the game is good.  Real life is not like this...but it used to be!  This fascinating realization could be the key to improving productivity and job satisfaction on an enormous scale.

Long ago, before mass production and huge corporations, most people worked for themselves.  Even the lowest classes during feudal times typically had a flat or percentage tax that allowed rewards to scale with productivity.  Instead of working up through the ranks of a corporation, most people became apprenticed to an artisan or learned the family business, and once they finished this, they became self employed.  When they produced something, they were immediately rewarded.  Blacksmiths, tailors, carpenters, and other craftsmen were rewarded with a finished product, and when the product was sold, they were also financially rewarded.  Farmers were rewarded with a harvest and money, if they could afford to sell some of it.  Merchants were rewarded in money and traded commodities.  With the exception of domestic servants, who were rewarded much like modern salaried workers, and nobility, who were often rewarded without much work at all (as well as occasional random events, like droughts), nearly everyone was quickly and proportionally rewarded for their efforts.  Even beggars were rewarded fairly proportionally (more time and effort spent, more donations).  It was well understood among the lower class that harder work yielded greater rewards.  Since then though, the world has changed.

In our modern world, effort is not rewarded.  Contrary to upper class clichés, working hard is hardly even part of the road to success anymore (heritage and luck being some of the biggest factors).  A vast majority of employed people do not get rewarded quickly or proportionally.  McDonald's workers do not get paid more for being more productive.  Spending 15 seconds creating a sandwich is hardly as rewarding as spending several hours making a set of horseshoes (though equally mundane), and making the sandwiches in 12 seconds does not result in higher pay than making them in 15.  Helping an endless supply of customers check out at a grocery store is nothing compared to a full harvest at the end of the growing season.  In short, modern jobs are just not motivating.  Unmotivated work is low productivity work.  It is also typically low quality work as well.  Without a good reward cycle, modern workers have lower productivity, work quality, and job satisfaction.

This can be fixed, but it would have an initial high cost.  The problem is that employees are paid based on time.  Either hourly or salary.  Salary pay is the way nobility was rewarded long ago.  Salary is a reward that is given regardless of productivity (we are going to ignore things like getting fired, because they are more likely to encourage blaming and cheating than increased job satisfaction and productivity).  Hourly pay only rewards the presence of the employee.  It does not reward actual work.  Profit sharing can reward actual work, but it ends up being an average.  If there are twenty employees, and half of them work hard and half of them do not, no one is getting rewarded proportionally, and the less productive workers are getting rewarded despite doing a poor job.  If the company makes multiple products, stock based profit sharing could be rewarding workers doing a poor job on one product, when another product is successful.  This kind of reward cycle is only marginally more effective than purely hourly or salaried pay.

Productivity is very hard to measure.  How do you measure productivity for a cashier?  Profits on sales does not work, because the cashier does not determine markup on items or what the customer wants or needs (and the job of the cashier is to get though the line fast, not to spend 5 minutes upselling every customer).  Total sales is an equally poor measure, because over-staffing (the fault of management) or poor business (the cashier is the least likely person to be at fault) could affect it.  In engineering and other higher end jobs, it is even harder to measure productivity, because the apparently least productive employee could be the one holding everything together and helping everyone else to maintain high productivity (this is actually fairly common).  This is a major problem to fixing reality.

The only solid solution I can see is breaking things into smaller units.  Even this won't solve all of the problems, but it would improve things.  More smaller businesses and less larger businesses would make this far easier, but that is unlikely to happen.  Retail corporations could offer more autonomy to local stores, and local stores could offer more autonomy to individual departments within those stores.  Industrial corporations (everything that produces products, including software, hardware, and media) could provide more product level autonomy, and manufacturing could provide more factory level autonomy and even process level autonomy within a factory.  This would allow for more focused profit sharing and productivity measurement, which would increase reward accuracy.

Recently, I discovered a solution to one of the biggest hindrances of modern businesses.  The hindrance is that managers usually have a poor understanding of the processes they are managing.  In tech, this means that managers often have a poor understanding of the technology, which leads to demands and expectations that are impossible to realize or significantly harmful to the workers and the business (for example, CTOs that decide it is better to use just one programming language in-house, instead of selecting the best one for each task).  In other industries, this leads to large numbers of minor inefficiencies, like replacing the towel dispensers in the bathrooms every month, as the prices of different types of towels fluctuates, or retraining employees to put the ingredients of the sandwiches in a different order every few months.  Perhaps a better management model would be to have managers act as oversight, instead of bosses.  Those under a given manager would act fairly autonomously.  The manager would provide guidance where needed but would only make executive decisions when the employees violated rules or specifically requested help.  The reason I bring this up is that it fits very well into the idea of making components of a company more autonomous.  Adding this would further improve job satisfaction, at the same time as eliminating a large number of common inefficiencies in businesses.

At this point, I don't think we can ever return to the reward cycle of the past, but we can adjust things to get enough closer to enjoy many of the benefits.  Our world is so different from the past.  Processes are so much more complex.  Much of modern business must rely on teamwork to get jobs done, and this makes a perfect reward cycle impossible.  If we try though, we can get close enough to realize major improvements in productivity, quality, and job satisfaction, and this will make the world a much better place.

Small Businesses in the 3rd World

Recently, American investors have started funding startups in 3rd world countries.  It turns out that in Africa, the Middle East, and Southern Asia, there are a lot of artistic skills, without much local demand for the products.  Well, Americans have both the funds and the desire to purchase these products.  Some U.S. investors and charities have started providing funding for people in these 3rd world countries to start their own businesses based around these local arts.  Among other things, the funding is used to obtain training, pay for raw materials, and start shipping the goods to the U.S. where they can be sold.  Programs like this are helping to lift people in these countries out of poverty, and they are providing middle and upper class Americans with goods that are often of superior quality to factory produced products.  The problem is that this does not do anything for our large numbers of people in poverty here in the U.S.

Helping starving people in 3rd world countries is a noble goal.  Helping them in ways that reduce their dependence on us is even better.  It cannot last though.  We are not in any position to be giving people outside the U.S. significant amounts of our time and effort.  Poverty is increasing in the U.S., and we have plenty of our own starving people that need our help.  Our welfare system takes away some of the burden, but it adds others, partly because it is poorly designed.  What we really need is not U.S. investors providing funds for startups in Africa.  What we need is U.S. investors providing funding for U.S. poor.  Most of these businesses that we are funding in 3rd world countries could exist in the U.S. as well.

Americans can make shoes and rugs and many of the other things that we currently import.  Training is not that expensive, and it does not have to involve expensive trade schools.  Things like knitting and weaving can be learned on the internet.  Those with any level of artistic talent can learn how to make high quality costumes out of fairly cheap materials, and the current cosplay trend would help fetch some pretty good profits on this.  Things like blacksmithing and metal casting are also easy to learn on the internet, and in most areas of the U.S. there are groups that would be willing to help with training for cheap or even free.  This just brushes the surface.  There is a market in fixing old toys.  Learning to make simple web sites for individuals and small businesses is pretty easy.  Many people with unusual talents have managed to make a decent income just recording and publishing YouTube videos of their performances.  All of these things are artistic in nature, which means that they are not subject to the same sort of competition that normal jobs and products are.  There are only two things most poor Americans are missing: time and training (and sometimes equipment and materials).

American investors and charities should be looking at the American poor, instead of, or in addition to, those living in 3rd world countries.  They should offer funding, including enough for living expenses and training, for Americans who have or want skills in things that would provide the opportunity to start a small business based on artistic skills.  Besides helping those in the U.S., this could also be quite profitable for investors.  Demand for artistic products in the U.S. is fairly high, especially among the upper class.  Art knives made by reasonably skilled blacksmiths can demand $10,000 a piece or more, for products that take about one month to produce.  Hand crafted shoes can bring in a few hundred to a thousand dollars each for a week of work or less.  An old doll that takes a few hours to clean, repair, and repaint can bring in $20 or $30 with a half decent job (more for an experienced artist).  Hand knit or woven clothing and rugs can bring in a reasonable income as well.  Many people have managed to make a decent supplemental income with YouTube videos, and good ones can bring in ad revenue for months or years after they are published, without any additional work.  Even for those with less skill, these kinds of work can be done from home and supplement a poor income enough to make a significant difference.

What about those who are starving in 3rd world countries and do not even have food stamps to help them out?  The more we help our own poor, the more resources we will have to help others.  Every poor American we help out of poverty in a sustainable way is another potential donor, investor, or customer for poor people in other countries.  Instead of looking at investing in Americans as a drain from funds that could be invested elsewhere, consider it an opportunity for a more sustainable investment model for everyone in need.  Any investment that pays off will provide additional funding that can be used anywhere.  In addition, investors might encourage Americans they help to invest in or donate money to organizations that help people in other countries.  One rich person investing in some businesses in Africa will help a few people, until something happens that prevents that investor from continuing to invest (death or massive medical bills, for example).  Several thousand middle class Americans donating money to charities that help people start businesses in Africa will ultimately provide far better funding and be far more resilient.

The best strategy here is probably a mentorship strategy.  Investors should start investing in hobby-style artistic professions for poor Americans.  They should provide paid or volunteer mentors for every person they fund.  Those mentors should help beneficiaries manage their finances, find training, and setup their operations.  The mentors can also report back to the investors, to allow them to bail as soon as possible when a beneficiary is not using the funds wisely.  Another responsibility of a mentor should be to encourage beneficiaries to help out others once they are able to, and this theme should be repeated during regular meetings of the beneficiaries with the investors.  With mentors, chances of success will be much higher, and imminent failure will be much easier to detect much earlier.

The long term effect of this will be to teach Americans that cannot find jobs to create their own.  It will improve the U.S. economy, and it may even reduce the burden of the poor on the U.S. welfare system.  More importantly though, it will provide Americans with the means to provide aid for others far better than we are currently capable of.  A few rich investors helping the 3rd world poor start businesses to get them out of poverty cannot compete with what a robust U.S. economy composed of a large number of American middle class donors can do for them.  A common religious theme applies here: You must help yourself before you can truly help others.  To maximize the good we can do, we must first remove the mote from our own collective eye.

Hobby Lobby and Mandatory Benefits

The Hobby Lobby case was an extravagant law suit.  Of course religious freedom should have won.  There should never have been any question.  The problem was not with Hobby Lobby, and it was certainly not about human rights.  The problem is with who carries the obligation to enforce those rights.

Consider how this would play out: The government decides to enforce the right to own property by putting businesses in charge of it.  Now, businesses are legally required to handle things like evictions and property deeds for their employees.  If an employee is robbed, the employer is required to investigate and bring the thief to justice.  Oh yeah, and this only applies to full time employees.

Now, considering the following: The government and the majority of Americans establish that adequate medical care is a fundamental human right.  The government comes up with a list of medical care related things that every person should have free access to.  Now, to enforce this the government does two things.  First, it puts enforcement in the charge of for-profit businesses.  Businesses are now required to provide their employees with the list of things that every person should have free access to.  Now, we cannot forget though, this only applies to full time employees.  The second thing the government does is to mandate that anyone who is not a full time employee must pay, out of their own pockets, for insurance.  This is great.  Now, the government says that adequate medical care is a fundamental human right, so we are forced to enforce this right ourselves on an individual basis.  That makes perfect sense.  Imagine if this was applied to freedom of speech.  If the government tries to shut us up, our only recourse is to fight the government as an individual.  Appealing to the law would not be an option, because it is our own problem, not the government's.  This applies equally to medical care.  The government is pretending to provide what has been established as a fundamental human right by saying that for-profit businesses and individuals have to enforce this right.

The Hobby Lobby case should not have been about religious freedom.  That should have been a given.  The Hobby Lobby case should have been about responsibility.  If the government is not responsible for enforcing human rights, then no one is.  Enforcing rights is the purpose of the government.  The reason health care has become a problem in the first place is that the existing system, including mandatory benefits and health insurance, is entirely inadequate.  Forcing people to subscribe to the current system can hardly be considered enforcing a fundamental human right to adequate medical care.  In fact, it is little more than another way for the government to control us and subject us.

The big problem with requiring businesses to enforce human rights is that it forces people to work for them.  This is a rather foul case of discrimination against freelancers and business owners.  Human rights do not just apply to those who work for someone else.  If something is a right, then, by definition, it applies to everybody.  Further, allowing businesses to get out of this obligation for part time employees is even worse discrimination against the poor.  Clearly, the American lower class does not have the right to adequate health care, based on the precedents set by the law.  This also gives businesses far too much power.  A business can decide who has the right to adequate medical care merely by setting schedules and employee classification.  If my employer does not like my religion, my political ideology, my race, or even my hair color, a simple reduction in hours can change my classification to part time, exempting me from the right to adequate medical care.  Even worse, now I am legally required to go buy insurance (which, just for the record, does not provide adequate medical care), even though my pay check just got substantially reduced.  Choosing who human rights apply to is not the responsibility of for-profit businesses.  In fact, even governments have no business discriminating in this area. 

Enforcement of human rights is the job of the government.  It is not the job of businesses, and it certainly is not the job of the individual.  If individuals have to enforce their own fundamental rights, then the government is obsolete.  A government that puts the burden of enforcing human rights on businesses and individuals is lazy and corrupt.  If adequate health care is truly a fundamental human right, the government needs to get off of its lazy butt and take care of the problem.  This is the government's job.  It is not the job of businesses or individuals.  Further, if adequate heath care is a human right, it should apply to everyone, not just those who work full time and not just those who are willing and can afford to buy into the system.

Hobby Lobby should never have needed to defend its religious rights.  The government never had any business placing the burden of providing a fundamental human right on the business in the first place.  There are certainly cases where religious freedom must be balanced with other human rights, but it was entirely wrong of the government to place Hobby Lobby, or any other business, in this position in the first place.  Not only could this pitting of religious freedom against the right to adequate health care have easily been avoided, it should have.  If the government had done the right thing in the first place, this issue would never have arisen.

Account Proliferation

Now days, when you get a job in an industry that pays half decent wages, they typically require you to setup an account with some web services.  Maybe it's Dropbox.  Perhaps it is Google.  One is probably a project or schedule management tool.  There are also plenty of job specific services you might need.  For software development, you will probably need an account with Github or some other software subversion repository.  Just to get a decent job, you typically need at least a Facebook account and a LinkedIn account.  If you change jobs, your new job will probably use a slightly different set of services, requiring you to setup several more accounts.  During your lifetime, you may go through 5 or 6 jobs (and that number seems to be increasing).  If each job requires you to sign up for 3 different web services, you will have 15 to 18 of them by you retire.  You will probably forget about at least half of them.  Most of the other half will be useless to a retiree

If you decide to get a college degree, you will also see this problem.  Your English teacher will probably expect you to sign up for an account with an anti-plagiarism service.  Your math teacher might encourage you to sign up for a free tutoring service, and advanced math teachers will want you to get an account with some company so you can get the student edition of their math software for cheap or free (and then you will be stuck only knowing how to use an extremely expensive piece of proprietary software; that's another discussion).  Many teachers like file repository software like Dropbox, but every teacher likes something different, so expect to be required to sign up for 2 to 4 of these services (or more, depending on the major).  There are also major specific services you may need.  For Computer Science, you will probably be expected to get a Github account and maybe an Amazon Web Services account.  For any kind of art related major, you can expect to sign up for an account with at least one website that serves as an art repository and gallery, like Deviant Art or Flickr.  You may also be expected to get an account with some popular art forum (though, again, different teachers will prefer different options).  In Electric Engineering, you will probably be expected to sign up for an account with at least one company that produces complex components like micro-controllers, for access to programming libraries, tutorials, and datasheets.  In Physical Education or any other health related discipline, you will probably need accounts for various medical sites, maybe a few forums, and possibly some nutritional data repositories.  Communications majors will likely be required to sign up for at least 20 accounts, including social media services, web forums, and even advertising services.  Depending on your major, you could end up with 5 or 10 more accounts.  Now, admittedly, some of them will be necessary for your jobs when you graduate, but again, while there is some overlap, it is very common for different employers to use different services.  As before, probably at least half of them will be useless once you graduate.


Now, this might seem like a trivial and benign problem.  Unfortunately, it is not.  There are many problems this causes.  The least harmful is the extra space taken up by unused accounts.  Every account for a web service uses some amount of storage space.  There are already a huge number of unused accounts spread over the internet, wasting a lot of space.  This is fairly easily mitigated though.  Service providers can delete accounts that have been inactive for a certain period of time.  If they want to keep the accounts open, just in case, they can buy more storage space, and when the cost is spread out among a large number of services, it can seem pretty small.  This is a problem, but it is not a critical one.

A worse problem is privacy.  If you have 20 accounts with different web services, you have probably already forgotten about half of them, unless you use them all very regularly.  All of those accounts hold some amount of your private information.  I'll discuss the security related things later, but for now, let us look at information that could be misused, but which is not a critical security risk.  The first, and most obvious one is credit card information.  Skirting around the subject of security (you did willingly give this information to these services), credit card data can be used in many ways.  It could be used to run credit checks.  It could be used to track you and your purchasing behavior.  Some of this is easy, some is more difficult, but a lot of this is possible and legal if you willingly gave the company your information.  Your physical address, phone numbers, and email address are all private information that could be misused without breaking the law, if you provided them willingly.  Some of these services might suddenly decide to start sending you ads a few years down the road, when their business is struggling.  You might get junk mail and telemarketing calls as well.  If one of these services is bought out, the buyer might decide to sell your personal information (not necessarily legal, if the original company agreed not to, but it happens anyway).  This is not necessarily a critical problem, but it could definitely cause a lot of inconvenience.

The worst problem is security.  We have discussed legitimate abuse of private information and some illegitimate abuse that is only indirectly related to security.  Security itself is not just about abuse by the service provider though.  The more accounts you have, the higher the odds are that at least one provider has poor security.  In fact, a majority of web services use security that is well below the accepted security standards for web.  Even something as simple as how your password is stored on their server can make a huge difference.  It is a well known fact that a vast majority of people use the same password or small set of passwords for all of their accounts.  If a hacker can get your password from the most trivial site, he can probably use it to hack into all of your other accounts.  If you have 10 or 20 different accounts, the odds that one of them has fairly weak security is very high.  All it takes is one.  The more accounts you have, the worse your odds are for getting hacked on all of your accounts.  This can give an attacker access to all of the private information you have on all of your accounts.  And, hackers do not have business ethics, high legal liability, and high profiles like the service providers do, so they are far less likely to avoid abuses of your data.  In fact, this is one of the most common techniques used by identity thieves to get your private information.  They don't have to hack into your bank.  They just have to hack into that Sony account to get your password, which they can then use to log into your bank account with ease, regardless of your bank's security.

There are ways to mitigate all of these.  The first is up to the service providers, and it only affects end users by increasing the prices of paid services.  The second can be mitigated by researching service providers before signing up for accounts (though, your employer or professor may still insist) and by asking for service providers to cancel your accounts and delete your information when you are done using them.  There is no law stating that they have to comply (this may be in the works though), and in some cases, the law may even require them to retain records, but many providers will comply when they can legally do so.  The third can be mitigated by always using different usernames and passwords for every account.  Good luck with this though.  Password managers can help, but they just shift the point of weakness.  Remembering 20 passwords is extremely difficult, so you may be tempted to write them all down, but that is often worse than a password manager.  Using one really good password can also help a little, but if someone hacks the service provider's database, it will not matter how good your password is.  The only fool proof solution is to have 20 highly secure and totally different passwords, and then to memorize them all.  Like I said, good luck.

This is actually a pretty big problem.  A lot of people in positions of authority think it is appropriate to impose security risks on other people, without any accountability.  If an employer or professor requires you to use an insecure service, there is no responsibility for harm caused if your information is misused.  If you do your research and find that a certain service is a high risk, typically your only option will be to quit your job or drop the class.  If the class is required for your major, you might have to switch majors to avoid the security risk.  If you are lucky, you might find sympathy, but often people are so set in their ways that they will risk the safety of everyone else to avoid change.  This is a very serious problem, and anyone involved in perpetuating it should seriously consider the consequences.

I understand that many times, the use of web services is valuable and even necessary.  This does not justify putting others at risk though.  Those choosing what services to use, and those approving such decisions, have a moral responsibility to make sure that those services meet accepted security standards.  Those being required to use such services should also make sure they meet accepted standards, and when they do not, those people should band together in protest.  Frankly, I think colleges should regulate what services professors are allowed to make mandatory.  If a professor needs a file repository service, the school should provide an option that it has verified as compliant with accepted security standards.  The school does not need to run the service (in fact, in my experience colleges are often poor at running such services internally).  It just needs to have a standard in place.  If a professor chooses to use a service that is outside of school policy, there should a policy specifically exempting students from being required to use that service as a condition of their grade (and the professor should be required to notify students of this policy wherever such a service is used).  In other words, use of such a service should be optional, and students should not be expected to have any knowledge or understanding of course material that is offered only through unapproved services (note that this article is about services that require accounts, not free services that do not require accounts).  (Obviously, colleges doing this should also have an approval procedure to add services to the list.)  Businesses would do well to also adopt policies requiring security assessments of any service that is required as part of the job, and no service which has not passed such an assessment should be allowed to be used as a mandatory part of the work.  In short, people in positions of authority over others should have some sort of regulations set in place to avoid putting their subordinates at risk.  Sometimes such regulations will fail (even following accepted security standards does not make a site immune to hacking, just much more resistant), but this is not an excuse to avoid them altogether.  No one should be allowed to put someone else at undue risk as a condition of their education or employment without any accountability.

Mandatory Benefits Enforce Slavery

Freelance work is becoming a big deal in the U.S. for several reasons.  One reason is that the currently very poor economy (yeah, they claim it is improving, but really it is only getting better for the wealthy but no one else) is still making it extremely difficult to find decent work.  Right, you heard on TV that unemployment is decreasing, but did they bother to mention that most of the new jobs are low paying jobs?  Did they even point out that wages are staying stagnant while inflation is still increasing?  A lot of Americans are finding that freelance work is easier to get than permanent employment.  That is not the big driver of freelancing though.  Over half of freelancers are doing it entirely voluntarily.  They have chosen freelance work over long term full-time work because they like being their own boss.  They like setting their own hours.  They like the ability to choose what work they will do and what work they will leave to someone else.  Many even like the fact that they do not have to work a full 40 hours a week to get by.  Freelancing comes with a cost though: No benefits.

Aside from social pressure, wage slavery is primarily driven by mandatory benefits.  I know many people who would like to start their own businesses, but they cannot, because they cannot afford private health insurance.  Other benefits are a problem as well, but health insurance is, by far, the biggest problem.  I even know a few people who have their own businesses and work a regular job for the health insurance.  Businesses, like Lowe's, that offer these benefits even to part-time employees are a great blessing to business owners who cannot afford private health insurance.  (Years ago I worked at a Lowe's store, and at least two other employees there owned their own businesses, but worked 10 hours a week at Lowe's for the health insurance package.)  This is a problem, because it discourages freelance work and the creation of new businesses.  For the most part, only independently wealthy people can really even afford to start their own business, and I am not just talking about businesses with really expensive startup costs.  I have several computers, I have access to all of the tools I needed, I have all of the necessary knowledge and training, but I still cannot afford to start a software company, because I am stuck spending nearly all of my time working for someone else.  Even most middle class employees are stuck in this situation.

What is the solution?  Get rid of mandatory benefits.  In fact, ideally, all non-monetary compensation should be prohibited.  Someone still has to take responsibility for health insurance, because costs are still too high.  Obamacare made health insurance mandatory, but it did not solve the underlying problem, which is that it just plain costs too much.  At this point, a single payer system seems like the best option, and the retirement of Medicare and Medicaid would go a very long way in funding it (actually, if you add all the costs of the multiple Obamacare failures, it might make up the difference).  Further though, if there was still a deficit, another side effect of this would cover that and then a whole lot more.  The single most abused benefit is stock options.  Eliminate those and tax revenues (especially from CEOs and such) would increase dramatically.

Taking the burden of health insurance off of employment would release millions of Americans from wage slavery.  Of course, they still have to work to survive, but they would have much more control over that work.  Without employer provided health insurance, more people would be motivated to start new businesses, and more people would be willing to work for those businesses.  More people would be able to go the freelance route.  In addition, one more awesome benefit of this is that more people would feel free to choose part-time work instead of feeling compelled to work full-time, making more jobs available for others.  More Americans would be free to choose their own paths than ever before.

Now, I am sure you are aware that I endorse a basic income in addition to this, and a basic income would free Americans to a degree never before seen in all of human history (accepted history, anyhow).  Even without a basic income though, eliminating all non-monetary benefits would go a long way to increasing freedom in the U.S..  Of course, if stock options were eliminated, the increase in tax revenue would likely cover a large chunk of the costs of the basic income.  I just wanted to point that out.

Legalized Wage Theft

This article discusses a recent Supreme Court ruling that Amazon does not have to pay hourly employees for time spent in mandatory security checks.  The case involved several workers at Amazon warehouses, where post-shift security checks are mandatory to prevent theft, and the time spent waiting in line routinely takes more than 30 minutes.  The justification was an ill advised law from the middle of last century stating that work that is not essential and integral to the job position does not have to be paid.  The Supreme Court concluded that since the security checks could be eliminated without harming the work of the employees, Amazon (or rather, the company they pay to manage the warehouses) does not have to pay employees for this time.

This is an absurd case of legalized wage theft.  In this case, the verdict should be simple: The security checks are mandatory.  This makes them an integral part of the job.  Even by that old law, the employees should be paid.  Any mandatory activity that is part of a job should be part of the job description.  If it is not, then it should not be mandatory.  And, if it is part of the job description, then it is an integral and essential part of the job and thus should be compensated.

This ruling leads to other problems though.  It sets a legal precedent for allowing businesses to squander employee time without compensating them for it.  Some easy examples that have been given include sharpening knives in meat packing.  This is an important task, because it affects efficiency and safety, but, unless a knife will no longer cut, it is not essential or integral to the task.  The Supreme Court has said that their ruling does not apply to things done for safety or efficiency, but as a legal precedent, it does apply, because the law in question does not say otherwise.  Given this, another major concern is time spent putting on and taking off safety equipment.  Legally, employers no longer have to pay employees for these things, because the Supreme Court has ruled that something which can be eliminated without removing the ability to do the job does not need to be compensated.

The real problem here is that employers have been given a level power over employees that is entirely abusive.  What if Amazon's security checks get longer?  What if employees are now stuck in line for 2 hours?  It is still not essential to the job, and the Supreme Court has declared that it is permissible to detain employees on pain of firing without paying them for that time.  What if that time goes to 4 hours?  Now, most employees are staying at work for long enough to get significant overtime, but according to the Supreme Court, it is still totally legal to detain them without paying them for that time.

Frankly, I don't care about that old law.  It was a bad idea, but the problem is far deeper:  The Supreme Court has more or less signed over the right to hold employees against their will indefinitely, without any accountability.  At least requiring employees to be paid for the time is an effective deterrent.  If that security check is not part of the job description, employees should be able to easily bypass it without any adverse consequences.  If the employer tries to detain the employee, then the employer should be charged with and convicted of holding the employee against her will.  If it is part of the job description, then by definition, it is an integral and essential part of the job and should be paid as such.  Really, there should be criminal charges going on in this case, not just a question of getting paid for that time.

Pulling Your Own Weight

The idea of pulling your own weight is based on the idea that each person incurs costs for upkeep, including food, water, clothing, and shelter.  In the U.S., we might add things like internet and electricity to this, but really it comes down to the fact that every person has an upkeep cost, and someone has to pay it.  The idea of pulling your own weight is a very old idea, but also a conditional one.  Each person in a society that is capable of doing so is expected to pull their own weight.  Of course, there have been some deviations from this, but it is largely the most common way of running an economy.

There are some occasional historical exceptions to this, but there are also some chronic exceptions.  Historical exceptions almost always involve slavery.  Greek philosophy and math were built by people who did not pull their own weight.  In fact, if they had not had slaves to pull their weight for them, we would probably not have modern technology and science as we know them.  Slavery has been common off and on throughout history.  In the U.S. and most of Western civilization, slavery (overt slavery, anyhow) has been abandoned and replaced with an economic philosophy very common to cultures that reject slavery.  This philosophy is the idea that every person must pull their own weight.  Chronic exceptions to this are very common and will never go away.  Babies, young children, elderly people, and disabled people are not expected to pull their own weight, because they cannot.  Stay-at-home mothers are treated as not pulling their own weight in many parts of modern society, however this is a filthy lie.  They may not be producing goods, but stay-at-home mothers are doing work that is far more important than most of the work done outside the home.  Now, the slavery exception is becoming an unusual one that is likely to overturn how we view economy, probably within the next half century.

In older economies, the pull-your-own-weight ideology was a fairly sound one.  While it is possible for a small number of people to provide for a large number, the work involved has been excessive.  One slave working 16 hours a day might be able to provide the needs of ten or twenty other people, but that slave cannot have any freedom because there is just no time for it.  Modern technology has changed this though.  Besides finding more efficient ways of producing, it has also provided ways of replacing human labor with mechanical slaves.  Mechanical slavery is completely ethical.  The machines can work 24 hours a day, and they never need time off or personal time.  The only down time is time spent on repairs and maybe upgrades.  Experts estimate that this ethical form of slavery will replace about 50% of the human workforce by 2050.  This presents a very serious ideological problem.

Here is the problem: The U.S. economy is based on this pull-your-own-weight ideology.  We are in the process of rapidly replacing human workers with mechanical slaves.  These two things are completely incompatible.  If we replace half of the human labor force with slaves and then still expect the humans to pull their own weight, we are expecting the impossible.  Actually, we are perhaps doing something worse.  We are missing something important. What is the actual weight of a human?

The "weight" of a human is the amount of labor required to meet that human's needs.  Slavery with human slaves does not change the weight of a human; it just displaces the labor.  Some human still has to pull the weight.  Slavery with machines slaves, however, does change the weight of humans.  Replacing human labor with machine labor directly reduces the human labor required to meet the needs of humans.  This is what we are missing: As we automate more processes, we are reducing the weight of humans.  The problem is that we are not accounting for this.  We have high unemployment largely because we have reduced the weight of humans, and those humans that are still doing the same amount of work are now pulling more than their own weight.  The result is that there is not enough work left for everyone else, because their weight is already being pulled.  Unfortunately, because we have not noticed this problem, we are not distributing the results of the work appropriately.  The consequence is that some people are pulling more than their own weight, and they are getting the proceeds of that.  The people that are not able to pull their own weight are stuck without enough to survive, because their portion is being given to the people that are pulling their weight for them.

This is complicated, and it is not obvious that this is what is happening.  Further, there is a very important reason that this is happening: We have reached a point where it is actually substantially less efficient for each person to pull their own weight.  When each person's weight costs 2 to 4 hours of work per day (and, when that burden is centralized to one or two people per family), it is fairly efficient for businesses.  Each employee spends enough time working to easily keep up with overhead.  Now, however, each person's weight comes out to around 1 or 2 hour per day, or even less.  When centralized, this comes out between 10 to 20 hours a week.  Having every employee work half time doubles the overhead, because the number of employees are doubled (reducing hours does not reduce overhead).  In addition to that, higher end jobs often have warm up and cool down time that results in unproductive hours on each end of a shift.  This means, in an 8 hour shift, if an hour at each end is unproductive, 75% of the work time is productive.  In 4 hour shifts, productivity is reduced to only 50%.  In lower end jobs this effect is dramatically lower, but in high end jobs (especially in problem solving work like engineering and science), this is a major obstacle to reducing hours (note that in these jobs, longer time between shifts tends to increase the unproductive warm up time, so 8 hours three days a week is not an efficient solution either).  This is an efficiency problem that is never going to go away.  It is just not efficient at current human "weight" for each person to pull his or her own weight.

Is there a solution to this?  Yes, but it is not a very popular one.  It is incredibly unpopular among conservatives, and it is at least mildly unpopular among liberals.  The solution is abandoning the pull-your-own-weight ideology.  We are quickly becoming a slave state, just like Greece was, except that we are doing it ethically.  If we do not abandon this pull-your-own-weight ideology, we are going to either let the majority of Americans starve as their jobs are replaced by machines, or we are going to have millions of Americans working workweeks so short that they are costing more overhead than the value they are generating.  Neither of these is a good long term economic plan.  One short term solution might be long vacation time, where each employee works "normal" hours, but only for 1/4 of the year, and the rest of the year is vacation time, however, that only partially mitigates overhead costs.  The most efficient solution is for some people to work 20 to 40 hour weeks at least 50% to 75% of the year, while everyone else lives off of the proceeds of that work.  Some kind of motivation would be necessary for those who work, and this would probably be complicated and difficult to do without resulting in an overprivileged working class and an underprivileged non-working class (ironic, given that historically the opposite happens).  Ultimately though, it is going to eventually become necessary, or we are going to have an epic economic crash when so many consumers starve to death that consumption drops below an economically sustainable level.

Things are changing rapidly.  Technology continues to advance faster than we can keep up with.  In the past, the impact of this has been primarily limited to the tech industry itself.  In the near future, however, this is going to have a massive economic impact.  If we are not prepared, we are going to suffer.  In some degree, the consequences are not predictable, but there is one thing that is predictable: If a large portion of human labor is replaced with machine labor, we cannot have a sustainable economy that is based in the pull-your-own-weight ideology. 

Taco Bell App

Taco Bell has come out with an ordering app that allows customers to use their smart phones to put in an order and pay for it.  As the customer approaches a Taco Bell location, the app asks if they want the restaurant to start preparing their food.  This process can involve almost no human contact (I suppose someone has to pass the food out the window, but ordering and paying is entirely electronic).

As this becomes more popular (Taco Bell is not the first to try this, and it most certainly will not be the last), a lot of jobs are going to be lost.  Eventually, most drive through orders will not require a cashier, because most of them will already be ordered and paid for before the customer even enters the drive through.  This will allow the drive through cashier position to be combined with another position.  It is also likely that the added convenience will reduce the need for inside cashiers.  Eventually this is going to spread to all fast food restaurants, because otherwise, they will not be able to compete.  This is going to add up to a lot of jobs that are lost.

It is about time!  Fast food restaurants severely underpay their employees.  They claim that they cannot afford to pay more.  I have argued this before, and I will repeat it again: A business that cannot pay employees enough to survive on is not worth existing.  Work that is not worth a living wage is not worth doing at all.  Pay that is below a living wage is just plain not sustainable.  A business that cannot pay a living wage is not profitable enough or valuable enough to justify its own existence.  Fast food is practically the bottom of the barrel (ok, agriculture is far worse, but also far less prominent).  Current Federal minimum wage, which most fast food places start at, generates well under the poverty level in income, even full time.  One of the most effective ways of reducing costs (so that employees can be paid fair wages) is automating processes and eliminating unnecessary employees.  Food assembly is hard to automate (though, certainly possible).  Automated order taking is now very easy to automate.  It is the low hanging fruit.  It is nice to see that fast food is finally figuring this out.

There is a catch.  The most common response to increased profits through automation is faster expansion and better shareholder payouts (or, even worse, increased CEO salary).  If Taco Bell choses to take this route, then not only is it not worth existing, it is actively worth destroying.  Why?  It is already vastly underpaying its employees.  It should take this opportunity to make its employment system more sustainable by raising wages.  Admittedly, eliminating maybe two or three employees will not save enough to pay all of the rest a living wage.  An effort, however, would be nice.  It would show that they care about paying their employees fairly.  If, instead, they spend the profits on something else, then they are showing that they could care less about their employees.  If this is the case, then the business does not deserve to exist, and additionally, it deserves to die so society no longer has to pay the costs of its freeloading on our unpaid labor (if it pays less than a living wage, then it is not paying for all of the labor it is getting).  I hope they do the right thing, but I am not holding my breath.

Donating Ourselves to Death?

We might be donating ourselves to death.  Wealth goes two ways.  The first, and most often noted, is how much money a person has.  The second, and most frequently ignored or overlooked, is how much stuff costs.  A salary of $350,000 a month sounds like a lot, but when a one bedroom apartment costs $59,000 a month, suddenly that salary seems a bit low.

According to one website, ¥350,000 is about the average monthly salary in Japan, and according to another ¥59,000 a month is about the average rent for a one bedroom apartment outside of a city center.  Right, it is yen, not dollars, but given the same values in dollars, those wages would not be that impressive given those costs.

Where ignoring costs and focusing on dollar amount becomes problematic is when average pay raise is less than average inflation.  When pay increases less than inflation, it is the same as pay decreasing by the difference.  This has been happening in the US, especially among the middle and lower classes, since at least 1960.  That, however, is not the subject of this article.

Modern companies are expected by many consumers to back popular causes.  Companies that donate to educational, environmental, or human rights causes are are revered by many consumers, and companies that do not are viewed as evil money grubbers.  The consequence is that companies feel obligated to back some popular cause, because otherwise they will loose business and eventually fail.  From a cost point of view this is problematic.

It is possible to reduce the income of the poor without ever touching their money or reducing their wages or welfare benefits.  All that is necessary is to raise prices without raising the wages and benefits of the poor.  An extremely effective way for the general public to do this is to make companies feel obligated to spend money on something that will not bring any profit.  Consumers who refuse to do business with companies that do not support some popular cause force businesses to spend more money on unprofitable things.  This, in turn, forces those companies to raise their prices.  Increased prices make the poor even poorer.

While supporting moral causes is a good thing, expecting businesses to do so is a misplacement of resources.  When a business donates to a cause, it is indirectly forcing all of its customers to donate to that cause.  If some of those customers cannot afford to donate, then this practice is unethical.  This kind of shopping habit perverts competition to force businesses to do things that are oppressive to the lower classes.  The correct application of market forces uses competition to keep prices low, and this application of competition supports a healthy economy.  Competition that values things other than price or product quality almost always results in increases in price and reductions in quality.  Admittedly, competition that encourages businesses to act ethically (from a business standpoint, not a popular cause standpoint) can be very good and can help keep workplaces safe and encourage ethical treatment of employees (though it still increases prices and/or reduces quality but justifiably).  Competition that encourages or forces businesses to start acting outside of their sphere of influence, however, is harmful to the economy, because it drains funds from the rich and poor equally and without their consent.

We might be donating ourselves to death.  The graduated income tax system is designed to put the majority of the tax burden on those with the majority of the money.  At first this may seem unfair, but a government that protects the ownership of property benefits the wealthy far more than the poor, because the wealthy have more to protect.  In addition, the poor cannot afford much if any of the burden, and what good is a government that favors protecting property ownership over the lives and well being of its citizens?  When businesses donate, they impose a sort of flat tax on all of their customers.  Of course, the rich pay more than the poor, because they spend more, but the poor cannot afford to pay any of this involuntary tax.  By donating to popular causes, businesses are harming the economy and robbing the poor.  When people refuse to shop at the cheaper stores because those stores do not donate to a popular cause, they are paying the more expensive store off for oppressing the poor.

It is not fair to blame the businesses for this problem, because they are not, for the most part, responsible.  They are responding to market forces.  If they did not do this, they would ultimately fail.  The blame goes to the people who blindly choose to avoid stores that do not donate without considering the consequences.  The blame goes to the people who are too lazy to donate directly and instead patronize businesses that donate so they can feel good about themselves anyway.  If a cause is worth supporting, it is worth donating directly, instead of spreading the burden to those who cannot afford it by expecting businesses to do the work of donating.

Philanthropy does not belong in for-profit business.  Those who want to donate to a cause should do it themselves instead of expecting someone else to do it for them.  It is hard enough for the poor without forcing them to donate to every popular cause.  This problem is one of the many reasons the US economy is struggling and taking so long to recover.

Data Cap for Monopoly?

I just read two articles on Comcast.  The first is about its proposed acquisition of Time Warner.  Evidently, the FCC has received some opposition to allowing the acquisition, because Comcast uses some rather monopolistic practices.  More or less, Comcast and Time Warner are using their size and market share to manipulate content providers into paying for services that most ISPs gladly provide for free.  Notably, one of the complaints comes from Netflix, because Comcast and Time Warner refuse to provide direct connections for free.

Direct connections to major content providers dramatically reduce internet congestion and improve the ability of ISPs to provide good quality media streaming.  As such, ISPs that provide direct connections to major content providers benefit themselves and their customers dramatically.  Very large ISPs, like Comcast, however, use their size to force content providers to pay for these connections.  Ultimately, the content providers feel forced to comply, because without the direct connections, their services will perform poorly for customers of those ISPs.  Sadly, the customers blame the content providers, even though the fault lies entirely with their ISPs.

The second problem with Comcast is its attempt to redefine language.  According to Comcast, charging extra when a subscriber goes over a data limit is not technically a data cap.  The FCC definition of "data cap" actually includes this kind of subscription model, with a clause explicitly exempting Comcast from this definition (the FCC working group that drafted this definition includes a Comcast VP, who presumably is responsible for this clause).  Evidently Comcast's size and market share gives it the power to define language in its own terms.  Note that the term "data cap" is commonly used by ISPs and individuals to mean any data limit, whether it be a hard limit or a sort of uptier limit where extra charges are applied when the limit is exceeded.  It is clear that Comcast believes itself to have power to alter the meaning of language.

The second problem is worse than the first, but they come down to the same thing.  Comcast's motive for using data caps* is exclusively financial.  Most data caps imposed by smaller ISPs exist to combat network congestion.  Comcast is large enough that it does not have congestion problems, but they would rather charge data caps to pay for upgrades than use a portion of their already very high profits to pay for them.  There is another, more nefarious and legally questionable reason for Comcast's data caps though.  Comcast does not count data transfers to and from its own services against the caps.  This means that customers using data heavy services may feel compelled to use Comcast's services instead.  Now, I do not know exactly what services Comcast offers, but I could easily imagine some examples.  Note that even if Comcast does not offer a specific service, it could easily add it at a future date.  The first service that Comcast could offer is a video streaming service.  Video streaming from services like Hulu or Netflix are certainly data intensive, and regular use of those services could easily hit a fairly large data cap.  If Comcast offered its own video streaming service, many customers might feel like they have to use Comcast's services instead of Netflix or Hulu, to avoid paying fees for exceeding the data limit.  This applies equally to digital media sales services, like those provided by Amazon.  Digital video files are large, and can be consumed faster than streaming video (because you can download many at a time, at a faster rate than you can view them).  If Comcast offered this sort of service, a data cap would definitely give it an advantage in the market of its subscribers.

The thing that all of these problems boil down to is monopoly.  Comcast is leveraging its huge market share to force content providers to pay for services that other ISPs provide for free, because they benefit both sides equally.  This is a monopolistic practice.  Comcast uses a data cap to increase its revenue, and gets away with it because of its huge market share.  Again, this is a monopolistic practice.  Lastly, and the worst of them all, Comcast uses its market share in its ISP service to gain an unfair advantage in its other services.  This is an extremely  monopolistic practice.  In fact, large companies have frequently been punished by the government for this last practice.  The MS lawsuit over its inclusion of Internet Explorer in the US (and Windows Media Player in the EU and now in China as well) was based on the fact that MS was using its Windows market share to give it an unfair advantage over other browser (and media player, outside the US) makers. This is monopolistic because it is using the popularity of one product to sell another unrelated product (internet connectivity vs internet based service, very similarly to operating system vs application).  Further, it is not just abusing the market share of one product to sell another unrelated product (IE and Windows Media Player might seem free, but the price is included in the cost of Windows); it is actually putting customers in a position where they are effectively being fined or otherwise charged extra for using someone else's product too much.

Very few ISPs do the oppressive and monopolistic things that Comcast does.  Most ISPs now offer unlimited data in all of their non-business packages.  Most ISPs provide direct connections to content providers at no cost, because they benefit just as much or more.  Most ISPs do not have enough market share to leverage things like data caps and direct connections to rip off customers and compete unfairly with content providers.  Most ISPs do not make anywhere near the profits Comcast does.  Comcast is not doing any of this because it is necessary to remain profitable.  It is doing all of this because it wants more money and it has the power to get it.  If it acquires Time Warner, it will control even more of the internet.  We should be seriously worried about one company having this kind of power over our largest communications system (especially when that company thinks that it can just redefine language to avoid looking bad).  Comcast is already acting in ways that have been established as monopolistic and illegal in the US and most of the rest of the world.  While we should be worried, it is the government's job to protect us from this.  Not only should Comcast not be allowed to increase its monopoly by acquiring Time Warner, it should be the subject of a serious government investigation for monopolistic practices.



Here is the article on data caps definition: http://arstechnica.com/business/2014/08/comcast-tells-government-that-its-data-caps-arent-actually-data-caps/

* If some Comcast executive reads this and suddenly feels compelled to demand that I use a different term, let it be known that I will not.  Bullying large publications might work, but I am not going to redefine language based on the delusions of grandeur of some company.

Fair Pay

I believe I have expressed my opinion on this subject before, so I will summarize:  Any job that cannot pay enough for employees to live off of is not worth doing.

Minimum wage is starting to become a big deal again, as Obama pushes to have it raised by around 33%.  Fast food employees have started a movement to have minimum wage, at least for fast food jobs, raised by almost 100%.  Current minimum wage is almost half the poverty level (70% according to the government definition, but according to actual accurate data it is less than 50%).  If minimum wage is supposed to provide enough to live on, why has it not been raised sooner?

The Republican Party is largely to blame, along with many large businesses.  The claim is that raising minimum wage will put more people out of work.  This is probably true.  So, I guess they think it is better to let most of the population starve than to make businesses pay fair wages and have less workers but with fair pay.  Really, this is an unsolvable problem from this point of view.  I have already shown how a basic income would solve this problem, so I am not going to harp on that, but I would like to discuss how some large businesses are actually trying to do something about this problem.

I just read this article.  It discusses how some businesses are voluntarily raising their minimum wage.  (I would like to point out how absolutely disgusting it is that self interested businesses have recognized this problem before our government, which is supposed to be paying attention to our needs.)  Ikea recently announced an internal minimum wage of $10.76 an hour (to be implemented soon).  Gap is raising their minimum to $9.00 an hour and already has plans for increasing it to $10.00 an hour in the near future.  Costco already pays a minimum of $11.50 an hour, but the article says that bonuses bring it up to an average of $21 an hour.  Whole Foods also pays $10.00 minimum (with an average of almost twice that).  The last two mentioned in the article are fast food places.  Shake Shack and In-N-Out pay a minimum of $10.00 and $10.50 an hour respectively, with In-N-Out also providing vacation and retirement benefits.

None of these companies are doing poorly.  Costco says the higher wages pay off in productivity and lower employee turnover, and compared to Sam's Club, which does not pay fair wages, the evidence supports that claim (also note that Costco still manages to charge very low prices despite paying their employees around twice what Sam's does).  As far as claims that raising minimum wage will hurt businesses go, the evidence seems to prove the exact opposite.

It is probable that raising minimum wage will make unemployment worse.  This is a natural effect of the law of supply and demand.  When supply and demand are not a matter of life and death, it might be ethical to consider their impact before raising the cost of such an essential commodity as labor.  When it is a matter of life and death, it is not ethical to consider the problem entirely from an economic point of view.  Minimum wage is exactly one of these life and death cases.  Due to a number of different factors, our economy is incapable of providing enough work for everyone who wants it, and the consequence is that the U.S. is slowly sinking into widespread poverty.  There are many solutions to this problem, but they all require more than just changing minimum wage.  Businesses should be required by law to pay fair wages, and a minimum wage that pays $15,000 a year is not fair wages.  We need a minimum wage that pays more than the poverty level to have a sustainable economy.  Raising minimum wage should not even be a question, and if our government cannot see that, then they are not qualified to rule anything, especially not a large country.  Bickering about minimum wage and unemployment is a waste of time.  Once minimum wage is taken care of, we can start looking at other options to take care of the larger problem.  So long as people are relying on minimum wage as their primary form of support though, businesses and the government are morally obligated to make sure it is high enough to provide sufficient support.

I have multiple suggestions to solve the worst of our economic problems, and a basic income is at the top of that list (a basic income would also obviate the need for any minimum wage).  A wage cap would help take care of the supply and demand problem inherent in a minimum wage.  Even a more robust welfare system would help, though it would cost far more than it is worth, with the current needs based system.  Ultimately, we really are living in an unsustainable economy.  It is impossible for a business to survive when it pays less for its resources than they cost to produce.  Minimum wage was designed to solve that problem for labor.  It currently does a very poor job.