Category Archives: political economy

I Have a Question

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It seems that employers offering/allowing remote work at least some of the time, are better able to hire quickly than employers who require full-time presence in the office for work. The subheadline nicely sums up the article’s thesis.

Employers offering flexible work options are hiring at a faster pace than those requiring full-time office attendance

And the lede:

With employers fighting for a limited pool of office workers, those offering remote-friendly jobs appear to have the upper hand.

Upper hand compared to what? That brings me to my question, which is this: what’s the quality of work done by the part-time remote employee compared with that of the full-time in-the-office employee?

OK, a second question: what’s the quality of employee who works remotely at least some of the time compared with the employee who works in the office full time?

A bonus question: what’s the quality of the quickly hired employee, or the quality of the work done by him—the partial remote employee, for instance, but not exclusively so for this question—compared with the employee who’s hired after some time spent by the employer in the search?

Have a Plan and Stick to It

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Or not. Apartment buildings—aka multifamily buildings—have been a sound investment for sound investors, but the investments aren’t all that these days, because the investors aren’t all that these days.

Apartment-building values fell 14% for the year ended in June after rising 25% the previous year, according to data company CoStar.

But even at that, apartment building values still were up more than 7% on the two years. On the other hand,

[u]nlike office buildings and malls, which have been hit hard by remote work and e-commerce, rental apartments have low vacancy rates. The apartment sector’s main problem isn’t a lack of demand—rents have soared since 2020—it is interest rates.

Oh yeah. Debt and the associated interest vig. That’s where investors, who used to have a plan, stopped having serious plans, or walked away from the ones they had. There exists, today, $2 trillion in apartment building mortgage debt, double that of a decade ago. That, by itself, shouldn’t be a problem, but. But, but, but.

Most apartment loans are fixed-rate, long-term mortgages. During the pandemic, however, investors took out more shorter-term, floating-rate loans.

The warning signs were obvious, though: increasing lock-down and related government overreactions to the pandemic already were leading to increasing rent payment delinquincies, to say nothing of Federal government-mandated rent payment deferrals; inflation pressures from the Federal government’s panicky pandemic-related spendings and bailouts that were already predicting a need to raise interest rates; and on and on. Why move away from the stability of long-term mortgage borrowing, except in the hopefulness of being able to flip the property or keep raising (unpaid and increasingly unpayable) rents to cover the rising debt costs of floating rate loans, when the loans would need to be rolled, soon, into ever higher interest rate loans?

Even in investing, it’s optimal to dance with the girl what brung you, to stick to your original plan, no matter how many hot, can’t miss, deals show up.

Unionized Laziness

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The United Auto Workers union is bent on being the epitome of it. UAW’s President Shawn Fain:

I think we should push a 32-hour work week.

In return for working less, the union is willing to settle for

  • Increased paid time off
  • Double-digit raises

In an ideal world, Ford, General Motors, and Stellantis, along with the other major car companies that assemble their cars in the US, will have the stones to tell the union to take a hike. American companies are not job welfare entities, they exist to produce goods and services for consumers and to make profits for their owners.

If the union wants to have a light work week and big pay, it should start its own car company and operate within those parameters.

Who Interviewed These Folks?

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I have to ask because:

Roman Devengenzo was consulting for a robotics company in Silicon Valley last fall when he asked a newly minted mechanical engineer to design a small aluminum part that could be fabricated on a lathe—a skill normally mastered in the first or second year of college.
“How do I do that?” asked the young man.
So Devengenzo, an engineer who has built technology for NASA and Google, and who charges consulting clients a minimum of $300 an hour, spent the next three hours teaching Lathework 101[.]

How was this newly minted mechanical engineer even hired when he didn’t know the basics of mechanical engineering (how was he able to graduate with a degree when he didn’t know such a basic thing, but that’s for a separate article.) Why wasn’t he given a quick test of the basics? Newly hired secretaries administrative assistants get tested on basics like typing and telephone etiquette and etc. Why wouldn’t any new hire be tested on the basics of the job for which he’s being hired?

Employers are spending more time and resources searching for candidates and often lowering expectations when they hire. Then they are spending millions to fix new employees’ lack of basic skills.

It isn’t just mechanical engineering, either, it’s

  • structural engineers unable to answer questions about the use of trusses in the construction of bridges and roadways
  • nursing students struggling to pass a certification exam
  • new call center workers have problems with soft skills
  • Zoo seasonal workers not looking to be productive; if someone isn’t managing every second and keeping them busy, their inclination is not to self identify what they can do—it’s to do nothing

The list goes on. And on. And on….

In the alternative, instead of taking whatever noob wanders in from the sidewalk, or dropping too many dimes on ad hoc spot training, where are the employers’ more formal, organized remedial training programs? What are these employers doing to work with the schools to help them better train their students/recover more quickly from the effects of the Wuhan Virus Situation and the associated remote learning, which aside from failing generally, didn’t get the newly minted mechanical engineer the hands-on design training he should have had?

Deflationary Pressure in the PRC

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A quick note. As The Wall Street Journal writes, the People’s Republic of China is facing the threat of economic deflation.

Prices charged by Chinese factories that make products ranging from steel to cement to chemicals have been falling for months. Consumer prices, meanwhile, have gone flat, with prices for certain goods—including sugar, eggs, clothes, and household appliances—now falling on a month-over-month basis amid weak demand.

There are a number of causes for the nation’s falling prices, including to some extent, the deflationary pressures being relative to the inflation spike that the PRC experienced as the world came out of the economic dislocation the Wuhan Virus Situation engendered.

However, there’s another factor—a critical one IMNSHO—that pushes for deflation in the PRC. That factor is the nation’s shrinking population. With fewer people even available to buy things, demand necessarily must fall, and if the supply of goods and services doesn’t fall commensurately, prices will come down. If those prices already are flat, or falling, then they’ll only fall further. With that lessened demand, the only way producers can stay in business is to reduce production—to reduce payroll costs, either by reducing pay, laying off workers, or some combination of the two. That reduced income will drive further reductions in demand.

Deflation sets in, and it deepens.