The open plan disaster

A recent Harvard study finds that open plan offices do not even bring the expected increase in collaboration that is supposed to compensate for their destruction of productivity:

As my colleague Jessica Stillman pointed out last week, a new study from Harvard showed that when employees move from a traditional office to an open plan office, it doesn’t cause them to interact more socially or more frequently.

Instead, the opposite happens. They start using email and messaging with much greater frequency than before. In other words, even if collaboration were a great idea (it’s a questionable notion), open plan offices are the worst possible way to make it happen.

Previous studies of open plan offices have shown that they make people less productive, but most of those studies gave lip service to the notion that open plan offices would increase collaboration, thereby offsetting the damage.

The Harvard study, by contrast, undercuts the entire premise that justifies the fad. And that leaves companies with only one justification for moving to an open plan office: less floor space, and therefore a lower rent.

But even that justification is idiotic because the financial cost of the loss in productivity will be much greater than the money saved in rent. Here’s an article where I do the math for you. Even in high-rent districts, the savings have a negative ROI.

It’s nice to see this stupid and inhumane practice get flayed by such an august institution. While we’re at it, can we nix the idea that “collaboration” is inherently good? Some types of work require concentration and solitude, not incessant communication in shared spaces.

Declining well-being of Americans

Professor Peter Turchin explains his observation that the well-being of Americans has been declining over the last four decades — a process called immiseration:

Last year I had an interesting conversation with someone I’ll call the Washington Insider. She asked me why my structural-demographic model predicted rising instability in the USA, probably peaking with a major outbreak of political violence in the 2020s. I started giving the explanation based on the three main forces: popular immiseration, intra-elite competition, and state fragility. But I didn’t get far because she asked me, what immiseration? What are you talking about? We’ve never lived better than today. Global poverty is declining, child mortality is declining, violence is declining. We have access to the level of technology that is miraculous compared to what previous generations had. Just look at the massive data gathered together by Max Rosen, or read Steven Pinker’s books to be impressed with how good things are.

There are three biases that help sustain this rosy view. First, the focus on global issues. But the decrease of poverty in China (which is what drives declining global poverty, because Chinese population is so huge), or the drop in child mortality in Africa, is irrelevant to the working America. People everywhere compare themselves not to some distant places, but to the standard of living they experienced in their parents home. And the majority of American population sees that in many important ways they are worse off than their parents (as we will see below).

Second, the Washington Insider talks to other members of the 1 percent, and to some in the top 10 percent. The top-income segments of the American population have done fabulously in the last decades, thank you very much.

Third, many economic statistics have to be taken with a grain of salt. […]

So what has been happening with the well-being of common, non-elite Americans? In my work I use three broad measures of well-being: economic, biological (health), and social.

Briefly:

-Economic: Wages of non-elite workers show “rapid, almost linear growth to the late 1970s, stagnation and decline (especially for unskilled labor) thereafter”; the “relative wage” (the nominal wage divided by GDP per capita) drops sharply after 1960; labor participation has been trending downward regardless of education level since at least the late 1970s.

-Biological: Average height of native-born Americans stopped growing after the 1980s (and has declined for some demographic groups); life expectancy growth has lagged behind Western Europe and for some groups, life expectancy has declined in absolute terms; suicide rates are climbing for all ethnic groups.

-Social: Average age of marriage and percentage of people unmarried are on the rise.

Remember when the original Star Wars came out? That was around the historic peak of American economic, social and biological well-being. Hard times are coming, and for an increasing number of people, have already arrived.

Minimum wage machine

This is pretty funny:

If you’ve always wanted to work for minimum wage, but in typical overachieving fashion haven’t quite got there yet, the Minimum Wage Machine will pay you $7.15 for an hour of turning the crank-handle.

Workers will receive one penny for every 5.04 seconds’ worth of work, which at $7.15 an hour is the minimum pay required by the NY state—or at least, it was back in 2008 when this piece was created by artist Blake Fall-Conroy.

Musk update

The Wall Street Journal claims that, according to sources, Elon Musk flipped out when safety sensors automatically halted the assembly line at the Tesla factory in California, and “began head-butting the front end of a car” to prove that the safety measures were unnecessary. He then apparently fired a senior engineering manager involved with the system.

The takeaway here is that Musk is a nutjob, perhaps in the throes of an Ambien-fueled psychotic episode. What sane individual head-butts cars? But the verb choice may be misleading. As the Journal notes later on in the piece: “Tesla said Mr. Musk, in a safety hat, had tapped, not headbutted, the car on the assembly line that day, and that the system was adjusted without jeopardizing safety.” Of course, “Musk tapped the car on the assembly line with his helmeted head” would make for a much weaker hook.

Journalistic hyperbole aside, it does seem that Musk is in over his head (heh), and while I can’t claim to understand what is going on at Tesla, it does not seem good:

The executive team at Tesla that Mr. Musk once relied upon for information is depleted. More than 50 vice presidents or higher have left the company in the past two years.

Mr. Musk hasn’t so far found a second-in-command with the expertise or vision that appeals to him, people familiar with his thinking said.

Mr. Musk had long told his executives he didn’t want to be CEO and planned to serve only as long as it took to bring Tesla up to speed, leaving him to focus on product development, people familiar with his comments said. Aides debated who would take his place: Doug Field, the engineering chief, or Jon McNeill, the sales chief.

Both men left Tesla this year, and Mr. Musk assumed their roles instead of hiring replacements. Tesla said neither man was being groomed for CEO.

“These people are complete narcissists”

Google leadership seminar

Google leadership seminar (source)

I enjoyed this rant against Big Tech, which besides being funny, also contains the kernel of a very interesting idea for how to address the growing crisis around data privacy and ownership:

Bannon also added this gem about Tesla:

I do not have a dog in this fight, but Musk seems increasingly unhinged to me, and the little stunt he pulled with his abandoned buyout plan was undeniably shady. But… are you not entertained?

American serfs

Steve Bannon provides a useful metaphor for the economic state of current-day Homo Americanus:

All the economic textbooks you’ve got before 2008? Throw them out. They’re totally irrelevant.

Your generation, the readers of New York Magazine, you’re nothing but 18th-century Russian serfs. You’re better fed, and you’re better dressed, and you’re better educated. But you don’t own anything. And you’re not going to own anything.

The state capitalism of the big technology companies has taken away your digital, your data sovereignty. They’ve totally taken it away. You generate intellectual property all day long, and they don’t pay you for it. They take it for free, they monetize at huge margins.

The quote is from a fascinating interview regarding the aftermath of the 2008 financial crisis. There is surely a connection between the decline of private ownership in the US — ranging from homes and cars to technology and books — and the rise of a permanent class of social media serfs who create content for free. The collapse of ownership is also a useful framework for measuring the actual wealth and economic well-being of Americans. Are you wealthy if you have access to everything you want, but you own nothing? Obviously not, because access can be revoked, whereas property can only be taken away with difficulty, if at all.

On a more practical note, Bannon sees big economic policy changes ahead:

But now McMaster is gone, Cohn is gone, Tillerson’s gone. Look what Trump’s done in six months. He’s reorganized the world’s commercial system. We’re very close to having a massive reorganization in six months. The Wall Street stuff will all come. Trump wants to make sure first, get the economy revved back up again —

What if it doesn’t?

Well, the economy is going to be at 4 percent growth. Wages are going to start to follow. We’ve got time. You can’t do everything at one time. Let’s change the world’s commercial relationships and change the supply chain away from China, okay? First off, that would be Herculean, because for 30 years we looked the other way and exacerbated and we helped its growth.

Daily links: Economic stresses mount

Debbie Downer

We apologize for this depressing post

The rate of seniors filing for bankruptcy has tripled since 1991. The elderly have little financial cushion in the event of catastrophic health problems, and of course medical costs are rising. And more people are entering retirement age with debt.

More people are living in their cars as homelessness rises in America. “The problem is ‘exploding’ in cities with expensive housing markets, including Los Angeles, Portland and San Francisco, according to Governing magazine.”

Outstanding education debt in the US now exceeds $1.5 trillion (roughly the GDP of Australia), after tripling over the last decade, and more than one million student loan borrowers go into default each year.

The average American works longer hours than a medieval peasant: “Juliet Shore, economist, told the site that during periods of high wages, such as 14th-century England, peasants worked no more than 150 days a year.”

Trade war drives CPC rifts

Reports are surfacing that the escalating trade conflict with the US is driving a wedge between elements of the Chinese leadership:

BEIJING (Reuters) – A growing trade war with the United States is causing rifts within China’s Communist Party, with some critics saying that an overly nationalistic Chinese stance may have hardened the U.S. position, according to four sources close to the government.

President Xi Jinping still has a firm grip on power, but an unusual surge of criticism about economic policy and how the government has handled the trade war has revealed rare cracks in the ruling Communist Party.

A backlash is being felt at the highest levels of the government, possibly hitting a close aide to Xi, his ideology chief and strategist Wang Huning, according to two sources familiar with discussions in leadership circles.

A prominent and influential academic whose views have found favor in some party quarters has also come under attack for his strident views on Chinese power.

There are hints — which, given the totally opaque nature of elite Chinese politics, we should take with a dollop of salt — that the factional tensions could even be weakening the “core leader’s” grip on power:

China, for all its problems, seems set on an inexorable rise to superpower status to rival the US. On multiple benchmarks – economic, technological, military and diplomatic – Beijing is making rapid advances.

We are a long way, in other words, from peak China. But that begs another question which has been sweeping Beijing over the northern summer – whether we are now witnessing peak Xi Jinping.

In recent weeks, the signs of a nascent pushback against Xi’s absolute power have started to emerge. Some are cryptic, given the nature of Chinese politics, contained in coyly worded postings on social media. Some are the stuff of rumour, or back alley news, as the Chinese call such information, which flourishes in the absence of a free press.

More background on CPC factional disputes.

Starbucks finally meets its match in China

Its name is Luckin Coffee, it has opened about 500 outlets since its launch earlier this year, and it is reported to be worth over $1 billion, making it China’s first coffee unicorn.

Jeffrey Towson of Peking University has been asking for years why Starbucks doesn’t have a serious competitor in China. Well, now it does.

Naturally, Luckin doesn’t have cash registers and you have to order through their app and pay through China’s mobile panopticon of WeChat/Alipay or the company’s own payment function.

“My take is their big weapon is digital + lower prices + tons of locations,” according to Towson. Is this the Starbucks killer?

Luckin Coffee has the stated goal of beating Starbucks, but even without doing that, they can potentially build a profitable business by getting more Chinese to drink coffee. The current per capita average is four to five cups per year.

 

Daily links: Fentanyl and state failure

China is the main source of the insanely potent synthetic opioid fentanyl in the US, which killed more than 27,000 people in the 12 months through November 2017. “The biggest difficulty China faces in opioid control is that such drugs are in enormous demand in the US,” an official of China’s equivalent of the DEA is quoted as saying. The Opium Wars in reverse?

The trade deficit has sliced $457.2 billion off the US economy’s cumulative inflation-adjusted growth, or 14.33%, from the start of the recovery in mid-2009 through the first quarter of 2018, according to last week’s revised GDP figures. But we are told that trade deficits don’t matter.

Britain is probably not going to run out of food in the event of a “no deal” Brexit. Nevertheless, it’s interesting to note that the British government cannot guarantee food security for its people, and seemingly expects the food industry to take all the responsibility for stockpiling goods. Meanwhile, the food industry has absolutely no plans to do this.

A simulation models the release and spread of a moderately lethal and moderately contagious virus. It kills off 150 million people over the course of 20 months, including 15 to 20 million people in the US.

Over 100,000 Russians marched last month in the city of Yekaterinburg to mark the centennial of the slaughter of the Romanov imperial family by rabid Communists.

Duterte publicly destroys more than A$8 million worth of contraband luxury cars in the Philippines: