A Philosopher's Blog

The Sharing Economy III; Resources (Human & Other)

Posted in Business, Technology by Michael LaBossiere on July 28, 2014
Olathe Human Resources

Olathe Human Resources (Photo credit: City of Olathe, KS)

In my previous two essays I wrote about the new sharing economy, focusing on regulations and taxes. In this essay I will cover resources (human and other). As noted in the previous two essays, the new sharing economy is exemplified by companies such as Uber and Airbnb that serve to organize transactions between individuals. In the case of Uber, people can serve as drivers for Uber selling rides in their own cars—without (as of this writing) all the usual costs and regulations of operating a cab. In the case of Airbnb, people can rent out property and (as of this writing) generally avoid the usual regulation and taxes associated with running a hotel.

For the people providing the goods and services, the new sharing economy makes it easier for people to make money. In general, the new sharing economy involves three parties. The first is the person who provides the actual good (apartment, for example) or service (a ride to the airport, for example). The second is the person who uses the service and the third is the company that provides the organizing service (often via an app) While this is an old model (people have long offered services and goods via things like newspaper ads), technological advances have changed the scale of this once informal economy. It has also served to blur the traditional roles somewhat. To be specific, those who provide the goods and services are not actually employees of the organizing services and those using the goods and services are not exactly customers of the organizing services. There are some advantages and some disadvantages in regards to these roles.

In the case of those providing the services and goods, one of the obvious advantages is that they can make money. While they could do this without the organizing service, the service obviously makes this easier and provides other advantages.

One of the advantages of not actually being an employee of the organizing services is that the provider has a high degree of autonomy that is usually absent in the traditional employee-employer relationship. The provider can (within the constraints of economic need) work as little as desired and is free to stop at will. This level of autonomy certainly has considerable appeal to some people—especially people who are looking for a more traditional job while making money to pay the bills. In some ways, the situation is somewhat like being a temp.

Of course, there are some disadvantages to being a provider. One is that doing this is rather like being self-employed in that there are typically no benefits and no job security. Also, the risks and costs tend to fall heavily on the provider. For example, if someone crashes into the company truck Sally is driving, then the company handles the matter. But, if Sally is freedriving for Uber and her car is hit, this is most likely going to work exactly as it would if Sally was just driving to Starbucks for a latte—that is, it is on her.

Another point of concern is that the organizer might be in the position to set rates or impose other limits—much like a traditional boss can. For example, Uber can set what drivers are paid on its own

But, this is nothing new—people who do freelance work or are self-employed in the usual sense face all these problems. After all, being the worker is generally not an optimal situation and being what amounts to a temp or freelancer can be even less optimal in terms of security and pay.

There are numerous advantages to the organizing companies. One is that they have people doing the actual work for them (for example, driving people) who are not employees. They also typically have people providing the resources (cars, gas, houses and so on) that are used. While the companies do incur costs in terms of running the organizing functions, they are able to avoid (or significantly reduce) the usual costs of running a business. For example, a hotel needs to have hotel employees (maids, etc.) and an actual hotel. Airbnd does not—the providers provide the services and buildings. As another example, a service that organizes drivers does not need to buy cars, maintain them or insure them—thus resulting in considerable savings.

In essence, the new sharing economy splits management from what would traditionally be the resources (human or otherwise) of a company. The organizer takes on the role of management while avoiding the need to have traditional human resources (beyond the administrative aspects of the business) and the need to have the material resources (beyond those needed for the administrative aspects).

Some companies do operate in something of a hybrid mode—having workers as well as material resources owned by the company while also having a sharing aspect to the business. This is, clearly enough, a variation on the old model of a company hiring temp workers, freelancers and contractors.

This model can, apparently, be very profitable—in large part due to matters of scale. After all, getting a slice of thousands of sales can result in a nice profit. Also, many of these companies benefit from internet inflation—the almost magical overvaluation of companies with business models based on the internet.

Given the apparent success of companies like Uber and Airbnd, it is reasonable to expect other companies to spring into existence to create what might be a new internet bubble—the sharing bubble. Of course, there are some clear limits on what sort of companies can exist—for example, airlines and heavy manufacturing are not really fit for the sharing economy. However, additional advances in economy might see some new realms for the sharing economy. For example, if 3D printers become truly viable, light and specialized manufacturing might become part of the sharing economy.

 

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Profit

Posted in Business, Philosophy, Politics by Michael LaBossiere on June 17, 2013
Exchange Money Conversion to Foreign Currency

(Photo credit: epSos.de)

Roughly put, profit (or loss) is the difference between what it costs to sell a product/service and what is received for that product/service. For example, if it costs me $1 to make and transport a widget to the purchaser and the widget sells for $5, then I would make a profit of $4 on each widget sold. Naturally, the overall profit of my widget business would be a more complex matter involving total costs, total income and so on. But the basic idea is profit is what one gets when the cost is lower than what is received for the product/service.

As a general rule, just as Trix is for kids, profit is for employers and not employees. In fact, the stock criticisms of profit tend to focus on the fact that making a profit often involves paying workers less than the value they produce.  So, on the face of it, it seems like the idea of a worker making a profit is a non-starter. After all, the worker gets paid (hopefully) and the mechanism of a profit does not seem to figure in here. However, it seems interesting (though perhaps totally misguided) to consider the matter of a worker making a profit (as a worker, not in another role).

As noted above, profit occurs (crudely put) when the seller makes more for a sale than the sale costs her. One way to look at this is that the value paid by the purchaser exceeds the value of what is sold. In the case of a worker, it would seem that a profit-like situation would arise when a worker is paid more than the value of her work. That is, I would make something profit-like if I were paid more than I was worth. The gap between the value of my work and what I receive for it would be my “profit.”

In either case, it would seem that making a profit generally entails that someone is getting exploited. After all, if all those involved in producing the product got their just share of the value of the product, there would be no surplus left to provide the profit, unless the customer pays more than the value of the product. Likewise, if the worker is paid more than the value of her work, it would seem that she is exploiting the employer.

It can be countered that profit can arise without exploitation. One way for this to occur involves what could be called relative/subjective (or perceived) value. For example, if it costs me $1 to make a widget and I sell it for $5, yet the customer values it at $5 (or more), then it could be claimed the customer  is not being exploited. After all, as she sees it she is getting her money’s worth. However, it would also need to be the case that the workers involved in producing, transporting and selling my widget also regard themselves as properly compensated.  Likewise, if a worker values her work less than the employer values it, then it could be claimed that the employer is not being exploited. For example, if I valued my time at $30 an hour, but I was paid $50 an hour and my employer valued my time at at least $50 an hour, then I would not be exploiting my employer. Or, perhaps more accurately, she would not regard me as exploiting her.

The response to this is to contend that a person can be wrong about being exploited. In the case of a worker, he might regard his pay per widget as fair, but might be mistaken. One obvious cause could be ignorance: the worker is unaware of the value her labor adds to the product and if she were aware of this, she would change her mind about the fairness of her pay. Likewise for an employer: she might believe she is getting her money’s worth (or better) but be wrong about this because I am so very clever about appearing to be worth more than I am actually worth.  Naturally, it could be insisted that in matters of money all value is relative/subjective (or perceived) and that the idea of some sort of objective foundation for claims about exploitation is fundamentally mistaken. If so, this would also entail that the idea of some sort of objective foundation for claims about fair or just profits would also be fundamentally mistaken. Presumably it would come down to whoever had the most power defining what is called “just” and what is called “unjust.” In this case, it would seem most sensible for each party to endeavor to get as much as he can and to get it labeled as “fair” and “just.” That is, the employer should endeavor to get as much for as little pay as possible from employees and employees should endeavor to get as much as possible for as little work as possible from the employer. That is, in a profit focused system everyone should try to exploit everyone else while contending that they are being fair.

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Are Professors Laborers?

Posted in Business, Philosophy, Universities & Colleges by Michael LaBossiere on December 21, 2011
Sombrero y diploma de graduación

Product?

Members of many professions like to hold to a certain image of their profession. In some cases this is a mere illusion or even a delusion. In the case of professors, we often like to think of ourselves as more than just paid laborers but rather as important members of a learning community.  Administrators and others often like to cultivate this view (or delusion). After all, members of a learning community will do unpaid work for “the good of the community” while a smart laborer never works for free.

On one hand, a professor is clearly a paid worker. Professors get a salary and benefits (if they are lucky) in return for doing work for the school. While professors typically do not punch the clock or record the hours (or minutes) of their work, they are still expected to earn their pay. As such, professors can be seen as any other worker or laborer.

On the other hand, professors (as noted above) are also often seen as being members of a learning community. While they are paid for the work, they are also expected by tradition (and often by assignment of responsibilities) to engage in various unpaid endeavors such as publishing articles, doing community service, doing professional service, assisting student clubs, and so on. These activities are seen as being valuable, but they also generate value for the professor in that s/he is adding to the community-a contributor to the general good.

Like many professors, I was very much of the “good of the community” sort of professor in the days of my youth. I made my work on fallacies freely available, accepted all invitations to speak (for free), helped students prepare for graduate school, wrote letters for students who had graduated long ago, and did a multitude of other extra (and unpaid) things. While none of this was required or had any impact on my pay, I regarded all of it as part of the “good of the community” duties of a professor.

In recent years I noticed the increasing tendency to look at the academy as a business and to approach it using certain business models. While I am all for greater efficiency and a smooth running business aspect of the university, I did look upon the expansion of this model with some concern.

One effect of this view is what seems to be an obsession with assessment and metrics. Professors are finding that they need to quantify their activities in ways set by administrators or the state. While I do agree that professors should be accountable, one unfortunate aspect of this approach is that often  little (or no) value is placed on the unpaid “community good” work of professors (or the unpaid work is simply rolled into the paid work but the pay is not increased).

Also, casting professors as workers to be carefully monitored can have a negative impact on the “community good” aspects of being a professor. One reason for this lies in the difference between the reasonable attitude of a paid laborer and a member of a community.

If I am a member of a learning community, then I have a stake in the general good of that community and part of my compensation and motivation can be that I am contributing to that good.  After all, as a member of the community, I have a stake in the good of that community and thus it is worth my while to contribute to that good. The analogy to a family or group of friends is obvious. As such, this view can incline professors to do unpaid work for the “good of the community.” Of course, for professors to justly believe they are a part of a community, there must actually be such a community-rather than a mere business.

However, if I am simply a worker in the education business  and the quality and extent of  my efforts are disconnected from reward (at many schools, merit pay is a thing of the distant past and bonuses apparently only go to top administrators), then it would seem I have little economic incentive to do more than what is required to keep my job.

Even if my efforts did yield economic rewards, I would only have an incentive to go above and beyond the basic level in regards to things that would yield economic results for me. Obviously, merely being good for the community would hardly provide a suitable motivation to do anything extra.

After all, if the goal of a business is to get maximum revenue for minimum expenditure , the goal of a worker would seem to be a comparable sort of thing: to get the maximum pay for the minimal effort. If doing the job with greater quality or doing more work yields no economic benefit, then there would seem to be no incentive to work beyond what is required to simply stay employed  (unless, of course, one is looking to move to a better job with another job creator.

Employers can, of course, counter this by compelling workers to work more or do higher quality work through the threat of unemployment. The worse the economy, the bigger the stick that employers wield and these days, employers can swing a rather big stick. However, compelled employees tend to be demoralized employees and threatening people in order to achieve excellence generally does not have a great level of success.  Also, CEOs and their supporters argue that quality work must be duly compensated, but perhaps that only applies to the top executives and not mere workers.

It can be argued that professors have had it too easy over the years and that it is time that they be locked into the same sort of business reality that almost everyone else is compelled to endure. While this might make some gray haired folks cry out as their ivory towers are stripped and sold on the free market, this is the new economic reality: universities are not learning communities-they are businesses that deal in the commodity of education (and sports, merchandise, etc.). Professors will need to awaken from their delusional dreams and accept that they are workers in this education factory. True, some of these education workers might deserve some additional compensation for improving the product, offering quality customer service or otherwise aiding the business. Naturally, they cannot expect too much-as always, the lion’s share of compensation belongs not to the mere employees, but to the top executives.

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Should Interns be Paid?

Posted in Business, Philosophy, Universities & Colleges by Michael LaBossiere on November 6, 2011
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Some college majors provide (or even require) professional internships. In general, these involve students working within their field (be it law, nutrition, chemical engineering, business or other field) in an educational context. These internships are generally seen as rather desirable since they are supposed to provide useful, practical experience in the field of the sort that is difficult (or impossible) to recreate in the classroom. They also often provide the students with a foot in the door for later employment.

Some of these internships are paid (for example, my nephew has been interning as a chemical engineer and the company pays him a nice stipend and treats him very well). Some internships are unpaid (for example, a friend of mine is doing numerous unpaid internships this year). As might be imagined, the question of whether or not interns should be paid is a point of some concern to students.

On the one hand, a solid case can be made for internships being unpaid (though paid internships are, obviously, preferable for students-all other things being equal). After all, internships are supposed to provide students with valuable experience, training and contacts that can pay off when the student seeks employment. As such, students are compensated for the work they do with something of value, thus making it a fair situation. Also, if companies were expected to pay interns, it would seem more sensible for them to hire someone to do the work that an intern would do-after all, the company could get someone with more experience and, in today’s economy, there are many quality employees who are desperate for work.

On the other hand, a solid case can be made for paying interns. After all, interns typically do actual work and thus create financial value for the company, thus they would seem to be entitled to financial compensation. After all, as the defenders of CEO grade pay always argue, people need to be properly compensated for their work. Otherwise the person is being exploited and this would seem to be unfair and perhaps could be considered theft.

One obvious objection is that the students, as noted above, are being compensated. They are undergoing an educational experience and making contacts. In fact, since students pay for their actual classes it can be argued they are getting a good deal if they do not have to pay the company who is providing that education. After all, professors do not pay students. Rather, students are paid to be taught.

A reply to this objection is that the work students do for professors is not work that profits the professor. For example, my students do not do research that I use in my books, they do not grade papers for me, and so on.  Rather, the professor works to teach the students and the work the students do is supposed to be entirely for their own education. When students (typically graduate students) work for professors, they are compensated (usually poorly) as teaching assistants or research assistants. If not, the professor is really exploiting them and should be suitably punished for such misdeeds.

In the case of students interning with companies they are typically doing actual work for the company and this would seem to require suitable compensation. Naturally, the fact that the student is a student and also getting something from the company other than money should be taken into account. However, fair payment for work done certainly seems fair.

In some cases it can be argued that the value of the internship is such that the student is fully compensated and there would be no justification for an additional financial compensation.  However, some internships involve students being used in place of temps or to do tasks that have little (or no)educational value-but do save the company money. For example, my friend recently spent a week looking up information about foods for a hospital so that the paid professionals could do their calorie counts. This sort of look up is boring and tedious work and can, in fact, be done by software. However, the software is expensive and the interns are free labor, thus saving the hospital a lot of money. As might be imagined, this was not exactly a valuable educational experience for my friend. Given the nature of this sort of work, it certainly seems reasonable to either not have interns do it (since it lacks educational value) or to pay them for their work.

My overall view is that interns should be properly compensated for their efforts, but that this compensation need not be financial. The professors supervising the internships should, as might be expected, take pains to ensure that they are sending their students into internships that will provide educational experience, etc. and not simply providing companies with free labor.

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Should Unions be Exterminated?

Posted in Business, Law, Politics by Michael LaBossiere on April 22, 2011
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While public unions have been making headlines because of the attacks being launched against them, most pundits seem to agree that unions (public and private) have been in decline for quite some time.

One of the main arguments against unions is that they are harmful to the economy. In the case of public sector unions, it has been argued that they enable public employees to grow fat on the taxpayers’ money as protected parasites. In the case of private sector unions, it is often alleged that they force companies to spend far too much on wages and benefits and this helps destroy American competitiveness. The American auto industry provides a perfect case study of this problem.  The solution that is often suggested is curbing or even getting rid of unions.

While casting unions as villains has a certain appeal and unions have clearly contributed to many problems, unions do seem to have a legitimate and important role that they should play. This role is, of course, to provide workers with protection from mistreatment and exploitation.

While it is tempting to say that the public sector employees need no protection from the public, this would be a mistake and would be on par with claiming that people in power should be free to do as they will with state employees. However, there clearly need to be checks on the power of those in power and unions do help to provide one such check. Or, at the very least, it provides employees with a more effective means of resisting the agendas of politicians and other vagaries of politics.

In the case of private sector unions, it could be argued that they are not needed. After all, there are plenty of laws to protect workers and unions actually are burden (via dues) and an impediment. As such, unions should be eliminated for the good of all.

This does have some appeal and there are aspects of unions that certainly do need reform. However, exterminating unions is actually a bad idea-at least from the standpoint of workers.

While unions are weaker than corporations, they do provide some degree of protection to employees. After all, being part of an organized group provides more safety than merely going it alone. In fact, many of the arguments used to justify and defend corporations can also be used to justify and defend unions. If it is good for the corporate people to organize into a corporation, then it would seem good for the employees to organize as well. In the same vein, many of the arguments against unions can also be directed against corporations. After all, if it is bad for people to organize for economic purposes, then this would seem to apply to corporations as well.

Of course, this might be countered by saying that while the corporate folks need to organize into corporations, employees do not need to do so. After all, it could be argued, they are protected by the government and they do not need the extra protection that a union is supposed to provide.

While there are laws protecting employees, these laws can be changed by the lawmakers. And, of course, many of these lawmakers are heavily influenced by the corporations that donate to their campaigns and lobby them. Without the modest counter offered by unions, corporations would be able to influence politicians without much (or any) organized opposition on the part of employees.

It might be claimed that this would not be a problem. After all, corporations would not use such nearly unchecked influence to do anything really unfair or harmful to employees. Or would they?

Since I am not a senseless hater of corporations, I accept that some corporate folks are principled and willingly treat employees well. However, since I am also familiar with history and what people are capable of, I am well aware that some corporations would attempt to act in ways that would be unfair, exploitive and even harmful.

Those who doubt this can take a look back of the history of business in the United States. Some highlights include slave labor, child labor, horribly dangerous working conditions, using the US military to break strikes, and so on. For more recent examples, the behavior of some American corporations in other countries shows just what these people are in fact capable of. Even in the United States, corporations still engage in questionable practices. As such, the idea that corporations can be trusted to act well without an organized body of employees to provide some counter is absurd.

This is not to say that unions are without fault. They also have their problems. For example, American unions have often been linked to organized crime. As another example, teachers’ unions often protect incompetent teachers from being fired.  As a third example, American auto workers were able to secure so many benefits that they actually impaired the ability of their companies to compete. As such, unions do need to work on improvements. However, this is quite a different matter from getting rid of them.

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Politics of Anger V: Counterfactual

Posted in Philosophy, Politics by Michael LaBossiere on October 17, 2010
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While the angry voters are angry about many things, one main focus of the anger is on the vast sums of money dumped into the bailout. While people are angry that the very people who caused much of the trouble got bailed out, people are also angry because they think that the bailout wasted money. To be specific, some people believe that the bailout did not work. The basis for this is that while the corporations are generally doing well, many individuals are in financial trouble. Unemployment is high and foreclosures are all too common. As such, it is hardly surprising that people are mad about what seems to have been useless spending.

Those who defend the stimulus spending claim that things would be worse now if the spending had not occurred. This sort of claim is what philosophers call a  counterfactual. A counterfactual claim is a claim about what would (or would have been) the case if things were different. People make such claims quite often. For example, someone might say “we would have won if Ted hadn’t missed that foul shot.”

In some cases, the truth value of a counterfactual is easy enough to sort out. For example, if a game is tied and the final shot is Ted’s foul shot, then it is clear that if he had made the shot, then he would have won the game. In the case of the stimulus spending the truth value of the counterfactual is rather hard to sort out because of the complexity of the situation and the fact that economics is hardly an exact science.

While various economic experts claim that the stimulus did prevent something worse, some people are skeptical. In some cases this skepticism is well founded and is based on legitimate concerns about the limits of economics as a science  in particular and about counterfactual reasoning in general. In other cases this skepticism is driven by emotional factors and is thus not well founded.

One powerful emotional factor is that people feel afraid and angry about what is happening now. After all, people typically feel what is far more strongly than what might have been. So, it is hardly shocking that telling people that things would be worse now without the spending does not make them feel better about how things are now.

It seems to be a basic feature of human psychology that telling someone how things could be worse does not, in general,  cheer them up. In my own case, this point was very strongly made when I fell from my roof and tore my quadriceps tendon. People telling me “it could have been worse” did not make me feel any better about my leg. Of course I knew, intellectually, that it could have been worse and I was glad that I had not wrecked both legs or died. But being told that it could have been worse did not make me  feel any better about my leg.

This certainly seems to apply to the current situation: telling someone who is unemployed or who has lost her house that things would be worse now without the stimulus does not make them feel any better. In fact, being told that things could be worse might have the opposite effect. In my own case, I got sick very quickly of people telling me that my fall could have been worse. Since I knew they were trying to express sympathy I was careful to hide my irritation at being told that it could have been worse.  But, as with my leg, what makes people feel better is not being told that it could be worse, but having someone actually do something to make things clearly better. Or, at the very least, saying things that make someone feel better.

Turning back to the stimulus spending, the Democrats obviously chose a poor tactic in trying to focus on how things would have been worse without the spending. While it is a point worth making, telling people this is (as noted above) not going to make them feel better. What the Democrats needed to do was to either find a way to make things better now or (this being politics) find a way to make people feel better.  However, they have clearly failed in both of these areas and people are not happy. In fact, some people are rather angry. Unless the Democrats are able to do something positive (or make people believe they are doing something positive) then things might go very badly for them in the next election cycle.

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Women in the workplace.

Posted in Business, Ethics by Michael LaBossiere on July 19, 2007

I saw on CNN that while women make up 46% of the work force only 3% of fortune 500 CEOs are women.

Naturally, many people see this as a grave injustice. This could very well be the case-feminists have argued that women are systematically excluded from positions of authority. This is said to be done by  secret policies, the creation of a hostile work environment, the power of the old boy network, and so on. People also point to the fact that little has been done to allow women to have both a high end career and a family. It has also been noted that women have been socialized to be less competitive and hence are less likely to end up in such positions.

Of course, some might say that there are more important things to worry about. After all, many people live in poverty and the fact that there are not as many super rich women as super rich women seems somehow less bothersome.

But, this situation does seem to indicate a deeper sort of injustice. While I’m not too worried that there are not that many female CEOs (after all, the overwhelming majority of people in the world are not CEOs) this disparity is mirrored all the way down the work force. For example, in academics woman professors often face serious challenges in earning tenure and promotions. This is because the years in which a professor goes up for tenure also are generally the same years when a family is raising children.

While there are many factors that explain the causes of this situation, a major factor seems to be that companies need to do more to enable women to work their way up the hierarchy while still being able to have a family. While much progress has been made, women still bear the majority of the burden of raising children and it is unfair that they have to “pay” for choosing to have a family by giving up career advancement. One reasonable way to deal with this is for employers to take steps to work with women (and men) to enable people to have both a family and a career.

It might be objected that this should not be done. After all, companies are in the business to make money. Since enabling women to have both career and a family would cost more than just sticking with men and non-family women, companies should not follow this practice. It might be replied that companies would be losing talented women by not following such practices. This, it might be said, is true-but other talented people can be found who would not need such accommodation.

To counter this, it would need to be argued that accommodating women (and perhaps men as well) is a social good and should be encouraged and funded by the state. This seems reasonable-society needs new people to continue to exist and hence the creation of such new citizens is something that should be encourage. Society also should not let talent go to waste and people should have the opportunity to make meaningful contributions. Hence, such accommodations make good sense.

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