Month: January 2012

Patagonia, a Benefit Corporation

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Patagonia, the maker of outdoor clothing and gear, has long stood for its environmental philanthropy championed by founder Yvon Chouinard. The company has redirected a portion of profits to green causes since 1986 and discloses the chemicals it uses in its products. And beginning this year, according to Bloomberg, it has officially been designated as a Benefit Corporation:

The company, based in Ventura, announced it will become one of the state’s first “Benefit Corporations,” a new legal structure that gives directors legal cover to consider social and environmental missions over financial returns. The law creating the Benefit Corporation is one of two state measures that went into effect January 1. They’re each designed to embed goals beyond profitability into companies’ missions. 

Benefit Corporations such as Patagonia must commit to creating an overarching “general public benefit.” Companies that incorporate as Benefit Corps must consider an array of stakeholders beyond shareholders, including workers, suppliers, the environment and the local community. They must measure their progress toward that goal against a third-party standard.

Patagonia is the highest-profile business to adopt this new business structure. Currently recognized in seven states, here’s to hoping that this type of structure expands further.

The Caging of America

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Adam Gupnik, writing in The New Yorker, considers why America locks up so many people in prisons. It’s a lengthy piece that offers some good thoughts on the relationship between incarceration and crime rate. My only regret is that the editing of the piece is a bit shoddy at places (where the reader may get confused with Gupnik’s opinion to that of another writer’s).

First, some startling statistics about the scale of incarceration in the United States:

Mass incarceration on a scale almost unexampled in human history is a fundamental fact of our country today—perhaps the fundamental fact, as slavery was the fundamental fact of 1850. In truth, there are more black men in the grip of the criminal-justice system—in prison, on probation, or on parole—than were in slavery then. Over all, there are now more people under “correctional supervision” in America—more than six million—than were in the Gulag Archipelago under Stalin at its height. 

Furthermore,

The accelerating rate of incarceration over the past few decades is just as startling as the number of people jailed: in 1980, there were about two hundred and twenty people incarcerated for every hundred thousand Americans; by 2010, the number had more than tripled, to seven hundred and thirty-one. No other country even approaches that. In the past two decades, the money that states spend on prisons has risen at six times the rate of spending on higher education. 

What Charles Dickens wrote about the American prison system upon visiting in 1842:

I believe that very few men are capable of estimating the immense amount of torture and agony which this dreadful punishment, prolonged for years, inflicts upon the sufferers. . . . I hold this slow and daily tampering with the mysteries of the brain, to be immeasurably worse than any torture of the body: and because its ghastly signs and tokens are not so palpable to the eye and sense of touch as scars upon the flesh; because its wounds are not upon the surface, and it extorts few cries that human ears can hear; therefore I the more denounce it, as a secret punishment which slumbering humanity is not roused up to stay. 

This dichotomy between business and the social good is quite disconcerting:

[A] growing number of American prisons are now contracted out as for-profit businesses to for-profit companies. The companies are paid by the state, and their profit depends on spending as little as possible on the prisoners and the prisons. It’s hard to imagine any greater disconnect between public good and private profit: the interest of private prisons lies not in the obvious social good of having the minimum necessary number of inmates but in having as many as possible, housed as cheaply as possible.

An interesting note about the relationship between increased incarceration and decreased crime rates (there is no conclusive evidence, essentially):

Trends and fashions and fads and pure contingencies happen in other parts of our social existence; it may be that there are fashions and cycles in criminal behavior, too, for reasons that are just as arbitrary.

Finally, there is Franklin E. Zimring’s (author of The City That Became Safe) argument of how crime can be minimized. Curbing crime does not depend on reversing social pathologies or alleviating social grievances; it depends on erecting small, annoying barriers to entry. There is this circular path:  the decreased prevalence of crime fuels a decrease in the prevalence of crime.

The piece is excellent, except for this point made by the author, who thinks that non-violent crime should carry lenient punishment:

No social good is served by having the embezzler or the Ponzi schemer locked in a cage for the rest of his life, rather than having him bankrupt and doing community service in the South Bronx for the next decade or two. Would we actually have more fraud and looting of shareholder value if the perpetrators knew that they would lose their bank accounts and their reputation, and have to do community service seven days a week for five years?

The answer to that question is: absolutely. We need stricter punishments for insider trading because lenient punishments have not been working. How would the thousands of people who were ripped off by Bernie Madoff feel if Madoff’s punishment was doing “community service for five years”?

The Leaning Tower of Big Ben

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The BBC reports that the Big Ben, at Britain’s Palace of Westminster, is leaning. The angle of tilt is calculated to be 0.26 degrees, and thus it is barely visible to the eye. By comparison, the Leaning Tower of Pisa leans at 3.99 degrees (and prior to restoration work performed between 1990 and 2001, the tower leaned at an angle of 5.5 degrees).

However, work isn’t expected to fix this Big Ben tilt until 2020. One professor estimates that it would take 10,000 years to reach the inclination of the Leaning Tower of Pisa.

Speaking of leaning towers, this is a good trivia question: which tower has the highest angle of tilt? According to Wikipedia, the answer is The Leaning Tower of Suurhusen (German: Schiefer Turm von Suurhusen), a late medieval steeple in Suurhusen, a village in the East Frisian region of northwestern Germany. The Suurhusen steeple remains the world’s most leaning tower that is unintentionally tilted, with the tower currently leaning at an angle of 5.1939 degrees (beating the world-famous Leaning Tower of Pisa by 1.22 degrees). But if I were to ask: which building/tower has the biggest tilt, regardless of it being intentional or unintentional, then the winner would be the Capital Gate tower in Abu Dhabi. Remarkably, it features an 18 degree incline.

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Note: You can’t go wrong perusing Wikipedia’s list of leaning towers.

On Salary Negotiation

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Patrick McKenzie, an ex-Japanese salaryman and founder of Kalzumeus Software, has one of the best posts I’ve ever read on salary negotiation. If you’re hunting for a job (and even if you aren’t), the post is worth twenty minutes of your time.

One highlight is this affirmation that you shouldn’t name your price/salary point first:

Every handbook on negotiation and every blog post will tell you not to give a number first.  This advice is almost always right.  It is so right, you have to construct crazy hypotheticals to find edge cases where it would not be right.

For example, if your previous salary was set during the dot-com bubble and you are negotiating after the bubble popped, you might mention it to anchor your price higher such that the step down will be less severe than it would be if you engaged in free negotiations unencumbered by the bubbilicious history.  Does this sound vaguely disreputable to you?  Good.  This vaguely disreputable abuse of history is what every employer asking for salary history, salary range, or desired salary is doing.  They are all using your previous anomalously low salary — a salary which did not reflect your true market worth, because you were young or inexperienced or unskilled at negotiation or working at a different firm or in another line of work entirely — to justify paying you an anomalously low salary in the future.

This is a superb reminder about employers’ full-load costs:

First, get into the habit of seeing employees like employers see them: in terms of fully-loaded costs.  To hire someone you need to pay for their salary, true, but you also have taxes, a benefits package, employer contributions to retirement, healthcare, that free soda your HR department loves mentioning in the job ads, and what have you.  (Trivia: for a US employer of professionals, the largest component after salary is usually healthcare, followed by payroll taxes.)  The fully-loaded costs of employees are much higher than their salary: exactly how much higher depends on your locality’s laws, your benefits package, and a bunch of other HR administrivia, but a reasonable guesstimate is between 150% and 200% of their salary.

Read the rest on Patrick’s blog.

Why the iPhone isn’t Made in America

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Why isn’t the iPhone made in the United States? Sure, Apple brands its product as “designed in California,” but the actual production happens in China. In this excellent New York Times piece, where more than thirty individuals were interviewed, we learn why the largest company in America has made the dramatic shift of producing its product in America to China. Apple executives believe there simply aren’t enough American workers with the skills the company needs or factories with sufficient speed and flexibility.

First, mind-boggling statistics about the scale of production at Foxconn, the factory in which iPhones and iPads are made:

The facility has 230,000 employees, many working six days a week, often spending up to 12 hours a day at the plant. Over a quarter of Foxconn’s work force lives in company barracks and many workers earn less than $17 a day. When one Apple executive arrived during a shift change, his car was stuck in a river of employees streaming past. “The scale is unimaginable,” he said.

Foxconn employs nearly 300 guards to direct foot traffic so workers are not crushed in doorway bottlenecks. The facility’s central kitchen cooks an average of three tons of pork and 13 tons of rice a day.

This anecdote sounded familiar. I first read it in Isaacson’s biography of Steve Jobs:

In 2007, a little over a month before the iPhone was scheduled to appear in stores, Mr. Jobs beckoned a handful of lieutenants into an office. For weeks, he had been carrying a prototype of the device in his pocket.

Mr. Jobs angrily held up his iPhone, angling it so everyone could see the dozens of tiny scratches marring its plastic screen, according to someone who attended the meeting. He then pulled his keys from his jeans.

People will carry this phone in their pocket, he said. People also carry their keys in their pocket. “I won’t sell a product that gets scratched,” he said tensely. The only solution was using unscratchable glass instead. “I want a glass screen, and I want it perfect in six weeks.”

After one executive left that meeting, he booked a flight to Shenzhen, China. If Mr. Jobs wanted perfect, there was nowhere else to go.

On the Chinese preparation for a contract. So methodical:

When an Apple team visited, the Chinese plant’s owners were already constructing a new wing. “This is in case you give us the contract,” the manager said, according to a former Apple executive. The Chinese government had agreed to underwrite costs for numerous industries, and those subsidies had trickled down to the glass-cutting factory. It had a warehouse filled with glass samples available to Apple, free of charge. The owners made engineers available at almost no cost. They had built on-site dormitories so employees would be available 24 hours a day.

So why is the iPhone made in China? It’s not just the low wages paid to Chinese workers. The flexibility, scale, and the formidable supply chain of Chinese factories, combined with the ability to raise an army of workers (sometimes literally overnight), cannot be matched in the United States.

And so, as quoted in the article, the consumer electronics business has become an Asian business. On a final note: while other companies have sent call centers abroad, Apple has kept its centers in the United States. It’s only a matter of time when Apple decides to outsource the call centers abroad…

Germany: America of Yesteryear

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This piece in The Los Angeles Times highlights how Germany of today is like America in the 1970s:

In 1975, manufacturing accounted for about 20% of the United States’ economic output, or gross domestic product, about the same as in Germany today. Since then, U.S. manufacturing’s share of GDP has slid to about 12%.

In 1975, the U.S. budget deficit was a manageable 1% of the economy, about the same as Germany’s now. Last year, the U.S. deficit was about 10%.

American families in the 1970s and early ’80s typically saved about 10% of their take-home pay, about the same as in Germany today. The U.S. savings rate these days is in the low single digits.

There story follows a couple in their 50s, the Krugers; the couple has two children. They have paid off their debts and are living much better on a combined $40,000 income than most Americans who earn twice as much.

On Soccer and Boredom

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Why is soccer boring? More particularly, why is soccer boring for most Americans, whereas in other parts of the world it borders on something holy? In this piece in Grantland, Brian Phillips ponders the question. He reveals that yes, soccer is boring (even to the dire fan, who should admit to this fact). But he also explains how soccer is romantic and tragic, and that’s what keeps the fan engaged in the game.

There are two reasons, basically, why soccer lends itself to spectatorial boredom. One is that the game is mercilessly hard to play at a high level. (You know, what with the whole “maneuver a small ball via precisely coordinated spontaneous group movement with 10 other people on a huge field while 11 guys try to knock it away from you, and oh, by the way, you can’t use your arms and hands” element.) The other is that the gameplay almost never stops — it’s a near-continuous flow for 45-plus minutes at a stretch, with only very occasional resets. Combine those two factors and you have a game that’s uniquely adapted for long periods of play where, say, the first team’s winger goes airborne to bring down a goal kick, but he jumps a little too soon, so the ball kind of kachunks off one side of his face, then the second team’s fullback gets control of it, and he sees his attacking midfielder lurking unmarked in the center of the pitch, so he kludges the ball 20 yards upfield, but by the time it gets there the first team’s holding midfielder has already closed him down and gone in for a rough tackle, and while the first team’s attacking midfielder is rolling around on the ground the second team’s right back runs onto the loose ball, only he’s being harassed by two defenders, so he tries to knock it ahead and slip through them, but one of them gets a foot to it, so the ball sproings up in the air … etc., etc., etc. Both teams have carefully worked-out tactical plans that influence everything they’re trying to do. But the gameplay is so relentless that it can’t help but go through these periodic bouts of semi-decomposition.

And this is a wonderful analogy of the relationship between soccer and its fans:

Following soccer is like being in love with someone who’s (a) gorgeous, (b) fascinating, (c) possibly quite evil, and (d) only occasionally aware of your existence.  There’s a continuous low-grade suffering that becomes a sort of addiction in its own right. You spend all your time hoping they’ll notice you, and they never do, and that unfulfilled hope feels like your only connection to them. And then one day they look your way, and it’s just, pow. And probably they just want help moving, and maybe they call you Josie instead of Julie, but still. It keeps you going. And as irrational as it sounds, you wouldn’t trade this state of being for a life of quiet contentment with someone else. All you could gain would be peace of mind, and you’d lose that moment when the object of your fixation looked at you and you couldn’t feel your face.

Worth the read in its entirety.

Sensational Spelling

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I’ve wondered for a long time why some products are deliberately misspelled (such as “Froot Loops”). Turns out, there is a name for this phenomenon/movement in popular culture: sensational spelling. From Wikipedia:

Sensational spellings are common in advertising and product placement. In particular, brand names such as Cadbury’s “Creme Egg” (standard English spelling: cream), Weet Bix, Blu-ray (blue) or Kellogg’s “Froot Loops” (fruit) may use unexpected spellings to draw attention to or trademark an otherwise common word. It has also occasionally been used to dodge regulations which dictate how much of an ingredient a product must contain in order to be featured on the label. In video games, the best-known example of sensational spelling would be the franchise name Mortal Kombat, in which the word “combat” is deliberately misspelled by replacing the hard C sound with the letter K.

 

Freeman Dyson on Life and Work

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Freeman Dyson, a pioneer quantum physicist and mathematician, has some excellent advice for living.

At the age of 88, why does he continue working?

I continue working because I agree with Sigmund Freud’s definition of mental health. To be healthy means to love and to work. Both activities are good for the soul, and one of them also helps to pay for the groceries.

His advice would to those who have been working for (a) one year and (b) 30 years?

 Advice to people at the beginning of their careers: do not imagine that you have to know everything before you can do anything. My own best work was done when I was most ignorant. Grab every opportunity to take responsibility and do things for which you are unqualified.

Advice to people at the middle of their careers: do not be afraid to switch careers and try something new. As my friend the physicist Leo Szilard said (number nine in his list of ten commandments): “Do your work for six years; but in the seventh, go into solitude or among strangers, so that the memory of your friends does not hinder you from being what you have become.”

I highly recommend reading Dyson’s commentary and book reviews at New York Review of Books.

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(via More Intelligent Life)