David Graeber on the Phenomenon of Bullshit Jobs

David Graeber is a professor of Anthropology at the London School of Economics and author of Debt: The First 5,000 Years. In a must-read, thought-provoking post titled “On the Phenomenon of Bullshit Jobs” he explains how the majority of workers these days are stuck in meaningless jobs:

In the year 1930, John Maynard Keynes predicted that, by century’s end, technology would have advanced sufficiently that countries like Great Britain or the United States would have achieved a 15-hour work week. There’s every reason to believe he was right. In technological terms, we are quite capable of this. And yet it didn’t happen. Instead, technology has been marshaled, if anything, to figure out ways to make us all work more. In order to achieve this, jobs have had to be created that are, effectively, pointless. Huge swathes of people, in Europe and North America in particular, spend their entire working lives performing tasks they secretly believe do not really need to be performed. The moral and spiritual damage that comes from this situation is profound. It is a scar across our collective soul. Yet virtually no one talks about it.

So what happened as a result of global automation?

But rather than allowing a massive reduction of working hours to free the world’s population to pursue their own projects, pleasures, visions, and ideas, we have seen the ballooning not even so much of the “service” sector as of the administrative sector, up to and including the creation of whole new industries like financial services or telemarketing, or the unprecedented expansion of sectors like corporate law, academic and health administration, human resources, and public relations. And these numbers do not even reflect on all those people whose job is to provide administrative, technical, or security support for these industries, or for that matter the whole host of ancillary industries (dog-washers, all-night pizza deliverymen) that only exist because everyone else is spending so much of their time working in all the other ones.

So was Keynes wrong? No, argues David Graeber, in this humorous paragraph:

While corporations may engage in ruthless downsizing, the layoffs and speed-ups invariably fall on that class of people who are actually making, moving, fixing and maintaining things; through some strange alchemy no one can quite explain, the number of salaried paper-pushers ultimately seems to expand, and more and more employees find themselves, not unlike Soviet workers actually, working 40 or even 50 hour weeks on paper, but effectively working 15 hours just as Keynes predicted, since the rest of their time is spent organizing or attending motivational seminars, updating their facebook profiles or downloading TV box-sets.

On meeting people with bullshit jobs in real life:

In fact, I’m not sure I’ve ever met a corporate lawyer who didn’t think their job was bullshit. The same goes for almost all the new industries outlined above. There is a whole class of salaried professionals that, should you meet them at parties and admit that you do something that might be considered interesting (an anthropologist, for example), will want to avoid even discussing their line of work entirely.

On the perverse notion that this status quo should endure:

It’s even clearer in the US, where Republicans have had remarkable success mobilizing resentment against school teachers, or auto workers (and not, significantly, against the school administrators or auto industry managers who actually cause the problems) for their supposedly bloated wages and benefits. It’s as if they are being told “but you get to teach children! Or make cars! You get to have real jobs! And on top of that you have the nerve to also expect middle-class pensions and health care?”

A must-read in its entirety. Thought-provoking.

An FAQ: The Trillion Dollar Coin

A good FAQ explainer at The Atlantic on the trillion dollar coin idea that’s floating around Congress (and the blogosphere):

What’s this nonsense I’ve been hearing about a trillion-dollar coin? It’s got to be some kind of elaborate —
Stop. It’s no joke. At least no more than voluntarily defaulting on our obligations by refusing to lift the debt ceiling would be. It sounds like something out of the Simpsons, but thanks to a crazy technicality the Treasury really can create a trillion-dollar coin, which would let us keep paying our bills if the debt ceiling isn’t raised. It’s an absurd solution to an absurd problem, but a solution nonetheless. As they say, when in Washington….
No, I’m pretty sure this is from the Simpsons.
Almost. That was a $1 trillion bill, which Fidel Castro tricked out of Monty Burns, but this is real life, so it has to be a $1 trillion coin. A platinum coin, to be exact.
I’m almost afraid to ask, but why does it need to be a coin? And why platinum?
We don’t make the loopholes. We just find them. The Treasury can’t print money on its own, because the money supply is supposed to be the strict purview of the Federal Reserve … but that might not be quite so strict after all, thanks to a coin-sized exception. Congress passed a law in 1997, later amended in 2000, that gives the Secretary of the Treasury the authority to mint platinum coins, and only platinum coins, in whatever denomination and quantity he or she wants. That could be $100, or $1,000, or … $1 trillion.
Read on to find out: what happens if the coin is stolen?

Tide Detergent: For Stains and Crack

This New York Magazine story profiles the popularity of Tide detergent. It’s such a hot product that it’s used by criminals in the drug trade. Since the bottles aren’t easily traceable, they aren’t a nuisance to steal and then resell in the black market. The money paragraphs:

The criminal cost-­benefit ­analysis of a bottle of Tide is more straightforward. Most of the people stealing the detergent, Sergeant Thompson points out, are the same criminals who used to break into houses or mug pedestrians—male addicts whose need to feed their habits can foster a kind of innovative streak. “They are smart. They are creative. They want high reward and low risk,” he says. Theft convictions can come with a maximum fifteen-year prison sentence, but the penalty for shoplifting is often just a small fine, with no jail time. For the most active thieves, says Thompson, stolen Tide has in some ways become more lucrative than the drugs it’s traded for. “It’s the new dope,” he says. “You can get richer and have less chance of doing jail time.”

For stores, stopping Tide shoplifting presents unique challenges. Most frequently stolen goods—GPS devices, smartphones, and other consumer electronics—are pricey, light, and easily concealed. They’re also not routine purchases, which means they can be locked up until buyers ask for them. Bulk goods like detergent are harder to run off with, but they’re also bought by dozens of customers daily—lock those products up, and a store manager adds more time to his customers’ errand runs, potentially sending them to shop elsewhere. “Any time you secure something, it impacts the sale of that item at some level,” says Jerry Biggs, the director of Walgreens’ Organized Retail Crime Division.

 Nor is relying on clerks to head off suspected thieves a realistic option. Cashiers and stockists, working for low pay, are often disinclined to confront a potential criminal. “People at the cash register don’t stop you,” says one of Thompson’s informants, an ex-con who shoplifted for years. “They just let you go past.” What’s more, stolen bottles of Tide aren’t easily traceable. Many merchants don’t record the lot and batch numbers for most grocery-store products, because that takes precious man hours. And Procter & Gamble has not made its own database of that information publicly available. Some stores have tried attaching tracking stickers to bottles to establish their provenance, only to find that thieves just wash them off.

Interesting throughout.

As an aside, I am loyal to the Tide brand (the NY Mag feature touches nicely on brand loyalty). The current version I use to do my laundry is the high efficiency Tide with Febreze.

The Destruction of the 1 Percent

Chrystia Freeland pens a brilliant essay on the destruction of the 1 percent. She begins with the rise of Venice during the Renaissance and its subsequent decline:

In the early 14th century, Venice was one of the richest cities in Europe. At the heart of its economy was the colleganza, a basic form of joint-stock company created to finance a single trade expedition. The brilliance of the colleganza was that it opened the economy to new entrants, allowing risk-taking entrepreneurs to share in the financial upside with the established businessmen who financed their merchant voyages.

Venice’s elites were the chief beneficiaries. Like all open economies, theirs was turbulent. Today, we think of social mobility as a good thing. But if you are on top, mobility also means competition. In 1315, when the Venetian city-state was at the height of its economic powers, the upper class acted to lock in its privileges, putting a formal stop to social mobility with the publication of the Libro d’Oro, or Book of Gold, an official register of the nobility. If you weren’t on it, you couldn’t join the ruling oligarchy.

The political shift, which had begun nearly two decades earlier, was so striking a change that the Venetians gave it a name: La Serrata, or the closure. It wasn’t long before the political Serrata became an economic one, too. Under the control of the oligarchs, Venice gradually cut off commercial opportunities for new entrants. Eventually, the colleganza was banned. The reigning elites were acting in their immediate self-interest, but in the longer term, La Serrata was the beginning of the end for them, and for Venetian prosperity more generally. By 1500, Venice’s population was smaller than it had been in 1330. In the 17th and 18th centuries, as the rest of Europe grew, the city continued to shrink.

She then makes a compelling argument that such a decline will happen in America. The only thing I found at fault with the essay is an unsympathetic jibe toward Apple and its Maps app in the latest iOS.

Americans Living Larger

Recession? What recession? Bloomberg reports:

The percentage of new single-family homes greater than 3,000 square feet has grown by one-third in the last decade, according to data released last month by the U.S. Census Bureau. The increase has occurred even while 4.3 million homes have been foreclosed upon since January 2007, a result of the housing- bubble collapse and economic meltdown. Slightly more than 1 in 4 new homes built last year were larger than 3,000 square feet, the highest percentage since 2007.

This is even more mind-boggling:

The Census Bureau reports that the average size of a U.S. house rose in 2011 to 2,480 square feet, up from 2,392 square feet in 2010. The 2011 figure is 62.6 percent larger than the 1,525-square-foot average size in 1973.

So people are buying fewer newer homes, but when they do, they want to get that 3,000 square foot McMansion. Makes total sense.

America’s Jobs Crisis

Felix Salmon has a good post digesting the latest jobs report. It’s worth reading in entirety, but I like Felix’s idea for job creation in America:

The solution to this problem is nothing complex — the arbitrage is sitting there in the first chart, plain for all to see. The government can borrow at 1.45%: it should do so, in vast quantities, and invest that money back into the economy itself. Take a few hundred billion dollars and use it to fix our broken infrastructure, to re-hire all those laid-off teachers and firefighters, to provide some kind of safety net for the millions of Americans who have been out of work for more than a year. Even if the real long-term return on any stimulus package was zero, the nominal long-term return would be well over 1.45%, making the investment worthwhile.

To put it another way, not all crises look the same. Back in 2008-9, the fact that we were in a crisis was obvious, and it resulted in unprecedented levels of enormous coordinated actions between Treasury and the Fed. Now, however, when we look at the crisis-level spreads in the first chart, we don’t think “crisis” any more — and the sense of urgency that everybody felt in 2008-9 is long gone. How many more dreadful jobs reports do we need before it returns?


Is Everything For Sale?

Michael J. Sandel, a political philosopher at Harvard, is the author of What Money Can’t Buy: The Moral Limits of MarketsAhead of the book launch, in a post adapted for The Atlantic, he cites examples of things that are for sale around the world:

• A prison-cell upgrade: $90 a night. In Santa Ana, California, and some other cities, nonviolent offenders can pay for a clean, quiet jail cell, without any non-paying prisoners to disturb them.

• Access to the carpool lane while driving solo: $8. Minneapolis, San Diego, Houston, Seattle, and other cities have sought to ease traffic congestion by letting solo drivers pay to drive in carpool lanes, at rates that vary according to traffic.

• The services of an Indian surrogate mother: $8,000. Western couples seeking surrogates increasingly outsource the job to India, and the price is less than one-third the going rate in the United States.

• The right to shoot an endangered black rhino: $250,000. South Africa has begun letting some ranchers sell hunters the right to kill a limited number of rhinos, to give the ranchers an incentive to raise and protect the endangered species.

• Your doctor’s cellphone number: $1,500 and up per year. A growing number of “concierge” doctors offer cellphone access and same-day appointments for patients willing to pay annual fees ranging from $1,500 to $25,000.

• The right to emit a metric ton of carbon dioxide into the atmosphere: $10.50. The European Union runs a carbon-dioxide-emissions market that enables companies to buy and sell the right to pollute.

• The right to immigrate to the United States: $500,000. Foreigners who invest $500,000 and create at least 10 full-time jobs in an area of high unemployment are eligible for a green card that entitles them to permanent residency.

Also interesting is this list of (strange) things people do to make money:

• Sell space on your forehead to display commercial advertising: $10,000. A single mother in Utah who needed money for her son’s education was paid $10,000 by an online casino to install a permanent tattoo of the casino’s Web address on her forehead. Temporary tattoo ads earn less.

• Serve as a human guinea pig in a drug-safety trial for a pharmaceutical company: $7,500. The pay can be higher or lower, depending on the invasiveness of the procedure used to test the drug’s effect and the discomfort involved.

• Fight in Somalia or Afghanistan for a private military contractor: up to $1,000 a day. The pay varies according to qualifications, experience, and nationality.

• Stand in line overnight on Capitol Hill to hold a place for a lobbyist who wants to attend a congressional hearing: $15–$20 an hour. Lobbyists pay line-standing companies, who hire homeless people and others to queue up.

• If you are a second-grader in an underachieving Dallas school, read a book: $2. To encourage reading, schools pay kids for each book they read.

So is there a market for everything?

In its own way, market reasoning also empties public life of moral argument. Part of the appeal of markets is that they don’t pass judgment on the preferences they satisfy. They don’t ask whether some ways of valuing goods are higher, or worthier, than others. If someone is willing to pay for sex, or a kidney, and a consenting adult is willing to sell, the only question the economist asks is “How much?” Markets don’t wag fingers. They don’t discriminate between worthy preferences and unworthy ones. Each party to a deal decides for him- or herself what value to place on the things being exchanged.


Related:  One of the best pieces I’ve read on the black market for organs is this investigative piece in Bloomberg. Chilling.

An Honest Letter from a Hedge Fund

Well, this is something you don’t see every day. One hedge fund decided to tell the bitter* truth in its annual letter to investors:

Dear investor,

In line with the rest of our industry we are making some changes to the language we use in our marketing and communications. We are writing this letter so we can explain these changes properly. Most importantly, Zilch Capital used to refer to itself as a “hedge fund” but 2008 made it embarrassingly clear we didn’t know how to hedge. At all. So like many others, we have embraced the title of “alternative asset manager”. It’s clunky but ambiguous enough to shield us from criticism next time around.

We know we used to promise “absolute returns” (ie, that you would make money regardless of market conditions) but this pledge has proved impossible to honour. Instead we’re going to give you “risk-adjusted” returns or, failing that, “relative” returns. In years like 2011, when we delivered much less than the S&P 500, you may find that we don’t talk about returns at all.

It is also time to move on from the concept of delivering “alpha”, the skill you’ve paid us such fat fees for. Upon reflection, we have decided that we’re actually much better at giving you “smart beta”. This term is already being touted at industry conferences and we hope shortly to be able to explain what it means. Like our peers we have also started talking a lot about how we are “multi-strategy” and “capital-structure agnostic”, and boasting about the benefits of our “unconstrained” investment approach. This is better than saying we don’t really understand what’s going on.

Some parts of the lexicon will not see style drift. We are still trying to keep alive “two and twenty”, the industry’s shorthand for 2% management fees and 20% performance fees. It is, we’re sure you’ll agree, important to keep up some traditions. Thank you for your continued partnership.

Zilch Capital LLC


(*satire; via The Economist)

Why Young People go into Finance, Law, and Consulting

Tyler Cowen has a simple theory why young people tend to go into law, finance, and consulting:

The age structure of achievement is being ratcheted upward, due to specialization and the growth of knowledge.  Mathematicians used to prove theorems at age 20, now it happens at age 30, because there is so much to learn along the way.  If you are a smart 22-year-old, just out of Harvard, you probably cannot walk into a widget factory and quickly design a better machine.  (Note that in “immature” economic sectors, such as social networks circa 2006, young people can and do make immediate significant contributions and indeed they dominated the sector.)  Yet you and your parents expect you to earn a high income — now — and to affiliate with other smart, highly educated people, maybe even marry one of them.  It won’t work to move to Dayton and spend four years studying widget machines.

You will seek out jobs which reward a high “G factor,” or high general intelligence.  That means finance, law, and consulting.  You are productive fairly quickly, you make good contacts with other smart people, and you can demonstrate that you are smart, for future employment prospects.

Combined with the fact that these jobs tend to be higher-paying than anything else available, and we’ve got a recipe for young people to pass opportunities in technology, public service, and the like. This New York Times piece sheds some data on percentage of people from Ivy League schools that directly entered finance jobs. For example, those graduating from Harvard were more likely to enter finance than any other career (in fact, 17 percent of new grads did so in 2010, which is down from 28% in 2008, just before the financial crisis).

Germany: America of Yesteryear

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.