Category Archives: business
Martin Shkreli has been in the news of late due to the interesting tactic of buying a biotech company and raising a drug price by approximately 5000%. Pills which had started at $13.50 and had only risen about 5 dollars suddenly find themselves at $750 per pill. While it is certain that there will be people out there who are prepared to pay that sort of figure in order to stay alive there will be a vast majority who simply cannot afford it. If my life depended on pills that cost $750 each then I would be saying my goodbyes. The likelihood that many potential customers would simply die is not good for the bottom line of any company. First rule of business, as any insurance company will tell you, is maintain the life of your customers.
So with the likelihood that many people simply could not pay one has to wonder how profitable it could possibly be to raise prices so high, especially when it also leads to you becoming one of the most hated men in the world. It may be that the figures do balance out and that Shkreli would really be able to lose a huge number of customers if enough people can afford to pay his exorbitant prices. It may be that there are more nefarious purposes behind his actions. A look into Shkreli’s past certainly suggests that nefarious purposes are not a thing that would slip his attention.
Shkreli’s success began when he was only 17. He suggested a particularly savvy deal in biotech which turned out to be so savvy that it led to an investigation for insider trading. Although the investigation did not find anything the continuance of suspicious circumstances accumulates a sensation of caution in relation to Shkrelin’s character. He was later discovered using multiple twitter accounts to give the appearance that his investments were better value than they actually might have been. For instance Fusion.net report a tweet worded “Damn Bruh, if Cohen is buying then your boy is buying too, nahmean.”
Fusion describe this as a seeming violation of securities law as well as of good taste. They make no mention of any action being taken though.
The rest of the article makes interesting reading as it mentions Shkreli being accused by the Citizens for Responsibility and Ethics in Washington of making inaccurate and misleading statements about the effectiveness of drugs in order to improve his position in regard to short investments.
Additional suspicious behaviour includes a very recent case in which he was sued for 65 million dollars by one of his own companies for allegedly using their funds to pay back customer losses in another company that he had recently opened. A tactic that has a flavour of Charles Ponzi all over it.
All told there are a lot of suspicious circumstances in Shkreli’s past which certainly seem to suggest that his approach is not the most ethical, but then can you really expect ethical behaviour from someone who is prepared to hike the price of a vital life saving medicine by 5000%. There is a line between purely unethical behaviour and behaviour that can draw criminal sanctions. So far Shkreli seems to have been quite free of criminal sanction but the question has to be considered, is this because he is an innocent who has never committed a crime, or is it pure luck?
The price rise he brought about seemed to have an immediate effect on the nasdaq biotech prices which dropped 4.41% on Monday. If you were the sort of person who was in the business of short selling then you could easily see the value in being able to effect this sort of change. It may be far fetched for someone with the limited set of thinking skills Shkreli demonstrates to anticipate the likelihood of major changes being announced in response to his actions but Clinton’s tweet was not completely unforeseable. Since then Shkreli has said that he will lower the price to one that is more affordable. There are times in Shkreli’s past where he has made similar price rises to drugs; it would be interesting to see how the nasdaq was affected the last time he made a price rise of a couple of thousand percent. Previously the rise was one that was only from about $1.50 to about $30. That is an increase that could be imagined as being payable. The current increase would make a year’s treatment for toxoplasmosis rise to over half a million dollars. The benefits of selling things cheaply are obviously not easy to understand in the world of Martin Shkreli.
Certainly with the list of interesting incidents above you could imagine anyone who was deliberately trying to influence stock prices would be getting gradually bolder and bolder. There is no doubt in my mind or the mind of most people that Shkreli’s ethics are more than questionable. Could this be the time that legal action eventually succeeds against him. It is difficult to say as I am not yet aware of legal action being proposed on the grounds of market manipulation. The information available about Shkreli on the internet shows that he is often the centre of controversies and legal actions for various courses of action that have surprisingly received little legal scrutiny.
There are people out there who wish to try and pursue Shkreli on any charges whatsoever, attempted genocide is one suggestion that I have heard. It seems that the evidence for a charge on market manipulation grounds would be favourable to anyone who is pursuing Shkreli. It is true that he probably has access to some incredibly talented lawyers but in the instance of biotech stock dropping by 4.41% across the nasdaq he has had an effect on a lot of other very powerful people. Where it may be that a blind eye is turned towards a lot of white collar crime the chances of that eye being turned full on in maximum scrutiny must be far higher where there are high powered victims of your actions. It is often in reaction to the greatest rogues that major improvements to legislation and legal infrastructure are made. If it hadn’t been for world war II there may have been no Human Rights Act or EU. Perhaps Shkreli deep down inside felt that the world of copyright and patent trolls was so egregious that he needed to force the hand of politics to introduce legislation to deal with it. Perhaps, but probably not.
At the present our society is facing a set of problems that are unique in the history of humanity. Thanks to a limited understanding of science that we have developed over the last few hundred years we know a great deal about food production, creation of fertilisers, even genetically modifying plants to increase yields etc. No matter how one feels about all the different technologies and methods in farming it is undeniable that one of the results has been an increasing population. Combine this with our gradually improving medical knowledge and our growing reticence to send huge numbers of people into wars and you find that the global population is growing massively.
At the same time as this growth is happening we are also developing far more efficient production methods, automation, robots, vehicles, etc, that reduce the number of people needed to run many business types. Where an office worker would once have had a secretary, they now have a computer, and type themselves where they would never have dreamed of doing so in the past. Where deliveries once took days to transport across the country with the use of numerous horses and the supporting services of stables, farriers, etc, deliveries not take a day as one man in a white van drives to their destination. I need not list all the ways in which modern technology has saved us time and money in the work place because everyone probably has many more examples in their own mind than I can think of.
These developments have of course created work as well. While we have become more productive it is also obvious that this is hand in hand with massively increased production. Look back half a millennium and you will see a society where most people owned only a handful of items and most money was spent on food. Today we probably have more items in our pockets most of the time; look around the room and you will no doubt see hundreds of different things, some of which will be technological marvels that would have looked like magic to that person of half a millennium ago. Naturally if so many more things are being invented and made then there will be a lot of jobs created by their production. However, necessity being the mother of invention, there is a huge effort put into the creation of labour saving devices, with the result that we all have a lot more free time than we once did. With mankind’s constant effort to amass more wealth and safety it is natural that employers will take advantage of some of this labour saving machinery to reduce their work force and lower their costs.
The problem with this is of course the fear that led saboteurs to throw their clogs into the early machines that were taking their jobs. The spanner in the works of modern economics is rising unemployment. Humans have a need to work on a deeply hidden psychological level. While a cursory glance at nature will reveal that most animals spend a lot of time conserving energy and humans have descended from the same origins, it is a tendency towards industriousness that has enabled us to rise to the height we have as dominant mammalian species on the planet. It is improbable that evolution ever intended us to work like machines for solid days, day after day; the rise in stress related illness attests to this, but we certainly do have a deep seated need to keep busy and be industrious.
King Solomon was regarded as being a rather wise chap. In Ecclesiastes 9:10, King Solomon instructs “Whatever your hand finds to do, do it with your might, for in the realm of the dead, where you are going, there is neither working nor planning nor knowledge nor wisdom.” Our industry is something that keeps us happy; when a person sits with nothing to do for too long it does not take long before boredom and depression set in. The fact that the quote above comes from the bible demonstrates that work is something that has been preached as being important on a moral and spiritual level. At present there is a moral crusade against the NEETS and scroungers who are not contributing to society. The seemingly endless recession hand in hand with our healthy population levels and work automation has led to a large number of unemployed people. The rigours and stresses of modern life and the many new chemicals and substances surrounding us are leading to effects on general mental and physical health that is preventing a great many people from keeping to the 40 hour schedule of the modern work week. The support that all these people need is being focussed on as being one of the drains on public finances.
Despite the fact that very little public money actually goes to people who are not contributing to society this group makes a convenient scapegoat and forcing them back into work is being touted as one of the many solutions being offered to help us back out of the recession. There are a number of points that render this approach unhelpful. Firstly it has long been acknowledged that there is no such thing as zero unemployment. Zero unemployment would not be desirable anyway as an absence of unemployed and penniless folk would lead to vendors being able to increase prices, which would lead to inflation. The only way zero unemployment would be possible is if people were not able to leave jobs, as if they did leave jobs they would become unemployed until they found another job. If people never leave jobs then there is no incentive to try and retain staff by offering a decent wage. The world where there is zero unemployment is a pipe dream inhabited by indentured servants paying high prices for their goods. As long as there are unemployed people it is possible to demonise them and use them as scapegoats for the failure of the government’s long term economic plan but in reality most of these unemployed folk are simply hopping from one job to another. These are all people who are in the process of improving their economic success by moving from inferior employment towards better situations. They are folk who have become unnecessary in one area of the world of employment but will soon become needed in another area. This is the free movement between employers that enables the system to keep running at optimum efficiency. The number of people who are actually targeted by schemes to deal with long term unemployment are a tiny number compared to the official unemployment statistics. The small amount retained to aid the economic recovery becomes so inconsequential when this is realised that it is nowhere near worth all the newsprint and publicity it generates.
The second undesirable factor in the demonization of the unemployed is the stigma surrounding unemployment. Those who become unemployed feel such an urgent need to return to the work place that they will accept jobs far sooner than they would if there was not such a stigma. The problem with this is that people will hurry themselves into jobs that do not pay their full worth. The evidence for this can be seen in the gradually drop in wage that is being experienced across the country. Newsnight has said that wages are expected to return to pre-recession levels sometime during the 2020s. It might not be the haste to return to work that is causing the wages to fall but it is certainly allowing the wages to fall. It is common for unions to call strikes in objection to the failure of wages to increase, yet here are people across the country rushing into positions with lower wages or with zero hour contracts. The employers are taking advantage of the measures being brought against the unemployed, even to the extent that employees are being sacked from their jobs and then being replaced with unemployed people who need not be paid the minimum wage. This is an obvious circumvention of employment law that should not be accepted. If people were not so eager to escape the stigma of being associated with the tiny minority who are deliberately unemployed then employers would have no other option than to offer a decent wage, and if the unemployed were not forced to work until they could find a job then they would be able to take the jobs that would not be done by the unemployed and unpaid.
The dropping wages that are supported by the increased desire people have to get back into work leads to a far more significant effect that is detrimental to society as a whole. Where there are lower wages the amount paid to tax is naturally going to be lower. A larger number of people are going to find themselves below the tax cut off and will not be paying any tax at all. A larger number of people will find themselves earning less than they would in more prosperous times and will therefore be paying less in tax than they would otherwise. The working population of the country is massive and all those of us who are earning lower wages would ordinarily be contributing vast amounts to the economy through tax. At present this money being saved in wages is money that is being retained by the employers; in most instances the employers will be using the services of accountants to find any methods available to reduce the tax they pay. It is a well known issue that large companies use many different methods to avoid paying tax, yet they are now being given a situation wherein it is becoming possible to retain more of the money they would otherwise have given to employees who pay tax, and the companies are using these methods to further reduce their tax payments.
The lower wages that are being seen around the country are leading to lower spending. Despite a few successes in the retail sector on Black Friday and Cyber Monday it was noted that spending did not reach the levels that had been expected. This was partly due to retail fatigue brought on by a glut of possessions, less available spending money and an underlying realisation that even where the public are spending the money we are so much part of the consumer equation that we are becoming products ourselves. Money that is available is being largely spent on rent and food. Food is free of VAT so is not contributing to the public coffers. There is little left over for spending on luxuries and gifts and what there is available is being sucked up by the companies that are closest to being national monopolies. VAT on luxury items is therefore not forthcoming and the appearance is that there must be a level of collusion between electric companies, gas companies, broadband companies, etc, raising prices year on year, who are all large enough to employ accountants and tax lawyers with a far higher level of skill than can be afforded by the public sector which is trying to retain some of this money.
The result is an economy in decline.
It is evident that a large number of the ‘solutions’ being offered to the problem of recession are being implemented purely for reasons of publicity. The government wish to be seen as being proactive in finding our way out of the recession. At the next election it is extremely valuable to be able to say that ideas were put in action that led to a reduction of the deficit and the national debt and greatly improved the lives of all Britons. At present it appears that the ideas are not leading to the ends that were expected. Had all the indignities of the last few years actually resulted in economic recovery I would probably feel far more magnanimous towards the current cabinet. The measures implemented look more akin to the measures of an average driver when sliding on a patch of ice, actively steering in what appears to be the right direction but is actually pushing the car into an ever more extreme skidding slide. The hands currently at the tiller of public finance are far too heavy to negotiate the delicate task of restoring balance to our economy.
It seems obvious that in an ever changing world we need ever changing ideas to find solutions to the issues that face us. Imagination and creativity are what is called for in solving the problems of an ever more automated society. We do not need to be forcing people into graft and labour just so that we can look as though we are being proactive and thereby gain enough votes for another disastrous four years of governance, we need to be nurturing the creativity and imagination of all those who do not find themselves immediately drawn into the employment situations available. It is education where we should be focussing our attention. A line from the Facebook film a few years back was that graduates from Harvard made their own employment. That is what should be expected of everyone who is at a short end. We should all be capable of spotting the gaps in the market and thinking of ways to cater to that need. There is no need to force people into working as little more than slave labourers if they are given the abilities to discover their own uses and their own jobs. Nobody wants to work for peanuts to further the success of a company that doesn’t even value their contribution enough to offer a fixed contract with adequate hours at adequate pay. Train the unemployed to make their own employment and numerous problems we are faced with will simply solve themselves.
It can be hard to make a living in modern Britain. Contrary to the prediction of Bertrand Russell we have not all been freed from the bonds of labour. The arrival of labour saving devices has not given us the freedom we expected. Robots apparently do not even threaten jobs, according to some reports each robot leads to the creation of three jobs for those who need them. Given that labour saving computers need constant attention to clean up viruses and malware and find solutions for the bloat of new updates this might not even seem surprising.
Mind you it is possible to buy your way out of the daily grind and thus leave your days open to pursue more fruitful ways of making a living. For the average person perhaps, the promised future in which machines would do our work for us has not arrived. For those who have the money to buy their tickets to freedom from hard work it is quite possible. Obviously a substantial amount of money would be needed to manage this, maybe a decade or two’s wages for most people. A lot of people have managed it. Sometimes they only succeeded because they inherited the requisite amount but others have worked their way into the position through their own cunning and ruthlessness. For some people the very act of buying one’s way out of work becomes a job in itself, even an obsession as they become wealthier and wealthier.
You may have worked out by now that it is the world of shares, stocks and financial trading to which I refer. If you can work out which businesses are going to be successful then you can become wealthy. If you can work out which ones will simply keep on a level then you can potentially bring in an income sufficient to keep afloat. For a lot of people who have to spend their days sweeping, building, digging, driving, painting, vending, etc, there is one obstacle that can prevent them making a living through this method. Aside from needing to learn the esoteric intricacies of entering the world of stocks and shares there are ethical considerations that many find hard to overcome.
Naturally one makes investments in order to earn money. A lot like the days when banks offered reasonable levels of interest except that the levels possible with a good investment can be far more interesting. In order to make money the investment must be in the sort of company that is likely to make more money and pay out dividends. With a free market in which regulation is kept to a minimum the more successful companies are also the most ruthless companies. They are the companies that don’t mind chopping down forests full of undiscovered creatures; they are the companies that don’t mind sourcing their products from unregulated factories where the age of the workers does not concern the owners, or the materials used might have been mined at terrible cost to the environment and the miners; they are the companies that see the law as a set of rough guide lines that can be interpreted in many ways, and if by chance that interpretation was incorrect the payment of a fine will be all the recompense necessary.
There are of course many successful companies that have far more ethical processes than these but those are the companies that must work extra hard to compete with the less ethical companies. The odds are that they will be paying their workers the lowest prices they can get away with and they will pay their taxes wherever is most convenient, as well as cutting costs by expecting their staff to do excellent jobs with old and malfunctioning equipment. Once again I may have painted a picture of a less than desirable company to hitch one’s ethical karma to.
Of course there are many flavours of business, but if a person wishes to buy shares in a company then the companies that are floated publically on the stock exchange do largely fit into these two categories, and for many people with the intelligence to work out where their money will get the best return these ethical shortcomings are unreconcilable. This is one of the reasons why many people never succeed in buying their way out of logging, farming, welding, bricklaying, fishing, etc. For these people the idea of sitting back and letting the money flow in from all these dubious business practices is as unacceptable as sitting in a bedsit on the dole waiting for junkies to come and buy heroin off them. Here we see a potential meeting of morals between the middle classes and the so called scroungers that Ian Duncan Smith is so intent on destroying.
For the people who are still earning their money without supplementation from shares it might seem as though they are the ones left behind by Bertrand Russell’s prediction. They look on the travesties conducted in the name of business and just hope that one day regulations will be put in place to prevent such practices and in the mean time they hope that perhaps consumers will choose companies with fewer ethical violations. They see the banks distorting markets and losing billions only to be bailed out by tax payer’s money and have little recourse beyond tutting and grumbling in the pub later. They would vote for a government that would sort it all out but the political parties have little difference between them and place GDP so high on their scale of priorities that they aren’t going to be the ones to sort it out unless a critical mass of public opinion forces them.
Getting such a critical mass of opinion in a nation is not an easy job for anyone. Pressure groups and charities work hard to force businesses to be more ethical and for governments to create better legislation, but it all blends together into the buzz of daily news. The political parties canvas to gain voters but as the last election showed no party can even gain a majority at present. Since then the political landscape has become even more fragmented. It is difficult to align the wishes of an entire nation so government ends up controlled by whoever has the loudest voices. These are media organisations with their own business interests which tread the delicate path between success and failure just as any other large business.
The solution to the problem of poor ethics in business for all those who have been trying to keep their hands and their morals clean, is the solution that goes immediately against their instinct. It is by investing in the very companies which have these terrible practices that they can guide them towards better ways of doing business. In day to day running of these companies the board of directors makes business decisions based upon rules that are set out in the Companies Acts. These rules suggest they ought to think about broader issues and their effect on their environment but only really so long as they don’t let it stand too badly in the way of returning maximum profit to the shareholder. However the secondary input that guides their decision making is the input of investors at any meetings they attend.
Given that the entire country proves to be problematic even for the Prime Minister to lead or control it makes sense that ordinary people would only be able to make the world better in smaller ways. Start with the world in front of you. At a certain point one begins to realise that doing the washing up or the vacuum cleaning is quite satisfying but makes no real long term impact on the world and the problems that afflict it. Conveniently if it is possible to save or raise even a small amount of cash it is possible to step into those companies that appear in the newspapers every day. Those things that people vote to change in elections can be changed from within the companies themselves. Admittedly it is still necessary to have the backing of many other like minded thinkers, but far fewer than in a public election. Alternatively simply raising enough money can give one investor the voting power of many.
Without the force of legislation there are few ways to change the behaviour of a company. Consumer action works to an extent but is often easily exhausted and difficult to affect by repairing company behaviour. Only by getting power inside a company itself can one be most assured of getting close to having a positive influence over the way that company conducts its business. By attending shareholder meetings one stands a far better chance of meeting other shareholders and of affecting their thought processes. The more shares a person owns and the more ruthless the company in which they have bought the shares, the more potential for good they can create in shareholder meetings. A side effect of this method of trying to make a better world is that those dividends are received by the people who are working hardest to prevent the companies in question from doing any further harm. That is the way to buy into Bertrand Russell’s prediction without breaking one’s moral principles.
Having just read the Guardian article ‘The tech utopia nobody wants‘ it occurred to me that laying the blame on the nerds was unfair. To some the idea of feeding the poor the artificial food stuff ‘Soylent’ in lieu of food stamps is a mark of a repellent future, just as there are people who rebel against the idea of Google glass becoming ubiquitous. The problem is not a problem with the technology though, the rapidly changing nature of technology merely highlights flaws that have existed in society since the enlightenment era began.
Certainly there are solid reasons to allow the developers of technology to have less control over our lives. Almost every piece of software I use has a feeling of being a beta version. Some software is released in permanent beta; much of the software we use is supposed to be a finished polished version but is far from perfect. Bugs and flaws are a common experience while we work on our computers; imagine if we had to put up with bugs and flaws in every aspect of our lives. In fact we do have bugs and flaws running through many aspects of our daily lives because so many things are based around very modern technology. The hidden pollutants and costs that frequently appear in our power sources, or the health problems caused by food additives are two examples of how technology exists throughout our lives and is not just the domain of silicon valley.
A very broad definition of technology would probably take in much more than the electronic world. Stephen Fry, who is known for his love of technology once gave the example of the lighter as being the most important gadget ever invented. We are so used to the lighter that we barely recognise it as something that hasn’t always existed, but almost everything around us is technology embodied. Go back a thousand years and the average person might only have owned half a dozen things. They would have had their clothing, which would have been barely more than what we might think of as a potato sack; they would have owned a bowl and maybe a knife; they might have owned a stool to sit on and a scraggy straw mattress to sleep on. Aside from that there were not a great many possessions for most people; they were lucky to own themselves. In the time since then technology has furnished almost everything around us.
When we live in what is arguably a tech utopia, or dystopia, already it cannot be fair to complain that the chaps in silicon valley are only now creating a tech utopia we don’t want. We have had it for years already. The complaint that it is only just happening now is simply fear of change.
However, it is not change in my view. It is more of the same that we have been getting throughout the last few hundred years. Many people are not happy and those who are happy are fully aware of reasons for the others to not be happy. My opinion is it all comes down to a fundamental misunderstanding of utilitarianism. Jeremy Bentham was one of the most influential proponents of utilitarianism, which is basically the belief that the greatest happiness of mankind should be the ultimate aim of all effort. Naturally there are trade offs and under a strict utilitarian view it would be acceptable to sacrifice the happiness of the few in order to guarantee the happiness of the many. The cruelty of nature prevents more humanistic philosophies from being practical as we simply are not able to prevent all unhappiness, misery and harm.
Bentham’s philosophy has had a strong hand in the dominance of the free market system. According to the understanding of the free market we should be able to bring the greatest happiness to the greatest number of people by allowing competition to bring prices down and increase efficiencies so that eventually everybody will be able to afford all the luxuries they could possibly wish for and live in nice warm houses with big screen TVs and plenty of food.
The flaw in this of course is glaringly obvious but often overlooked; the output of the free market does indeed make people happier but as anyone with the most basic understanding of physics can tell you:- for every action there is an equal and opposite reaction, and, matter and energy cannot be created from nothing, only transformed. There may be many other ways of saying it but essentially the free market doesn’t only create output, it also uses input. The output makes people happy but it is often very much overlooked how much the input can make people unhappy.
There are minorities who are unhappy about many of the effects of the free market; unregulated industries creating pollution and other environmental problems comes to mind immediately. Utilitarianism allows for the misery of the minority so long as the majority becomes happier; for this reason it takes a lot of impetus before many of the complaints against the free market are dealt with. Often the solution itself is an effect of the efficient operation of the free market in that customers deliver a message by altering their buying behaviour. There are many different and overlapping minority opinions that eventually become resolved in this way like direct democracy in action. There is an area where there seems to be an increasing problem that is being overlooked which offends against the principles of utilitarianism and the basis of why we wish to use a free market system – the input that is needed to create the output that benefits us.
When the original English economist Adam Smith travelled through Europe as a tutor he met the French economistes whose ideas inspired his later book, ‘The Wealth of Nations’ and kick-started our modern approach to economics. The economistes grew to be known as physiocrats as economics developed on account of their view that the wealth of nations depended upon the agriculture of the nation. It was agriculture that fed the horses and fed the men and thus allowed work to be done and allowed development to occur. Prior to this, wealth was largely considered to be how much gold and silver a nation possessed. Since those days, changes in technology have caused the wealth of a nation to be defined more by how much oil it can access. The more oil a nation possesses the more machines it can power and the more plastics it can manufacture. The majority of the input needed to create our output is therefore provided by oil fields and coal. The problem is that there is still a link in the chain that has more in common with the early days of economics when Smith was travelling through Europe. We may not make great use of horses anymore but production still relies a lot on people.
So while we take out all our products in the hope that we will create the greatest amount of happiness, we must still input our own efforts to produce them. We find we are not as happy as we wish because we are not producing enough wealth and enough products, and our solution is to streamline our processes, and become more efficient. We must work our factories harder and create more output in order to create this greatest amount of happiness. In theory this should work but it seems that at a most basic fundamental level the powers who oversee this process have overlooked the fact that the consumer is also the creator. The streamlining makes the overall amount of happiness decrease as men become automatons working in streamlined production lines, always aiming for greater efficiency. The reward for achieving greater efficiency is to be challenged to achieve even greater efficiency by the next appraisal.
Societal happiness decreases. The solution: push harder to be even more efficient.
This is not the approach in all nations of the world. Many countries and many companies are well aware of the absurdity of this approach, but often they only have this luxury while wealth is abundant.
To bring this blog around full circle to my beginning point I think one of the major complaints that can be levelled at a technological approach is that we have become so good at inventing and building machines and computers that we have forgotten that not everything runs like a computer. Our technology may be very advanced but our understanding of medicine, psychology, politics, and economics among other disciplines is nowhere near as advanced. Our mistake is to think that the lessons we have learnt in technology can be applied across all disciplines. The analogies do not work. Society cannot be run like a machine because the happiness we are aiming to create exists outside the physical processes of creation and consumption. Everyone is aware that as consumers we are not machines, but the thing that legislators seem to have forgotten is that as producers we are not machines either.
I have found myself drawn into the debate over the recent acquisition of Nest by Google. As Nest is a maker of thermostats it is not a subject I would have paid the slightest attention to if it hadn’t been so extensively covered on the Tektalk podcast; by covered I mean panned, slated, poopooed, belittled, you get the drift. A lot of people seem to be somewhat shocked by the purchase as it cost Google 3.2 billion dollars. When Google itself has just under 60 billion in spendable assets then it makes 3.2 seem like a lot for a company I had never heard of until this week. Playing devil’s advocate I intend to defend the purchase. It seems to me that this is a lynch pin in the Google game plan.
My initial reason for looking deeper is that my wife feels the cold really badly. I mean Really Badly, with capital letters. When I am walking around the house in a Tshirt she will be wearing two cardigans and two blankets with a hot water bottle and the central heating on. The idea of being able to turn the heating on when we are still ten minutes away from home is something that we would want to have asap.
My second thought is that this is a perfect additional tile for Google Now. I have installed Google Now on a couple of occasions but aside from its excellent speech recognition it is of little use to me. I work at home, I don’t drive, immediately a lot of its use disappears. I also feel like an idiot talking to my phone in public and if I did I would find that it couldn’t find a 3g signal so I was wasting my time. Such is the problem of living in the countryside, if I use anything other than an ancient nokia I have no hope of getting 3g. If my heating could learn to control itself according to my motions then I would have a lovely toasty home all the time and my wife would be far more happy.
The best reason for my optimism in the purchase of Nest though is the money it will be able to save consumers. I have heard the opinion that this is an expensive purchase, and wasted money but when your heating can learn how best to save electric in doing your will then you are going to save a lot of money. Nest themselves reckon the saving will be about 20% of your heating bill. This will pay for itself in no time. Aside from the benefit of saving cash for your pocket you will also have the huge benefit of easing a great deal of stress on the environment. Climate change will be reduced, air will be cleaned, customers will save money, which they will probably spend on tablets, phones, and any number of things in the google play store.
The big problem with the whole deal is that everyone expects Google to misuse the information gleaned from these sensors. Everyone thinks that there is a wealth of advertising opportunities to be had from being able to monitor every movement of the owners of these devices. Of course everyone is right about this, but Google have promised not to take any sneaky peeks at this data. Google have said that they will only use the data for purposes in the operation of the devices themselves, heating related, etc. Given the billions spent on heating I am inclined to believe this, why alienate your customers to sell adverts to any other kind of business when you can use your knowledge to influence the sale of contracts that far overwhelm the amounts spent on mobile phones or broadband?
Another key in the puzzle that makes me think that Google will not look at the data is the even more recent news that they are going to be investing in Deepmind AI. They will not need to look at any data, if they take the AI in the right direction they will be able to rely on the devices themselves knowing exactly how to use the data to maximise profit and there will be no human to see any of the data at all. The data could be misused and noone would ever know because it could all happen inside the machines.
3.2 billion is a lot of money but in the long term it is less than most of use realise. Naturally if you or I had this kind of money we would most likely become overwhelmed by the possibilities and disappear off on a long holiday/spending spree that would never end. In multinational business dealing in the kind of devices that everyone can make use of it seems like a smaller amount. All the same it is still a lot. However as stage number one, the opening gambit of a far longer play, it might seem far less.
Nest is run by a team that have Apple pedigree. This is valuable. This is part of the legacy of the insight of Steve Jobs. He may be gone but some of his decisions live on, and his decisions hold a mystique when compared to the decisions of all other CEOs. There are a number of teams doing similar things with sensors and the ‘internet of things’ but they are all unknown quantities. When a company has access to the resources of Google and has a serious game plan then there is no point skimping over the odd billion and risking getting stuck with a bunch of numpties who have been mismanaging the company you are buying. If you buy tried and tested Apple veterans then you know you are getting quality. That is a weight off your mind because the odds severely suggest you have made the right choice. It is probable that there were some key patents involve in the acquisition. Home automation seems like it was the natural next step in Google Now’s design, they could have been balked by the patents held by Nest. There are other companies doing similar ‘internet of things’ tasks, but of them all, the combination of factors in Nest make it a no-brainer.
It is obvious that Google are playing a long game. In a way they are far more able to get away with this than most companies. Most companies have to worry about the next shareholder’s meeting and reporting the maximum amount of profits because they are always in competition with others and therefore need to cut costs all the time. Google is currently free from this rat race and is still able to dream. They have always been a very adventurous company willing to innovate to a massive extent and no matter what happens they can fall back on the massive profits brought in by being the go-to search engine, an actual verb in the dictionary. This allows them freedom from the usual constraints of short term operation that usually control the decisions of companies. Asimov wrote of a mathematician who predicted a thousand years of future in the foundation trilogy. Although a thousand years is excessive it is my belief that Google are focussing on the distant future. They probably have intentions of occupying a particular position in 2035 but in order to get there it is imperative they make this purchase now.
With most companies we all know what they are planning. We might not know the specs and the design of the next Blackberry or Ferrari, or Conran, but we know roughly what they will be doing. We know roughly what they are working on at this very moment. Google is not that kind of company. They could be working on anything. Is it software? Is it a phone, tablet, car, computer? Are they working on giant robots, drones, space craft? Nothing would surprise me with Google and for that reason I think that all the criticism of this purchase is looking at this all from the wrong angle. Nest is an expensive acquisition but it may not be long before it begins to make a lot of sense to the rest of us. The future is always coming and often it takes us by surprise. We ought to keep our eye on Nest to see where the next surprise comes from.
I have been forced to comment on a great hooha spreading across the internet at present that seems to be getting a lot of people unnecessarily upset. Anyone who has read my blogs in the past will know that I do not approve of corporations and they might therefore be surprised to hear I am not against the Transatlantic Trade and Investment Partnership. I have always been a bit paranoid about the powers over my head ever since the days they were all poised to destroy us with nuclear missiles at any second so I am slightly surprised at my acceptance of the TTIP myself. There are a number of commentators who are riling up the internet as though they were poking a wasps nest with a stick. Of course the internet is quick to anger and there are millions of people who now oppose the TTIP.
I can’t help thinking that such an opposition is a sign of what I shall call farageing. It seems strange to me that people who consider UKIP to be a group of morons have no problem with applying UKIP logic to the idea of an agreement with the States. I can see where they are coming from to an extent. I have no uncertainty that there will be a lot of negative effects from such a partnership. However I am also sure there will be a great many positive effects from the partnership. Such is the nature of change and if we were not able to put up with it then we would all be living in small villages of mud huts eking out a poor existence from what we could forage and farm in the small patches of land around us, with any excess being taken by marauders. Whilst I might like to try such a way of life for a holiday I don’t think I would like to live there. Change will always bring bad things but at the same time it tends to bring more good, that is why the majority of us would not trade our current homes for one a thousand years ago.
When England joined Europe in the early 1970s we felt a great deal of change. Within a few short years there were an overwhelming number of new goods in the shops at ever reducing prices. Admittedly if you want to buy a decent bit of Deutsch Wurst then you still have to pay a massive amount more than you would in Berlin but at least you have the option. To compare what we can now buy in the stores compared to the early 70s you would be forgiven for thinking that the wartime rationing was still in operation at that time. The breaking down of the barriers in Europe and the loss of customs tariffs on European goods allows us to live the colourful lives we have now rather than the grey lives we had then. It also allows the producers of this country to sell with greater ease in Europe and when the pound becomes weak it means that there are far more customers helping to boost it up again. Back then it was the way in which food improved that I was most impressed by. Nowadays the thing that most people are having trouble buying and the thing that most people are coveting is electronics. Our free trade agreement with Europe does not help too much there because in Europe it is England where the prices of Electronics seem to be most affordable on average. If we had a trade agreement with America then we would suddenly gain the benefit of the fact that America has very low prices on Electronics compared to most other places in the world.
Aside from all the other benefits that might come from a trade agreement we would quickly find our capability to push our country technologically would become far more affordable. Computers, tablets and phones would be cheaper and all the benefits of them would become more attainable. Education would become cheaper for those who use such technologies to push themselves harder. That education would be more useful with an extra market that wishes to trade with us without barriers. This is only one aspect that would be helped by the agreement. Those in favour would touch upon others. Throughout the whole of Europe it is probably England that is positioned most favourably to benefit from this agreement. We share a very similar language to the Americans. They even name it English as it is so similar. For us the agreement will be far easier to slip into than for the Germans or Greeks.
The one failing of the agreement that is being pointed out by the naysayers and is drawing all the negativity is the rights it gives to corporations to use arbitration to challenge governments that adversely affect their business interests. Ironically the people who seem most alarmed by this are the same people who usually wish they could challenge the same governments themselves for all manner of idiocy. They seek to challenge the governments for the idiocy of allowing corporations to challenge the governments. It is true that we consider ourselves to be living in a democracy and we wish our desires to be adhered to. With this in mind we vote for politicians to represent our wishes. Once politicians are in power they can pretty much do what they want for the next 4 – 5 years. What they do is usually appeal to the readers of the most popular newspapers because whatever rubbish is published in them will determine whether they get to keep their job at the end of the period. Corporations are not one of my favourite forms of institution but at least they do listen to the actual democratic majority. There are so many twists in the way that politics works that almost everyone must now be familiar with Winston Churchill having said democracy is the worst form of government. The fact that he then said, ‘except for all those other forms’ meant that he still favoured democracy but simply felt its execution needed work. The beauty of a corporation is that it will listen to the will of the customer. One thing that many corporations have in common is that when they were not attentive enough and flexible enough to do what the customer wanted they went bust. The thing that all the other corporations have in common is that they were attentive enough to do what the customer wanted and they thrived.
In general the TTIP is unlikely to cause a great deal of arbitration to be focussed against our governments. It is a measure that is put in place in such agreements to protect companies in the worst possible circumstances where governments are using unethical levels of protectionism for their own industries. This does not mean arbitration will be absent. There will undoubtedly be some egregious use of the measures and no doubt we will all tut and blame the TTIP. This will not change the fact that we will gain massive benefits from the TTIP. It will also not change the fact that we are entering a new era of democracy. We are being given a far more direct form of democracy than we had before because if we disagree with the way the corporations abuse such measures we have the ability to stop shopping with those corporations. We have the ability to tell our friends to stop shopping with them. With the internet what it is we have the ability to tell the world to stop shopping with them. If the TTIP affects the web to such a degree that we cannot, and if this is something we dislike then we have the ability to set up meshnets, we have the ability to use usenet. We still have a right to free speech, we have the right to say something about these corporations and they will quickly learn that the TTIP does not give them carte blanche to abuse their positions.
There will be change. I have already said this. But we live in a changing world. Think of it not as change but as adaptation. This will be a time of great empowerment for average people, if we want it to be. Moving the emphasis of control away from government towards corporation really moves the emphasis of control into the hands of the people, and that is where it should be.
Further information can be found at the following URLs and at any to which they link.
You will also find amongst them links to petitions of opposition if you so choose but you will need to find them yourselves.
Johannes Gutenberg invented the printing press in the 15th century setting in motion the process of releasing the typewritten word to the general population that eventually developed into webpages such as the one on which you are probably reading this.
Thomas Edison invented the phonograph in 1877 setting in motion the process of recording sound that eventually developed into the podcast.
The internet grew from the written word on bulletin boards and in an echo of technological development through the centuries gradually incorporated pictures, sound and video. The podcast was named for the ipod and was one of the best reasons to have an ipod. Podcasts took off. As is so often the way on the internet everyone was talking about podcasts and everywhere you looked there were companies setting up podcasts. The podcast was the future; a way of delivering content to a different audience, the people who listened rather than reading or viewing.
The problem was that everyone read on the internet, especially once the internet became filled with the communications of their friends on social networks. Those who didn’t read wanted something like the television that they were accustomed to watching through the evenings in the pre-internet world. The people who liked to listen to podcasts wasn’t such an attractive audience for whom to produce content, the profit wasn’t there. Gradually the podcasts have begun to disappear. A lot of people who spend time on the web are fans of technology; for these people the disappearance of Stuff magazine’s podcast, followed by Cnet’s main podcast, and most recently by T3 magazine’s podcast has been notable.
These 3 big companies of technology have decided that podcasting is not worth the effort involved. In times of austerity the natural way to save money is to cut back on those expenses that are not profitable enough. Is this the best plan.
Companies are ruled by their shareholders and at regular points they must release details of their profits. The problem with this is that if they do not continually try to save money and build up good dividends then they will lose value in the shareholder’s eyes with the result that funding will become harder, expansion will become harder, even staying afloat will be harder. Lose too much value and you risk being bought out and liquidated.
However the internet has been with us for a while and there are many people who are beginning to feel swamped by the intensity of information that is delivered. A short while ago Facebook was developing into something massive. It was so massive that when it made its initial public offering on the stock market its value ballooned to ridiculous levels that were totally disproportionate to its ability to earn money. Even though this has now died back Facebook is still left with having to sell a lot of advertising to create the necessary profit to maintain its value. The result for Facebook users is that newsfeeds are filled with sponsored posts. Chosen pages are having their posts suppressed if they don’t pay to promote them. Facebook has become chaotic and time consuming to read. Those who love facebook are finding that it is eating up too much time to justify its place in their life.
Facebook is only one example but in general the web demands too much of those who live there. 200 years ago the average reader would own a few books in their lifetime which they would read and reread, eventually memorising them. There is now more information uploaded to the internet everyday than any one individual could hope to read in a lifetime. A lot of it is tripe but a lot of it is stuff that we want to read, in fact most of it is designed specifically to pull all the strings that make us want to read it.
A lot of us spend our working lives sitting at desks interacting with computers; we carry phones which have the same functions; it is possible to spend hours conducting a social life under exactly the same conditions. For the first few years of the internet it was an intriguing mystery. When the world wide web was created it started to become something that ordinary people would use. As more people have begun to use it the web has become a potential target for corporate profit. The result has been the explosion of exciting and enticing content crying out to be seen. If television was ever the drug of the nation then the web is the crack cocaine that was even more addictive.
I am not saying we should all become Amish and reject modern technology but when we find it stealing our lives we have to take something back for the sake of our health. However we can learn from the internet and besides, we enjoy the information. The beauty of a podcast is that we can run in the woods while we listen to them; we can go shopping; we can travel to work or to visit friends; we can sew and paint. All those things that we have lost to the internet can be given back to us by the podcast. As people start to become disillusioned with the theft of their time they can take it back but still enjoy the benefits of news, reviews and opinion.
It seems to me that we are just reaching the point at which the podcast is going to be the solution many of us are looking for. The demand for profit of corporations is going to drive us away from the internet that we have been enjoying for the last few years, but ironically the demand for profit is what is taking away the refuge that the podcast offers. There is a future for the podcast but the companies are throwing it away ahead of time. Like so many things that have come before it, the podcast was invented a little bit ahead of time. With the right approach the podcast could make a comeback with a vengeance.
Having lost three of my favourite podcasts, Stuff, Cnet and T3, I am glad to say that when the Times newspaper decided to shut down its hilarious Bugle podcast the presenters thankfully took matters into their own hands to seek sponsorship and create merchandise to keep it running. The people who will profit when podcasting again attains a height of popularity will be those people like this who do it because they enjoy it and because it is who they are. The companies that were only doing it because they smelled a profit may all have ducked out by that point. There is still a future of great content to be developed and it will be developed by the real enthusiasts, and perhaps that is the best way it should be.
I have recently been placed in the line up for becoming the UK gadget guru for PriceSpy. It is currently being put to the vote on Facebook. As far as voting stakes are going I am currently not in the top running but then neither am I at the bottom. It is unfortunate that friends and connections can be a bit slow at clicking through to things and on Facebook there is always the problem that nobody wants to give any permissions to a site they’ve never previously heard of.
There are eight of us in the running and we have been told to be ready for interviews up in London next week. They have also asked to see a piece of our writing, naturally focussed on gadgets/technology. I am planning to write about the Neo900, which I think is a particularly interesting phone soon to be released that has received hardly any publicity due to its opensource origins. I am being limited to 500 words so I will not be able to say everything I wish to say; I will therefore be likely to publish the full length impression I have been given of the Neo on here for you to read. In future of course, if I get the job, I will be writing anything technology based on the pricespy blog primarily.
Pricespy themselves are a Swedish outfit I believe, Prisjakt Svaerige. Their umbrella company is one of the leading Norwegian media companies so they are not a small outfit. They have successfully entered a number of European markets but this is apparently the first foray into the British technology world. It is fairly well known that Norway and Sweden are amongst the most advanced nations on the planet. The economist has named them as some of the best governed countries in the world. Things are done differently up there in Scandinavia and even with the distrust of big business I usually have, I must say I would feel far happier working for a Norse/Swedish company than I would for most.
Ultimately I am here blogging to blag for your vote. I don’t know how many people are likely to read this piece of text but if you do then please go to the UK PriceSpy Gadget Guru voting page on Facebook and put in your vote for Ro Atkinson.
With the economic downturn a lot of people have been thinking it might be time to save a bit of cash so they have something for a rainy day. I have recently come to the conclusion that this is the last thing you want to be doing. I remember a while ago when talking about personal debt David Cameron had told people to simply spend less and pay their debts off. It was not long before he retracted this when someone deep in Whitehall had presumably explained to him that a British public that was not spending money was a recipe for economic stagnation. It is pretty evident that the government do not want the public to save their money and stop supporting business with their custom. All the same, a lot of people might disagree with the government point of view and decide that now is the time to begin thinking about holding something back for the future.
However the economic situation in many of our nations is really too far gone to take this very obvious and traditional way of ensuring our future prosperity. Many of our nations are experiencing levels of debt that have in the past presaged wars, revolutions and other detrimental situations. In living memory many of us have grown used to a very comfortable and stable way of life, but looking at history shows that good times always come to an end. Tropical eras are followed by ice ages; empires are followed by dark ages; boom is followed by bust; even day is followed by night and summer is followed by winter. Of course there is always the possibility that the complexity of our modern technology might present ways in which we can avoid most of the possible deterioration of society that might have occurred in a previous age, but nevertheless there will always be change.
It is possible that many of the disastrous scenarios I am privately fearing may never come to pass, but even so, it is highly probable given the modern world we now live in that none of our ancestors ever experienced, that the way in which we might wish to use our spare cash will be far more likely to change.
Those in the social stratosphere descended from medieval gentry have typically used their cash very wisely. It is easy to invest wisely when you have so much wealth that you could buy the rest of your lifetime’s meals and still be left with vast sums weighing you down. For the rest of us investment gets a little trickier. It is all very well taking investment advice that tells you to store your wealth in gold or perhaps buy stocks in a foreign power, but if all the gold you can afford will fit in your pocket then it is not going to do you a lot of good when you can’t pay the bills at the end of the month. For most of us there are two main ways in which we will use our extra wealth; we will spend it on shiny things, or we will put it into an ISA/pension/etc.
There seems little wisdom in either of these paths. Our own mothers would be the first to explain why it is not wise to spend it on shiny things. Maybe a few shiny things might be nice but when we are living on a shoe string but have a 50″ 3D TV then we should realise for ourselves that we are losing our sense of proportion. The second path of saving is something that we are encouraged to do with all kinds of tax advantages. It is nice to know that we have that little bit of tax free benefit in an ISA; the same goes for the incentives we are offered to put our money into a pension pot. It is a necessity to incentivise this sort of behaviour to encourage a few people not to spend their money on shiny things. For those who would have done so the pension or ISA are probably an improvement. However it is also an incentive that can prevent those who would have spent their money more wisely from doing so. Those who have their eye on the future might be discouraged from spending their money getting to that future in favour of putting it into an accumulating account that they might access when they arrive.
The returns to be had by such savings are pitiful. Those figures might have looked favourable when we were taking out our pension but considering the inflation of the last generation it is likely that we would reach our retirement to discover that our cash had been doing the fiscal equivalent of treading water and trying to keep its nose above the surface. Any money put into savings of any sort may well be there to spend in the future but what use is spending money at an age where we might possibly have had a heart attack and died many years before.
Those with a fair amount of wealth know exactly what to do. When you have enough wealth it is only a tiny percentage that need be spent on getting the kind of advice that will allow investments to double in a matter of years or even months. The figure for such advice is more likely to be several hundred per cent of whatever we might be able to afford to put away. That is why we stick it into various tempting schemes, but the problem is we can not even afford the level of advice that will tell us which of these schemes might offer the best return.
Where should a person with almost no money invest the few pennies they have. Considering the level of financial woe that recent years have given us, the first answer many people will think of is investing it in beer, wine and spirits. Drowning our sorrows has been one of the ways in which the British public has long sought to support the noble efforts of the brewers and publicans. The way in which it might be more practical to invest money is in the things that are so evidently going to be needed in the probable future. If money is tight then it makes sense to invest our money in ways of avoiding that problem. D.I.Y., tools, sugru, solar panels, allotment gardening, sustainable transport, repair networks, recyclables, thread, needles, yarn, education. These are the things that green movements have been trying to talk us into for the sake of the planet for a long time. It is ironic that what may ultimately push us in that direction is the selfishness of preserving our immediate comfort that has kept us away from that lifestyle for all these years.
Spending money is what the economists want us to do to keep things moving. Forgetting economics for a while, it is spending money that we need to do to prepare for the failings of the economists. At present we are spending plenty but it is not sustainable spending. DVDs, TVs, PS3s the list of things that we buy to take our minds off our woes is extensive but if things do get worse then we will need to be developing practical skills, we will need to be buying useful items, we will need the materials and infrastructure of creators and fixers, not consumers. The market will adjust to supplying these different desires and our confidence will grow. Those industries might also be the best places for the greater investment of setting up businesses.
We need not spend less to save money for the future, we can spend as much as the economists hope we do but lets spend that money on the things that will enable us to create better lives rather than allowing the possibility of failing markets to leave us with lives that no one would want.
I am going to go out on a limb here and make a radical statement with this blog post. At least radical for a tutor of business management and business law. There may be many people who agree 100% with what I am about to say but amongst educators there seem to be depressingly few thinkers. The task of the teacher seems to be largely a game of playing it safe. The college or school will buy into the right to teach a certain subject and the examining body will provide a set of materials which will then be decanted into the minds of the students. I am not one of the types who say those who can, do, but those who can’t, teach. However, I do recognise that just as there are many who practise in their fields with no idea what they are doing, there are also a great many teachers across the world who are simply seeking to earn a paycheck and never develop a full understanding of their subject.
Personally I am not saying I have a greater understanding, indeed everything I write whilst making my point today may well be complete garbage. I have noticed that in general most ideas seem to be split down the middle between those who hold one view point and those who hold another. Half of these people must be wrong. In fact the people who stand on the fence and agree with some elements from each side would probably say that both sides are wrong. A lot of the greatest experts we have ever had in many areas have ultimately been proved to be wrong. It would seem that I can therefore take as extreme a viewpoint as I like because if it turns out I am a complete asshat then I will be in illustrious company.
I have been provoked to write today by the appointment of John Browett as senior VP of retail by Apple. Browett has had a great deal of experience in setting the strategy of large electronic retailers in Britain. American readers may not be so familiar with his work. On the English side of the pond those who know his name are largely critical. Those who don’t know his name are also largely critical, they simply do not have such a specific target at which to aim their ire.
I have had the benefit of working in an organisation that has been guided by Browett’s ministrations. I spent approximately a year working in an electronics store which came under the general Dixons umbrella. In our store the staff were pushed to speak to customers in a certain, almost scripted fashion. For instance there were certain openings we were meant to use which would guide a conversation down a set path designed to maximise sales and ensure the purchase of add-ons, insurance schemes, accessories, etc. Many of the staff resented this as they would not be allowed to improvise to the extent that they wished in order to achieve rapport with the customer due to the understanding that certain boxes had to be essentially ticked during the conversation in order that a mystery shopper would see that we were doing as we were told.
Naturally the customers could see right through this. We knew the customers could see right through this so we would try and avoid appearing scripted at all costs. We did have a lot of good conversations with a lot of happy customers but we would also have an overwhelming amount of customers who would say “FFS” and roll their eyes as soon as we opened our mouths. I remember one customer whose hatred of the sales technique was so severe that a standard trick with the newbies was that as soon as he came in, a member of staff might suggest to them that they go and serve him. Perhaps this was largely because they didn’t want to go anywhere near him themselves but at the same time it did also generate some amusement as newbie was left open mouthed at the tirade of abuse he received over heavy handed sales techniques.
We were a national joke and we knew it. Searching through forums online would turn up pages and pages of abuse at the staff in our stores. I am quite pleased to say that most of the usual complaints were for levels of customer service that fell far below that which was seen in our store. We were both lucky and unlucky to be in a high street store. Unlucky because high street stores have a difficult job coming anywhere close to getting the level of profit that could be made in an out of town superstore, this meant that for us ‘a bonus’ was a mythical beast that may have once been encountered by a lone employee 5 years previously. We were lucky because we sought to be as helpful as possible and tried to ensure that every customer who needed help would get as much help as was humanly possible, whenever I have shopped in one of the out of town superstores I have been lucky to get assistance if I have gone looking for it.
And of course that is the crux of the issue with John Browett taking this position at Apple. Apple have developed a fantastic reputation for customer service. The Apple Genius bar is praised across the world. They might not turn the profit that is usually desired from a retail chain but that is not really their purpose. Everyone knows that those who are most tech savvy will usually turn to the internet to purchase their goods. The advantage that Apple stores have is that the prices in the store and their prices online are not radically different. Other stores are in competition with so many online retailers that they really have to cut corners to survive. Apple stores are not really about sales though. They are about the Geniuses and they are about customer service. That is why it is worrying that Browett is taking this position of authority over them. Browett’s philosophy is one of cutting costs and maximising profit. Store members are being laid off and methods are being streamlined. I imagine that down the line sales techniques will become more forceful and it won’t be long before Apple stores start to develop the reputation that Browett drags behind him like the rotting carcass of a hunted deer that he refuses to discard until he has taken every bit of protein off its bones.
Milton Friedman said many years ago that the purpose of a company was to seek maximum profit. That is the free market system that we have been living with through the decades since his statement. I am told that Keynesian thinkers like Stiglitz consider this approach to be one of the causes of the economic collapse we are currently trying to escape. Even government has tried to do something to change this dangerous point of view. The 2006 Companies Act in the UK kept the main element that directors should always seek to maximise profit but added that when doing so they should have regard for the implications of their decisions. Essentially they should consider how their decisions might affect the environment, the economy, etc. Not exactly a brave direction to take with legislation but then governments are timid creatures that know if they push too hard then all those lovely corporations with their lovely profits will go and cosy up to some other government.
The immediate problem with seeking to maximise profit is that while it may help the consumer to buy bargains at low cost it is inevitable that many of these bargains will be shoddy goods that are poorly designed and will soon need to be replaced. The consumer will have little choice about accepting them though due to the fact that so many members of his family have been made unemployed by cost cutting measures that the family are unable to afford the quality goods anyway. It is not all bad though. At least if you are unemployed then you do not have to work in one of these corporations that are so keen on cutting costs. That is not a great deal of fun as you are regimented to follow precise procedures designed to maximise profit, and doing so the whole time at the lowest possible wage the company can get away with paying you. In addition you know that you have to reach certain impossible targets or else there are huge numbers of unemployed people put on the streets by other cost cutting companies who will eagerly take your place. I am glad that I left after only a year. Thankfully I now have a full head of hair again.
Of course cost cutting measures do maximise profit so this must be a good thing. Lets see where this profit goes. It doesn’t go on buying in quality stock. Stock is kept to a minimum to ensure that nothing is left unsold. As a consequence we had to turn away dozens of people everyday who wanted specific items. Mostly those made by Apple. It doesn’t go to the staff. They are operating on a wage so low that they need to supplement their income with government handouts. It somehow doesn’t seem right that a person should work in a miserable job yet not even earn enough to live on. If tax payers money is being given out to support those who are working then there is something seriously wrong with the system. It doesn’t go on the company’s infrastructure. Out of about 7 tills our shop had there were many times when we would have a shop full of customers but only one till that was in operational order. The touchscreens would break down or the OS wouldn’t load or the scanners wouldn’t work. There was always something. I cannot speak for the example of my store or chain but in general I know that profit also doesn’t go on paying taxes. I was reading yesterday about Walmart paying rent for their property and therefore claiming tax back on the outgoing. The people to whom they were paying the rent were a subsidiary of Walmart. This subsidiarity also claimed back tax on the rent that they paid for the property… to another subsidiarity of Walmart. I could go on but this would become quite tedious because there were over half a dozen subsidiarities of Walmart claiming back tax on rent that they were paying to each other. Some of them did not even have a single employee.
So the profit will go to the shareholder. With many of these shareholders one can not blame them for trying to get some profit out of a business that they have no hand in supporting through hard work. They are trying to keep their head above water in similar industries a little higher up the chain. They may get paid enough to invest in shares but they kind of have to invest in shares as they are the ones who the government is not paying out money to. They have no choice other than to invest or they are going to have just as much trouble making ends meet. Their companies are also governed by Milton Friedman’s idea that a company’s main aim has to be the making of profit above all else. Indeed the only reason that companies care about the health and safety of their employees is because the law started making them pay out some of their precious profits as compensation when employees fell foul of dangerous working conditions.
We all know where the profit substantially ends up. It ends up with those who are probably sitting on their own private beach sipping cocktails in some exotic country right now. The reason we accept this is the vast majority of us live in such a hell at the hands of profit obsessed companies that the only thing that keeps us going is the belief that one day we too might be able to sit on a sunny beach sipping cocktails instead of slogging away on a production line while our body wastes away from standing in one position for eight hours a day while only being nourished by a diet of fried trimmings of the otherwise delicious food that is currently being cooked up for someone to eat outside their beach house after they have had their cocktail. We imagine that if we play the game and work hard then maybe there is a slim chance we too might get there as well. Some do make it of course.
I wonder how the exact figure compares to those who get there by simply winning the lottery.
This is the free market system. While it is obvious that too much government control does not work, as we have seen from the failings of communism, it must be dawning on people by now that perhaps the free market may have its failings as well. Naturally the best way to do anything is to find a balance between too much control and too little control. It can be difficult working out exactly where that is and when the most powerful and influential people in the world tend to be those who personally make a profit from one form over another then it would be foolish to imagine that the balance is going to be any easier to perfect.
For me the conundrum comes from the fact that those people sipping cocktails in their luxurious beach houses let it happen. In fact the conundrum lies with the fact that anyone lets it happen, that anyone plays their game. We all know the saying that it is easier for a camel to get through the eye of a needle than it is for a rich man to enter heaven. I can imagine how those who hold a secular viewpoint could ignore this wisdom as the mention of heaven suggests it has no implication to affect anything of substance that they might believe in. This is not the case, as psychology and our understanding of conscience has successfully proved. I certainly cannot understand how those who are religious continuously ignore this wisdom. They purport to believe it fully yet they still seek to compete for the ability to buy things like shiny translucent stones when they know for a fact that there are people across the world, or even in their local inner city centres dying of diseases that are easily preventable with a little monetary input.
Personally I have had difficulty playing the game myself. I have certainly had the dreams of becoming wealthy myself but since then I have begun to understand my conscience. I am in a job now that I enjoy. I do not make enough money to pay all my bills but I am constantly learning and the work atmosphere is friendly. That is how I continue to live my life. If I had to return to working in the minimum wage conditions of those who support the shareholders I would not do it. The cost is too high. Time is our most precious resource, followed by our health and happiness. All those things would be taken from me if I were to submit to being the pawn of the free market system.
Neither would I seek to be one of the ones who sit at the top of the ladder. If I were to make money as a shareholder in one of these profit driven companies then the things I have experienced combined with what I know of the world would not let me do it. I would feel constant guilt and would not be able to feel happy. Not to mention that too much comfort makes you flabby and robs you of your health anyway so you still cannot escape that unhappiness.
I know there is a better way. I have not fully engineered all its intricacies yet but the way that we are doing things at the moment is broken. If we actually got to simply choose where we were in the system we would realise that most people would get a choice between working hard in poverty or growing fat in opulent surroundings with the disdain of the rest of the population. There are obviously exceptions. Starving with a bloated stomach in an African scrubland would be an exception. Getting a little education and managing to afford to take on a twenty year mortgage or pay enough rent to live somewhere that is not horrible but not affording to buy a huge mansion would be another exception. I am not even happy with that one though. I guess I am cursed with being a worrier but it feels like living like that is an equivalent to putting my fingers in my ears and closing my eyes and hoping that the world will sort itself out.
I am happy to accept less if others can have more. Of course I would like them to put in a decent amount of effort to achieve what they gain but I do not think their failure to work is their own fault. That lies with the cost cutting companies refusing to employ them whilst also putting anyone who would employ them out of business by undercutting them. This does not mean I am anti company. I think that the company has the potential to be the most powerful force for good we have. In order to do this though I think it is time that the company grew up. The concept of the company is largely around 500 years old. Its petulant adolescence is over now. It is time to start taking on some responsibility. It is time to develop a community spirit. The time has come to stop squabbling over who has the most toys or gets the most sweets. As companies approach adulthood they must start taking care of their environment. If children were left in a house to look after themselves indefinitely we all know that it would not end well. If these great big children called companies are left in a world to look after themselves and they fail to grow up then this will also not end well.