Saturday, 29 June 2013

I want to be a garbage collector

The story that two garbage cleaners in New York were fined and forced to retire after being caught accepting a tip of $ 5 caught my eye.  Not for the reason you might think. This story would provoke hoots of laughter in my country where nothing happens in the public service without a gratuity.  Even in NY, this must be an incredulous story - every man and a dog demands tips shamelessly for just existing in the same space as you. But the real reason this story has prompted this post was buried somewhere in the middle.
The two garbage men apparently netted $100,000 each, including overtime. Granted that they had put in long years of service. Granted that they probably earned lots of overtime. But still a wage of $ 100,000 for a garbage collector shows everything that is wrong about the United States. No wonder they lose jobs by the droves to India and China. No wonder unemployment is a stubborn problem.
But this post is not to highlight the completely unrealistic pricing for labour in the US, as compared to the world. This post is instead about a global problem - automatic salary increases every year.
If you spend enough years on any job, even that of a garbage collector, you will reach levels of $ 100,000. If you start at $ 20,000 a year and get a 5% rise every year , you'll land up with a $100,000 salary in 33 years. That is presumably what happened to these two guys. Imagine the situation in India where anything less than a 10% raise a year leads to a strike. If you start at an annual salary of Rs 5 lakhs, an entry level salary for a qualified graduate,  and keep demanding 10% salary rises, by the time you retire after 35 years, your salary even staying in the same job, will be Rs 1.4 crores.
Now you see why there is age discrimination in employment and the older you are, the quicker you are fired. Now you see why there are large scale job losses.
Salary levels have to follow some form of a normal distribution over the years, if you stay on the same job.  You start low and as you gain more experience and you become more efficient, your salary should increase. It should probably reach a peak when you are say 40, and then begin a slow decline so that you can remain competitive with the younger folks who are trying to displace you. I know this sounds heretic, but I would rather take cuts in my salary than lose my job altogether. The trick is to price yourself, just a shade below the market rate (not go for the highest salary possible). If that involves annual salary decreases, then so be it.
Of course, you can, and should, upskill and move on to a higher value job. But if you stay in the same job, automatic salary increases every year is a one way ticket to losing the job.
So, how about negotiating a salary reduction, instead of a raise. At first read this might seem like an insane idea. But think about it .....
Its an altogether different matter as to why somebody who was earning $100,000 a year, asked and took a $5 gratuity !

Tuesday, 25 June 2013

Inquilab Zindabad ? No ! _____ (fill in the blanks) Murdabad .

What is common between a park demolition and a raise in bus fares. Well, something profound , I believe. Because in the last one month, I dare suggest that these were the two most important events in the world (NSA be damned ; as if that was a surprise)

The park issue was the first and it happened in Istanbul, Turkey.  The government had planned to demolish the Taksim Gezi Park and use the space to reconstruct the historic Taksim military barracks. About 50 environmentalists occupied the Park in protest. The police , predictably evicted them. That snowballed into massive nationwide protests and a huge Occupy Taksim Square movement started.  The issue of demolition of the Park has now given way to a protest against all sorts of unrelated issues and drawing crowds numbering in the tens of thousands. It is now an anti government protest without a coherent theme or leaders. A big section of the population is just protesting without a clear understanding of what they are protesting against and what the solution is. This mind you, in a country where the President Erdogan has won repeated elections with a strong mandate.

In Brazil, the government decided to raise some bus , train and metro fares. A few protested, notably the  Movimento Passe Livre (Free Fare Movement). The police broke up the protests. Again this has snowballed into a nationwide protest movement, involving millions of people. The government quickly withdrew the bus fare hike, but the protests have snowballed into something bigger - a whole range of issues, including protests against the Football World Cup and the Olympics all scheduled to be held in Brazil in the near future.  If Brazilians are protesting against football, something serious is happening. Again this is in a country where Dilma Rousseff won a resounding mandate in the elections and is the chosen successor of the extremely popular Lula.

As of today, both these protests are going on. You can see parallels with the Occupy Wall Street movement in the US and a few other places. In all these protests, there is no coherent theme, there is no leadership organising the protests. But these protests have been massive, cover a whole range of grievances and are significantly aided by social media.  They largely cover the middle class, not the poor. They tend to die down because they are not coherent and not "organised". But they are symptoms of a deep underlying problem.

This is a profound sociological change and one that should be researched deeply.  I believe the underlying issue is economic. Despite a big economic improvement globally across the last two decades, there is deep resentment. Large swathes of the population do not believe that there is a bright economic future ahead of them. This, despite the fact that the future is significantly brighter than what our parents, grandparents and forefathers ever had. And that is the problem governments and societies cannot ignore. There is no easy solution, and aspects of the solution will be different for different societies. But the root of the solution is economic. We have to have economic growth.

PS - In the title of the post - Inquilab Zindabad means Long live the revolution, in Urdu, a favourite phrase of protests of the past in the Indian subcontinent. Murdabad means "Down with".

Monday, 17 June 2013

Black yoga pants that "showed too much"

Some businesses I can completely relate to. Most businesses I understand,. But there are some that completely fox me .

Take the case of the quaintly named company,  Lululemon. I was, of course, blissfully unaware of its existence until I read a news item that its CEO was leaving (polite term for being fired). Naturally, with a name like that, I couldn't but help read up. Apparently this Vancouver based company is  in the business of "yoga inspired" athletic gear , whatever that means. They are fast growing , but reportedly had a product problem recently which led to the CEO's exit.

The "product problem" made further interesting reading, Apparently, their Luon range of black Yoga pants was getting too many customer complaints - the product was too sheer and ,er, "showed too much" ! A particularly sensitive topic when when doing yoga which involves stretching and contortions !! The outcry was so much that they had to pull the product from the shelves in March.  The CEO stayed long enough to resupply the product, hopefully this time,  not "showing too much", but then had to go.

What amazes me is that this company makes a margin of 50%, selling yoga pants and the like.  Products include "Wunder Under pant" priced at $92 

and "Om pant" also priced at $ 92

If you want more gems such as the above visit their website here.

What foxes me is this. Who on earth wants to pay $ 92 for a "Om pant".  Do yoga by all means, but concentrate on , well, the yoga. Does it matter an iota whether your pant is "om" or "not om" ?? There are many places on earth to make a fashion statement, but I doubt if a yoga session is one of them .

I am a sports nut, as regular readers of this blog would know. I have spent an insane amount of money on sports. But for rackets, bats, balls and the like which help me to play better. Not for looking like an Adonis on court (well, that would be an impossibility anyway, but you get the drift ... ). I thought the purpose of getting on to a training room, or a sports field, is, er, to train or to play.

Yeah, I know lots of people who dress up for the evening walk. This is a disease that especially affects the female of the species. The sight of a Rajalakshmi - she of the ample proportions - trying to look fashionable while huffing and puffing at 1 kmph, I can assure you, is not a sight for the Gods. You can spot a true sportsman or sportswoman from a mile away - just from their dress. Although I admit, that Pete Sampras, one of the all time greats hit new lows in dressing, wearing what I can only describe as a Kachha which a Sardarji would be proud to wear as an underwear !

Even I would blanch at that !

But seriously, you can run a very successful business by peddling yoga pants at outrageous prices ! While being called Lululemon !!

Now , that's a business I can never understand :)

Wednesday, 12 June 2013

Who won the Cold War

I sometimes wonder, who the real winner of the Cold War was. Traditional wisdom is that capitalism won over communism, right ? The Western world over the Soviet bloc. Freedom and liberty over authoritarianism and government control. Etc Etc. But I wonder if this is really true ?

Take the capitalism versus state enterprise debate. Today capitalism is a four letter word to much of the world. The fastest growing economy in the world and the second largest, China,  is significantly  state enterprise driven. Government expenditure as a % of GDP is 53% in France (surprise surprise), 47% in the UK, 43% in Germany and in supposedly the bastion of free market capitalism, the United states, 39%. Government spending has propped up the global economy for five years now and bailed out financial institutions when they were mired in the quicksand.

What about freedom and liberty. After the revelations over the last couple of days from a certain Edward Snowden, we may have to redefine the word liberty. If I told you that the government listened to your every word, read every e mail and tracked every movement of yours, you would naturally think that the government in question would be Russia or North Korea. Instead we now know that it is the US of A and that their snooping is not not just restricted to US nationals, but literally everybody in the world (the fact that there are howls of protest in the US about snooping on US citizens , but perfect acceptability of snooping on an Indian citizen like me is an interesting definition of the word liberty in America). That this revelation is met with a big yawn in China, where this is just routine practice further annotates my point.

Force feeding prisoners in Guantanamo, keeping them in detention forever without a trial is not very different from what the gulags did in the Soviet Union.  Even at the height of its powers the Soviet Union did not kill citizens of another country from the air with impunity as the US does today with drones. If the Soviet Union brutalised Afghanistan invading it needlessly and tyrannically, you could perhaps make the same point with the US and Iraq.

The citizens of the Soviet Union could never get out and go elsewhere. Those in the  West were blissfully free to go where they pleased. Is that really true now ? Anybody from any country who has to get a visa to go to another country , just to visit (forget emigrating), might have a different point of view with regard to freedom of movement.

What about the West over the Communist bloc ? Well, if you define the communist bloc widely enough to include China, the verdict might be closer to a draw than a clear cut victory. 

Of course, this post stretches the facts, but only to make a point. The scale of what happened in the Communist Bloc during the Cold War may have been beyond anything you see today. But then, although the Soviet Union collapsed, aspects of its ideology are thriving in many places around the world.Perhaps they lost the battle, but haven't yet been defeated in the war. 

Yes, they may never be a winner in the capitalism versus communism debate.  As indeed in the democracy versus totalitarian debate. Alas, what a pity, at least in the case of the former.

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