Human Capital

Today is Labor Day in the US. It is a day to celebrate labor, the union movement, and the role of the worker in our economy and our society.

I have always struggled with the idea that labor and capital are intrinsically opposed to each other.

It is obvious that workers have been taken advantage of by employers since the dawn of an industrialized society and possibly/probably for much longer than that.

But does it have to be that way?

In the tech sector, we typically issue between 15% and 25% of the company’s stock to the employees and we keep granting this equity as the company grows and expands.

And it is also the case that the tech sector is largely a non-unionized industry.

There are large portions of a tech company’s workforce that are in short supply, most notably software engineers and other technical positions where demand outstrips supply and has for as long as I have been working in this sector.

So there are things about the tech sector that are different from other large industries and I’ve always felt that human capital (as we like to call the people in the tech sector) is more valued in tech companies than traditional industries.

But when a tech company stumbles and starts bleeding cash, one of the first things to go is headcount.

Capital demands that a company have a profitable outlook or it will not flow to a company.

So there are fundamental economic realities that put capital and labor in opposition to each other at times.

But both capital and labor want sustainable companies that grow and prosper.

So it can be the case that labor and capital work together and succeed together.

And that has largely been the case in my career in the tech sector and I enjoy that feeling of shared success.

#VC & Technology

Comments (Archived):

  1. PhilipSugar

    Here is the biggest difference in technology. Your talent and culture have huge leverage both inside and outside the company. Therefore the talent: workers have a decent shot a fair deal. Think about it:A good booking mobile app written by a couple of people saves an airline hundreds of call center workers, just one of infinite examples. Automated checkout etc.A great programmer outclasses a average one by 10 to 1 productivity that is well documented.So yes, talent can demand a fair deal.This is different then let’s take an example of McDonalds. You can’t flip more burgers and flipping burgers isn’t really high value. (and yes I know they are testing robots to do it)In my mind the solution is not UBI but to give the companies that employee these people credits as long as the pay is right no different than giving people the EIT credit.

    1. LE

      This is different then let’s take an example of McDonalds. You can’t flip more burgers and flipping burgers isn’t really high value.And in fact McDonalds does not want to keep you around for exactly that reason. If you stay around you will want higher pay. And there is no reason business wise to pay you higher pay if you are not able to produce more. [1] So they want you to quit at a certain point. And honestly it makes sense. If their costs rise the entire customer value goes out of wack (why Wawa still sells cigarettes theory of mine).May also come as a shock to people but hospitals operate in a similar way with Physicians. There is an almost trivial pay difference between what someone recently graduated from medical school makes vs. someone (I am talking non specialist in my example) makes after years of experience. The hospital, in order to contain costs, wants the kids right out of residency. They provide ‘enough value’ and the hospital doesn’t earn any extra income from someone with experience and apparently they feel it doesn’t even help patient outcome.[1] Similar to the well know fact that the environment including the seats are designed so you don’t stay longer than needed and tie it up for a later customer.

    2. sigmaalgebra

      For yourA great programmer outclasses a average one by 10 to 1 productivity that is well documented.with “well documented” — no need, ‘cuse I’ve done that myself, up to at least 40 to 1, maybe more, fairly consistently for all my career.First lesson: Don’t get 10 X just by typing 10 times faster. Certainly don’t get 40 X by typing 40 times faster. Get gains like that from working smarter, not necessarily more hours or typing faster.E.g., some guys saw a problem in optimal returns from some marketing in banking, formulated a 0-1 integer linear programming problem with 40,000 constraints and 600,000 variables, worked for weeks, learned and used the silly hyperhype, fad nonsense of the time, “simulated annealing”, ran on a computer for days, quit when tired, and still didn’t know how close they were to optimality.I got the problem on a weekend and on Monday stated that I thought I saw a path to a solution. I did some applied math derivations and typed in some code and on Friday reported that it looked like I was half done. The next week I finished the typing and ran my code. In 905 seconds on a 90 MHz computer I found a feasible solution guaranteed to be within 0.025% of optimality. On Friday I sent e-mail to the guys with the problem and reported my results.Never heard from them again. Their Chief Scientist was a big buddy of the CEO and pissed at me because I’d done better than he had. The CEO let his Chief Scientist cut me out. It is true that the CEO had instructed me to report to the Chief Scientist. But it was clear right away that the Chief Scientist didn’t know anything about how to solve the problem, didn’t know more than the CEO, and I wanted a slot at the table, not to send in messages from outside.One of the nicest presentations of such high manager ego is in the movie The Day of the Jackal: The Minister desperately needed a solution and desperately needed the chief investigator of the police but resented him bitterly, kept insulting him, and at the end pushed him out. A day or so later the Minister was back into boiling oil up to his neck and called back the investigator.A smart guy working for a Big Dog can cause Big Dog to have really bad ego problems. Smart Guy was just doing his job, as firmly requested by Big Dog at the beginning.At FedEx, there were serious claims that the growth plans for the company would encounter fleet scheduling problems that would sink the company. I was doing computing and data analysis consulting at Georgetown U.; about 8 of us, including some high end consultants, met in the Georgetown library. No one had any good ideas. I volunteered to deliver a good solution quickly. I kept teaching my computer science courses, dropped the consulting, designed and wrote the code, drove to Memphis, one evening ran the code and produced a schedule that passed review from our guys at General Dynamics, pleased FedEx founder Smith, thrilled the BoD, got rid of the claims, enabled crucial funding, and saved the company. My work was no doubt 10-40 X compared with alternatives. Heck some other guys were struggling just finding great circle distances — guys, it’s just the law of cosines for spherical triangles.Result: Our two guys from General Dynamics liked me, but my immediate manager felt so threatened and jealous he did all he could to cut me out, start a fist fight, fire me, etc. Actually, he did fire me, but Smith told him essentially to shut up and transferred me to work under another guy. Smith felt threatened: He felt he was Big Dog and didn’t want any evidence that there could be any challenging problem he couldn’t solve or readily hire people to solve, yet the fleet scheduling was such a problem and he’d clearly needed me to solve it. Otherwise I got lots of jealousy from others in the company.A prof at Georgetown had written some software to call the IBM Scientific Subroutine Package (SSP) for use in a course he was teaching in data analysis. When testing the code, one routine ran too long and another, for polynomial curve fitting, had terrible numerical performance. The first routine was running in O(n^2), and I found a way for it to run in O(n ln(n)) with no more storage. For the storage, at the time, array subscripts were limited to 16 bits, but the user was permitted to use 32 bits. So, I overlayed the 32 bit storage with 2 arrays of 16 bits and, in the end, put everything back together using the group theory result that every permutation is a product of disjoint cycles. For the numerical problems, IBM had used the normal equations, and for polynomial fitting are known to be on the way to the notorious Hilbert matrix. But I knew of an approach using some custom found orthogonal polynomials that got around the numerical problem. Result: The prof was amazed but happy, but the Director of the center felt threatened and pissed and started treating me like dirt.A software house I was in was in a situation of a competitive bid on some software to process some data collected by US submarines at sea. Part of the work was to measure the power spectrum of ocean waves and then to generate sample paths with the measured power spectra. Via Blackman and Tukey, I quickly got smart on the measurement of power spectra; I was already smart on the fast Fourier transform. In five days I wrote some illustrative software and showed an engineer at the customer how to measure the power spectra, how much data would be needed for reasonable accuracy, and how to generate the sample paths. His problem was that with ocean wave data, he was working a low frequencies. If look at the math, what matters in the length of the data is how many cycles there are. So, at radio frequencies, can get a lot of cycles in 1 second; at ocean wave noise frequencies, might need two weeks of data for that many cycles and equivalent accuracy. At the competitive show and tell for the customer, I was an added attraction and a star of the program. Our company got “sole source” since, with what I’d done, we had the only ability to do the work. Back at the office, nothing was said until eventually the office manager blurted out with a LOT of resentment “You are getting to be an important person around here.” If any of the other software houses had tried to do what I did, it would no doubt have been 50 X longer.It goes on this way: People don’t like 10 X programmers. They totally hate 40 X programmers. A 10 X programmer threatens a manager’s ego and sense of control. Control? He doesn’t want anyone around as important as a 10 X programmer. He’d rather have 10 1 X programmers and even if it costs him 5 X as much and leaves a string of challenging problems unsolved.There’s some of this in the movie The Sting. Big Dog and his loyal but not very bright Puppy are riding in the back of a car along with the outsider who has been doing good things. Big Dog turns to Puppy and saysI’m gonna have to keep you away from this guy. You’re likely to get ideas.Management very much does NOT like 10 X programmers.A 10 X programmer should start their own business.

  2. William Mougayar

    And the Blockchain is punching straight at what the future of work might be, possibly shattering many old beliefs and practices.Now workers can get rewarded with monetary value for time, data, effort, or services provided.

    1. PhilipSugar

      That’s a pretty bombastic comment. Exactly how? Because frankly I think it makes it easier to shift things to low cost areas.Now I know people say “I am a citizen of the world” but what that means is that we will look like the rest of the world and since I go to KL, Mumbai, places in China outside of Shanghai, that might be great for many of us here but I assure you for the other 90% it doesn’t look very good.

      1. jason wright

        No one knows exactly how. That’s not how experiments in building the future work.

      2. William Mougayar

        The basic tenet is that we will get compensated for the time we spend online that is valuable. Imagine if Facebook shared part of their profits with us whose eyeballs allow them to monetize our attention and re-sell it to advertisers, and give us nothing in return.

        1. PhilipSugar

          On this we agree 100%. We do need to get together. I do need to be in Toronto soon.But that is not work. But I agree and have always said that there is not a “fair” exchange of value for attention.

          1. PhilipSugar

            And I’ll add. I mentioned Williams Sonoma on this blog the other day. For professional and personal reasons I am NEVER going to buy something from them. Nor will my wife who I have told don’t even go into the store. But now I am inundated with ads. And I do click on them to add up the bill.

          2. William Mougayar

            I think we’re still iterating and learning by trials and errors on these work-reward models and equations. Stop threatening to come to Toronto 🙂 just do it!!

    2. Michael Elling

      How is risk allocated?

      1. William Mougayar

        The economics of these models are an interesting study in progress.What type of risk are referring to?

        1. Michael Elling

          In a permissionless system, nearly all risk is borne by the receiver. The sender has very little risk. How does Blockchain change this?

          1. William Mougayar

            Not sure I totally understood your point, but a blockchain based economic system can be more fair in balancing the rewards between the centers and the edges.

          2. Michael Elling

            Whoa, 2 things here.First, you don’t understand that in a permissionless system, where there is no or little cost of sending or acting that the majority of the risk is on the receiving end? And in a trustless system risk gets exacerbated? Simply saying that a transaction occurred and is immutable reduces none of the ex ante risk in the system.Second, I understand that the value is distributed by ownership and that value is a function principally of network effect; the more in, the higher the price/value. But not all ownership is equal. Those first in reap the lions share of the reward. Last in are suckers who bear all the costs, no? It’s just like any company or stock. Furthermore, show me one blockchain that has created a product or service of comparable value to an ISP at the edge or platform at the core.Blockchain may indeed be a better tool for exchange platforms that actors who create value through services and products use. But it is not the value generating part. Of course there is value in a liquid exchange platform, but blockchain has many competitors in that area, no?And doesn’t it just come back to solving a problem that isn’t really a problem. The real problem is that there was no settlement system built into TCP-IP; and is anyone really solving that who has any chance of scaling? Are any of the ICOs and blockchain based platforms building the settlement systems east-west (between actors/networks/ecosystems) and north-south between applications and infrastructure that will clear marginal supply and demand ex ante efficiently and equitably? Please provide examples.

          3. William Mougayar

            You seem to be mixing apples and oranges, and being arrogant in telling me I don’t understand…

          4. Michael Elling

            Go back and read thread. You were the one who said you didn’t understand my point about permissionless systems. I merely restated that in a question. As for mixing apples and oranges, I think I am very consistent about allocation of risk that is inherent in ANY transaction or communications event. If a sender has little to no risk, then the receiver has the majority of the risk, no?

          5. William Mougayar

            Permissioned vs. Permissionless is about the infrastructure elements of a blockchain. It is not related to the future of work depiction I was describing which is at the application level.

          6. Michael Elling

            Permissionless in the IP stack ran all the way up to the application layer. To wit, email. But it is the same everywhere else in the IP stack (html/browsing, ftp, etc…). That’s because there was no protocol governing how data transiting the networks might rely on the receive side’s permission to send; essentially, an economic incentive/disincentive system or terminating settlement. So, likewise, if it is not evident or extant at the infrastructure layer of the blockchain, how is it realized at the application layer?Note, blockchain does nothing to change the underlying permissionless system of the internet. All the public distributed approaches are permissionless, no? That’s the essence of distributed and trustless systems.

  3. jason wright

    “But does it have to be that way?”No, no it doesn’t. Crypto is redefining the way financial capital is being allocated. That begs the question of how it might also begin to redefine the relationship between financial capital and human (“capital”) beings.I like this post.

    1. PhilipSugar

      Until recently it has been a huge success at re-allocating capital from the idiots phase to a few people. I’d call that a step back. I’d say you are feeling pretty ass hurt if you bought in December, or put money into an ICO that isn’t going anywhere and never really was planned to go anywhere.

      1. jason wright

        you would also have felt that way after buying BTC at the then top in December 2013. Time is the great healer.crowd funding is the future. people will need to become better informed and less irrational.

      2. LE

        from the idiotsI would argue that over time that making rational and obvious smart decisions pays off and is the winning strategy in life. Over a short period of time (similar to a casino) anyone can win and look smart (Jamie Dimon’s ‘genius’ daughter). And in some cases those ‘idiot’ winning decisions can even pay off. An example might be (if true) Fred Smith’s betting in Vegas and saving his nascent company. Only an idiot would think that would work. Or my wife’s nephew the Eagle Scout skipping college and thinking he will make it as a musician by moving to Boston. That should not work. But sure it’s possible it will work he could meet people and that could lead to something but honestly that is ‘a gamble’ and only something that ‘an idiot’ would do.I just got the attached text (while writing this comment) from a tenant who is a Phd (and gets paid to help people) but can’t hang a picture. Or perhaps is skilled enough in manipulation to try and get me to help her with it. Which is it? I think it’s the former based on other interactions with her. Plus a bias based on dealing with many women over time (which honestly is of no benefit to them especially for something that is so easy to do with youtube, eh?).Note in the text the juxtaposition of ‘drop off the rent’ with the request for help and free labor. She has done other similar things and it’s kind of funny she thinks she is somehow manipulating me and I don’t recognize what she is doing (she gets an A for effort I typically admire that type of behavior as opposed to being offended)…. https://uploads.disquscdn.c

    2. Michael Elling

      I ask again, how does crypto/blockchain recognize and take into account marginal differences in both supply and demand?

      1. Andrew Cashion

        a non-kanban system

        1. Michael Elling

          Elucidate please.

          1. Andrew Cashion

            The most efficient system is the no kanban system, people have been saying it forever.And minus 10 points for using the word eludicate, I had to google it.

  4. Eric Satz

    “Capital demands that a company have a profitable outlook or it will not flow to a company.”100% true outside the Valley. Sometimes true in.

  5. Mark Cancellieri

    Mark Perry recently posted this:Happy Labor Day and Happy Capital Day 2018!

    1. Pointsandfigures

      Mark Perry is awesome. I love his “markets in everything” schtick that he does.

  6. Pointsandfigures… Thought this was a great summation of the blockchain and why we shouldn’t regulate companies like Google: “we’re now in charge of our own information. For the first time in history, really, you don’t have to prove who you are, or what you are, before a transaction.” A blockchain allows users “to be anonymous if they wish, while also letting them keep a time-stamped record of all their previous transactions. It allows us to establish unimpeachable facts on the internet.”

    1. Michael Elling

      All communication and transactions involves risk. Why the fascination with trustless, permissionless systems that make risk one-sided? They only serve to increase systemic risk and exacerbate pareto and standard distributions from their natural state. Networks and protocol stacks work to reduce that risk and achieve optimal frontiers according to marginal differences in supply and demand. Rather than try to create imbalance, we should be looking for ways such that geometric value captured at the core (and top) gets equilibrated with linear costs borne at the edge (and bottom) in order to make the networks and ecosystems sustainable and generative. It’s not proven that distributed ledgers actually do that. From all the signs today, they likely never will.

      1. Pointsandfigures

        right now, those are permissioned systems, or they are systems where the transaction is incredibly one sided (Facebook, Twitter, Google etc) I can see the argument that blockchain lock in can bring monopoly, but don’t necessarily agree that it magnifies risk. In a good network, one bad move and you get kicked out never to transact again.

        1. Michael Elling

          Those permissioned systems occurred on the permissionless TCP/IP stack. Had they given more thought to settlements in that stack and distributing costs and value, the internet would have looked like a much different place.Remember that the internet scaled in the US because we had already made our voice WAN competitive (AT&T, MCI, Sprint) which drove unit cost down 99% in a decade. The model was horizontal and intelligent and 800 and VPN was what really scaled it. The latter services can only exist with terminating settlements that enable the called party to pay. The internet was settlement free.The other key pricing artifact of the permissionless internet was flat-rate dialup that left the end nodes on 7×24 at no additional cost. This flat-rate pricing was a direct reaction by the vertically integrated, monopoly, analog and overpriced LECs to the competitive WAN threat.No other country in the world had these two pricing artifacts. So everything here appeared “free” or “cheap”.As we discussed with history the other day, it’s important to know that these conditions existed when www and HTML hit and found a free and clear pathway everywhere on an insecure, settlement-free, permissionless TCP-IP stack that ultimately became dominated by the permissioned and centrally controlled FAANG siloes.

  7. Rob Underwood

    On this Labor Day, I have been heartened to see the push back and reaction from so many to the work shaming by Fox News of Geoffrey Owens (…. A couple examples (from different POVs, political bents — lots more out there):…The elitism and classism in our nation seems worse than it’s ever been, especially amongst political leaders on both the right and left (inasmuch as those terms mean much any more). Lots of lip service paid to “the working man” but it too often comes across as fake, as “I admire working people (but over my dead body would my children ever work with their hands and bodies when they could be working at a hedge fund).” Not much different than the affluent urban white liberal “We must de-segregate our schools! (Just not the schools my kids go to)”.As a Democrat, my concern with the ongoing leadership of Nancy Pelosi and Chuck Schumer is that I think my party at least needs leaders who have had the first hand experience of converting the labor of their bodies into the money for rent. We need leaders who have felt the fear of wondering how they’ll put food on the table for their children one month. At a minimum, we need leaders who have punched a clock. The leaders and donors to Democrats now seem dominated by people who not only have never known that. And this, I think, is one thing that animates “working people” support for POTUS — the sense, accurate perhaps, that the new Democrats have become so detached from their roots as the party of labor that stands is some opposition to the traditional party of capital and corporate bosses (though that duality may no longer hold). Fortunately with some of the new, younger political leadership, this detachment from the first hand experience working with one’s hands may be changing.What’s also changed, and also not so great, is the loss of the “high school job”. From age 13 on to my junior year in college I worked as a dishwasher, bus boy, lumber yard labor, and waiter. My parents would have had it no other way — as soon as I was old enough to get a work permit, I worked. Now, in my hometown of Kennebunkport, the inns and hotels that used to rely on local kids for much of their labor struggle to find work not only because of the cuts in seasonal immigrants by the current administration, but because high schools and undergraduates working summers are now largely viewed as wasted summers, at least if those summers are not spent at doing a research internship at the Smithsonian, organizing food distribution in Mauritania, or something else similarly oriented around college applications to the Ivys and future careers at Google or Facebook.

    1. Rob Underwood

      Thank you moderators for unflagging comment above.

    2. JLM

      .The Dems have ceased to be the party of the working man a long time ago, but they have held onto the financial support of labor unions which clouds the issue. The rank-and-file are long gone and declining.The voice of the working man has been the Republicans since the angry 2014 elections and Donald J Trump since 2016.He is the only candidate who saw the anger in this demographic slice and rode that wave to the White House. Calling his supporters deplorables didn’t help the Dems with the working man.Since his election, the disparity has only become greater. I listened to a hard core Dem union guy complain that the Bernie Sanders/Alexandra Ocasio-Cortez socialism plans were going to be paid for by him because he was a guy with a job.His point was that the Dems were screwing him by their ultra liberal plans. I didn’t have to say a word to work this guy up.As to the H2-B programs, it is not correct that this admin has done anything at all on them. What has happened is that the requirement to offer these jobs “aggressively” to Americans at the “prevailing wage” is now being enforced.The prevailing wage is going up – makes sense, right? Can’t find workers, have to raise comp, no?In addition, the required checks by the Dept of Labor, Dept of Homeland Security, and the final issuance of a visa by Dept of State are being enforced. There was no change to the law, which only Congress could make, but the existing laws have been enforced.BTW, Trump’s empire uses the H-2B program to staff its Mar-a-Lago Club and Trump National Golf Clubs.The users of the H2-B program cannot really use high school and college kids if their season begins earlier than classes are out or extends further than when they go back to school.Over the last ten years, schools are all going back to school earlier.Then, of course, there is the issue of an almost full employment economy in which the underlying worker depth is just disappearing putting even more pressure on the H2-B program.This is tied up in the entire global immigration debate on which nothing has been done by this admin or Congress. Lots of talk, but no real law changes.JLMwww.themusingsofthebigredca…

  8. Twain Twain

    Well, if the fathers of economics hadn’t thought about wage supply-demand in these linear, inversely proportional ways and had quantum models back in C18th and C19th, we might be better able to do human capital management. https://uploads.disquscdn.c

    1. Michael Elling

      Amazingly bad theory. Doesn’t factor in marginal differences. Take into account exogenous factors. Lastly it’s almost always ex post, not ex ante.

      1. LE

        Some of that academic theory is helpful but the problem is people who study it don’t know enough to know what that part is.More helpful is actually having real experience dealing with people and therefore understanding exactly at a base level how they think and how to manipulate them.

        1. Michael Elling

          Very system 1 and 2. No system 3 and 4; morality and emotion. The latter is what separates humanity from other living organisms. Unfortunately we don’t recognize this and believe everything around us is meant to serve us; to be manipulated.But no where in nature is that model sustainable. And history has proven it’s not for humanity either.

          1. LE

            You reply though assumes that ‘manipulation’ is a negative.It can be. As an example I would argue that the Church and Synagogues manipulate people and are actually the best at doing that because they exploit a weakness that has been brainwashed into people. [1] Then we could talk about the military and ‘service to the country’. Next we could talk about ‘heroes’ and how that encourages foolish risk taking (which does not benefit those close to you I would argue).Unfortunately we don’t recognize this and believe everything around us is meant to serve us; to be manipulated.It depends on the situation. Usually if you don’t look out for yourself you will end up getting the short end of the stick as the saying goes in life.[1] Honestly what I have found is that the major difference is often the sugar coating and the way something is presented more than what the impact actually is. In other words the best manipulators are those that end up convincing people that they really care and aren’t manipulating them. They might not even think that they are manipulating but they are. [2][2] Let’s look at McCains 40 years of ‘service to our country’. Does anyone for a second believe that that is what it was primarily about? The country? And not a person who honestly had a great deal of positive feedback from being a politician?

          2. Michael Elling

            Morality is a tough one and it differs sometimes by context. The simplest one that Captain James T Kirk always faced was: what is more important, the system/network or the individual actor/component? (Needs of many vs needs of one). The answer: both. So we strive to reduce risk such that we achieve optimal outcomes for both.Market-based systems with incentives and disincentives are the best way to resolve the conflict and balance risk. That’s Taleb and black swan talking; skin in the game. But Taleb doesn’t fully understand how sustainable and generative networks work.Properly functioning networks reduce risk. When we view everything through a network filter we see the tremendous imbalance that can occur if we don’t balance centralized value with distributed costs.Plato and Co knew about this imbalance, but didn’t know about the math of networks and how to build a sustainable Republic.

          3. cavepainting

            The biggest manipulations are the ones we do to ourselves. Seeing things for what we wish they are than what they actually are. Peering at people and objects through the filters of our own prejudices and believing in what we see.

      2. Twain Twain

        Exactly, it’s just a blunt tool.

  9. Dan T

    It’s not just capital. It’s the market, the customers, our citizens that largely expect that people should be paid by the hour for their work, with quality and productivity being secondary. I used to run tech companies, now 2 businesses with over 1,000 employees and average wage of about $15 per hour. Would love to pay an awesome janitor $25 per hour that is super productive, but the market won’t have it. I don’t stress about things I can’t change. It’s only gonna get tougher with automation.

  10. Bob Warfield

    Don’t kid yourself, Employers and Labor are at odds even in the Tech World, and especially so where Venture Capital is concerned.For endless visceral examples of this, just read Dan Lyons book, “Disrupted.” There are many similar stories, and they’re not made up, though they seem to those who’ve never worked in VC High Tech like they’d have to be.In fact, Venture Capital and Entrepreneurs are often severely at odds too. The reason is simple, they have radically different utility curves.I’ve founded a number of VC companies and been involved in those founded by others too. After being offered a nice very life changing 8 figure return as a Founder only 10 months after founding, I’ve been told by a Board, “Stop talking to that company or you’ll never work in this Valley again.” My co-founder and I decided after that interaction we had no desire to partner with that Board and eventually forced a sale.This happens more often than VC’s would like Entrepreneurs to know, unfortunately. The problem is that a quick $10 million return to an entrepreneur is very valuable to the entrepreneur but useless to the portfolio of most VC funds. They would rather the entrepreneurs endure unreasonably high risks to satisfy the needs of their porfolios. They need Unicorns or bust.The math on VC deals is frankly, horrendous, and especially for employees vs founders. Yes, VC’s do allocate new 15-25% capital pools to grant more options. And yes, they do get constantly diluted out of their minds on their older options. Those new pools NEVER come out of the next round’s pockets, only the prior round, and typically largely from the Founders. It is, after all, a Zero Sum game, and the investor’s know that.What’s the average hit rate of a VC? 1 in 8 deals? Now plug that into the employee’s career planning spreadsheet. They’re being asked to take below market wages, work horrendous hours, sacrificing family and sanity for the pot of gold at the end of the rainbow.Do a little 1 in 8 Monte Carlo simulation, and account for dilution and all the rest. Yes, it can be lucrative. But not as incredibly lucrative as you might think since that 1 deal out of 8 has to even you up for the other 7 where you lost money.And the odds are seriously against you. Factor in 4 years stints and realize that if you are unlucky enough to need all 8 to get your pot of gold, you had better also consider the age discrimination that’s so prevalent too. You may not get 8 chances to roll the dice after all.BTW, you really should be leaving after those 4 years of vesting. That’s the only way you, as an employee, get to have a portfolio effect, which is your key to mitigating risks.What about that other issue:”There are large portions of a tech company’s workforce that are in short supply, most notably software engineers and other technical positions where demand outstrips supply and has for as long as I have been working in this sector.”The VC’s and Big Tech firms are certainly always begging for more visas. But, if the thesis is true, why haven’t wages risen much at all for this labor pool that is in such short supply? Go ahead, look it up, I will wait. Wages have been flat for years for software developers and IT people, especially if you even remotely adjust for cost of living in the Bay Area.The big VC pie in the sky is an interesting game. I encourage you to spin the wheel a few times, just because you will learn a fantastic amount. It is WAY better than a Stanford or Harvard MBA to go through a few startups from the ground floor. And the VC’s are spending an incredible fortune to educate you.But once you’ve done 2 or 3 and paid your dues, do something else. Think about Bootstrapping. Own your own piece of the pie. After 6 VC deals, my 7th is bootstrapped and I’m making as much money as I ever did with the VC’s at lower stress and lower risk.Happy Labor Day! Happy Entrepreneur’s Day! No need for a Happy Capitalist’s Day, because they’re not struggling. Every day is a happy day for Capitalists, LOL.

    1. LE

      Then people should try to start a business with no assets and no track record right after graduating from college and see how far they get w/o said self serving VC leaches that you seem to be highlighting. (If I have your point wrong I apologize).Nobody (to other points that I have often made) is forced to go down a particular career path in business, the arts, entertainment and so on. It’s a decision that they make that in no way guarantees a shortcut to riches, success, happiness (and all that jazz). And the fact that they don’t know what they are doing and get taken advantage of actually to me doesn’t detract from the potential upside of that arrangement either. No shortcuts and if you take one you have to deal with the downside of that decision.

      1. Bob Warfield

        Agreed, I would highly encourage folks to give entrepreneurship a try right out of school. I did, though via VC.And I’m not at all tongue in cheek about the educational benefit of working in a VC startup. I’m just very direct about the downsides.If you find your aspirations are that you need to be a Steve Jobs / Elon Musk / Larry Page sort of mogul, you will have to go VC.OTOH, if you just want to be a successful entrepreneur, there are better ways.And I don’t blame VC’s for being self-serving and optimizing the equation to their own success. They didn’t sign up to be philanthropists. But at the same time, let’s not get too carried away marvelling at their largesse and all they’ve done to create jobs or make employees wealthy. I don’t believe they deserve that credit.Really, we live in a fabulous time where bootstrapped entrepreneurship is more possible than it has ever been. This is largely because the Internet makes it possible to reach customers cheaply.My business is a solopreneurship that throws off 7 figures, reaches an audience of 8 million visitors to the web site a year, and required no capital to start. Didn’t even quit my Day Job.What a country! What a world!

    2. PhilipSugar

      Sometime you email me philipsugar on the google service. We agree

    3. JamesHRH

      Fred Kofman of LinkedIn / Sr VP Philosopher has it right – great companies have a culture where everyone understands that putting their interests first is the wrong thing.His simple example of how do you incentivize a soccer team explains the intractable nature of the labour / capital issue: if you pay for wins, people don’t work hard / assume others will get the W; if you pay for goals, you lose 7-8 a lot; if you pay for defence, you lose 0-1 a lot.Great companies are merely ones where the company comes first, where people ‘get it’ that they do well when the enterprise does well.Your comments are basically just describing the specifics of a VC funded company, where any founder needs to know the portfolio gives his funder more chances to succeed but, also, let’s killer founders choice between a multitude of funding sources.It is what it is.Know what’s going on and don’t be a selfish tool and everybody’s chances of making out we’ll get increased.

      1. jason wright

        Pay for goals but get nothing if you lose the game? lose 7-8, get nothing?What’s the psychology of each assuming the others will get the W?

        1. JamesHRH

          Nope, pay for goals only.The point of the example is hat there is no individual incentive program that creates tram wins.That’s the difference between winning cultures and losing cultures – losing cultures are full of people who are only in it for themselves.

        1. JamesHRH

          Phil, I asked Michele, who is the Fred Kofman person in our house. She said hisnYouTube series is a great start.His book is Conscious Business.

  11. LE

    You can’t really compare what I will call the traditional business world and labor and tech and in particular startups. Which are typically stocked with young and ambitious people w/o families all fresh scrubbed and ready to conquer the world.In the traditional (ie small business) world you are extremely lucky to get someone who shows up everyday and does their job and if you make something does quality work. And isn’t on drugs and doesn’t have some other issue going on.Usually in a tight labor market anyone ‘good’ is already employed. (Kind of a bit like my theory on dating ‘all the good merchandise has been snapped up already’).What’s funny is that anyone in small business definitely knows if they have been around how valuable their key employees who do their job are. They are the biggest asset. That is not a candy ass bs statement either it’s what I really think. After you have spent a decade building a company you have people who work for you (I am talking in non tech and non sexy positions) who you think ‘are really good’ and they don’t typically even realize the leverage they have over you. But honestly those types of workers are few and far between. And you would hate to lose them and pray that they don’t leave and get another job.But here is the thing. You think that the answer is paying them more? It’s not. If you pay someone more generally it just ends up making them think ‘yeah that is my value’. And then they will use that as a stepping stone to a new position or actually it will even signal to someone else their value to them. So it’s a really delicate balance and that assumes you can even get away with paying someone more for the same position that another person is doing less effectively.

  12. Michael Elling

    Wonder how things have gotten so out of whack. Looking more and more like 18th Century France. Ideal CEO to worker salary ratio: 4.6:1. S&P 500 CEO to worker ratio 373:1.HBS/AFL-CIO:

    1. LE

      The requirement of disclosure of pay when it came about years ago was what actually led to the exorbitant pay increases because CEO’s and compensation consultants then had a metric to force pay increases by comparison with others. [1] Very simple and something that wasn’t thought of as a consequence when the rule came about.Likewise I am sure this ratio will do a similar thing since it can be gamed in a number of ways that have not even been thought of yet.Separately something is ‘worth’ whatever someone is willing to pay for it. There is no basis for the value of real estate in NYC (as an example) vs. Bear Delaware other than the market dictates that there are people that are willing to pay millions in one place but not the other place. [2][1] Essentially ‘male member envy’ where ‘member’ is a descriptive word that starts with the letter ‘p’.[2] Actually and more importantly Chinese money more recently.

      1. Michael Elling

        Hint: it’s all about network effects and concentration of geometric value captured at the core and top. Everything (firm, country, societal institutions, our bodies, celestial orbs) is dominated by network effects and governed by network theory. Much like the telegraph and the printing press before it, there have been technological leaps that have exacerbated the value concentration at various times in our history (go back to sextants and roads, wheels and boat construction for prior examples). The global phenomenon that brought us to this current state started 60 years ago with jet travel and computers. It was enhanced with the internet and finally 7×24 connectivity. It will correct soon (in other words in 1-2 decades).

        1. Kerim Baran

          How do you think it will correct?

          1. Michael Elling

            Some social, political or economic upheaval.

  13. Rob Underwood

    Why are my comments getting flagged as spam, especially with an upvote?

    1. jason wright

      i’ll upvote this and see what happens.- OK, i don’t see a spam tag.

      1. Rob Underwood

        It was an earlier, longer comment, in which I made 3 points that is current flagged as spam:1) It’s great see the right and left condemning the working shaming of Geoffrey Owens by Fox News.2) I worry too many of the leaders and donors have not had first hand experience earning a living through the work of their bodies and handing; the Democrat party has become too disassociated from its traditional role as the party of labor.3) Too many young people are pressured to choose internships and other summer activities in order to position themselves for colleges acceptances and prestigious jobs, at the expense of the experience of doing traditional summer jobs like waiting tables. Coupled with a crackdown on immigration this is hurting both small businesses as well as resulting in more young people entering professions in tech, banking, etc. with no experience having worked for even a month or two in a “blue collar” type job.Theories as to why:- Inclusion of original fox news link as well as two representative tweets denouncing it, one from someone who leans left, another from someone who leans right- Someone didn’t like what I had to say and flagged it as spam

        1. LE

          Thanks for pointing that out. But for one thing I can’t even find anything (is it there?) that confirms that is actually the actor. Second for all we know he was researching a role. So this has not been even confirmed as a ‘Margot Kidder living on skid row’ type situation. It’s also not racist. The media would have run that story with any actor. And actually the bigger and whiter the better story. Much more impact if Tom Cruise was bagging, no? [1] Could also be a publicity stunt. I have done those. Media falls fast and hard on any stunt.By the way it’s newsworthy simply because of the ‘huxtaposition’ of (get it? Huxta vs. Juxta) of someone well known doing what is considered a low end job. Noting that cashiers often help bag at Trader Joe’s that I have visited. Not that that changes anything. The story would run even if he was manager of the store in my newspaper or on my blog (if I had one).And by the way most people missed the biggest put down of the week. It was by Lindsay Graham attempting to elevate Megan Mcain by offering an example of what he thinks is the lowest position on earth by making a comparison to the highest position on earth.To wit:”If you say something bad about her dad, you will know it, whether you’re the janitor or the President of the United States.So there you have it. We now know that Graham thinks very little of the janitor. It’s a totally Leona Helmsley ‘little people’ implication.…[1] Taking the other side of course I could argue that people would be more likely to think because he was black he had fallen to that ‘level’ of, call it, of work. Sure that is possible. But unfortunately criticism along those lines is also jumping to a conclusion when there is another (‘same for white guy’) way of looking at it.

          1. Rob Underwood

            Numerous folks on twitter have confirmed that they have seen him working at that Trader Joe’s and that he does it as a side gig to his work teaching Shakespeare nearby. Justine Bateman (Family Ties, now herself a digital media/computer scientist apparently) has also tweeted (I am hesitant to post tweet links now for fear of being flagged) that he has been in contact with her to thank her for the support. I’m not sure I’ve heard or seen any discussion that this might be a doppleganger.My guess, just based on my own friends who act and direct, is that it’s just what it appears — a part time job to make ends meet.Finally don’t know that I’ve seen many/any references to this being about race — seems like it’s mostly being discussed in the context of class and elitism.

          2. LE

            and that he does it as a side gig to his work teaching Shakespeare nearbyThanks. It seems to me that there is an untapped resource here.My napkin says that his value in terms of attracting attention to someone’s business (not Trader Joe’s either) is way higher than working in a Supermarket for an hourly wage.For example remember Charlie of Lancaster Bread Fame? [1] The publicity that he could get from association with a former child actor would greatly exceed the value of that actor working at a grocery is my guess. (Nothing that former sports starts as a cliche often end up working for car dealerships as ambassadors and rain makers.) Maybe not Charlie (he has no money) but certainly someone else could generate positive attention to a brand or product just simply because it would stand out in the clutter. That is the way it works and has always worked.[1] He had some issues btw if you google you will see.

        2. LE

          Too many young people are pressured to choose internships and other summer activities in order to position themselves for colleges acceptances and prestigious jobs, at the expense of the experience of doing traditional summer jobs like waiting tables.Agree with this. Although I am not sure that I agree that waiting tables is some kind of ‘gold standard’ for the best way a student could be spending summer time at a job.Although any job can be a valuable experience, I would tend to want someone in a job where they can learn the most that will be valuable to them in the future in some way. While that is hard to nail down my feeling is that doing restaurant work (unless you intend to enter that business) is not the best way to do that.

          1. Rob Underwood

            Yeah, waiting tables is a bit specific to my own childhood and where I grew up. I do think there is value in all kids when they are young earning some money through the the work of their bodies — mowing lawns, painting houses, waiting tables, etc. From what I’ve seen here in NYC, and corroborated by talking with parents back home, those jobs that were once viewed as important life experiences, are now seen as wasted summers by college admissions officers, recruiters at Google, and other economic gatekeepers.

          2. LE

            Mowing lawns: Yes. Painting Houses: Yes. Shoving snow: Yes.In the above though the only case where you could make an outsize profit is painting houses per hour of labor. In that case you can get referral business which would allow you to increase your profit by being seen as a good choice. On the other hand it’s not repeatable work and you have to find new houses to paint. Mowing lawns is repeat work. Shoving snow (in many places) is seasonal. But that isn’t your point but it is something that someone doing any of those would learn when they do them. And it would form a good lesson (vs. reading the same in a book or my comment here).More importantly in those examples you are learning to sell and to deliver a product to people that you are fully responsible for and can do without a formal employer and on your own. And you will learn from that. (I did lawns and I waxed cars but I also worked in offices and did other things.) Well I mean you should learn from that some people just are not good at picking up info from others.So to me it’s not the ‘work of their bodies’ part that matters but the interaction (and in a specific way) with people and fully under your control as the boss.Will also note that a fair amount of people that had those types of hustle jobs were not pushed to do so but more or less took advantage of an opportunity to do so. That self motivation is important (and probably self selecting).I think there are a great deal of nichy type jobs kids could do. Things like ‘clean cobwebs in houses with high ceilings’ or ‘replace bulbs that owner can’t reach’. Those are things you could charge a premium for vs. actual time spent. (Many examples of similar things).

        3. Lawrence Brass

          I have had this behavior before, by some Disqus bot. If you edit your long post more than N times, it gets flagged (N between 3 and 5+). Try editing and reviewing your long posts outside Disqus in an editor and post it when it is ready. This worked for me.

          1. Rob Underwood

            cool. I’ve edited long posts before, but not this one. Thanks for the tip.

    2. fredwilson

      Disqus must be acting up. I will fish them out

      1. Rob Underwood

        Thanks. I had a couple links to tweets and a news article in it — maybe why?And I should have been more precise — “Why did my comment get …” –> It was just one comment.

  14. sigmaalgebra

    In the US, for capital and labor, there’re lots of both good news and bad news. Same for the economy, standard of living, quality of life, security and freedom from anxiety, ….Some of the really good news is that at times (A) someone invents a better mousetrap, (B) people beat a path to their door, (C) the inventor does well financially, the customers have fewer mice, the mice suffer, and (D), likely the biggie one, with the US Constitution, our legal system, etc., commonly no one actually, seriously, fully stops the inventor.Here is some of the bad news: In the US, from cradle to grave, there are a lot of hidden obstacles, dangers, chuckholes in the road that can seriously hurt careers, families, lives, etc. One of the most telling measures of how bad it is is that we are having so few babies we are going extinct — literally, rapidly. Apparently to get a four bedroom house, we sent the wife to work and had fewer children. Going extinct is convincing data that we are NOT doing well.For this bad news, my guess is that the best available solution, and a relatively good one considering alternatives, is for the people, cradle to grave, to get more information about the realities of careers, …, and life, the obstacles, … etc. Currently overall the situation is just AWFUL — young people get thrown into the game of hard knocks, the deep end of the pool, the meat grinder, etc. naive, ignorant, uncomprehending, deceived, manipulated, exploited, wasted, etc., and a huge fraction of this could be solved just by people understanding some business, money, security, life, careers, education, family, …, 101 lessons — just 101 level stuff.Or, too often, usually, a young person’s view of reality is so narrow it is like looking through a soda straw. This is a special case of a general situation in species: The young learn from their parents. Here Darwin’s algorithm is to assume that the world doesn’t change very fast so a good control is just to have the next generation go with what worked for the last generation — that is, the children have a narrow view of what their parents did. Commonly some families, societies have understood that the children need something wider than a soda straw, need for the children to learn also from grandparents, aunts, uncles, older siblings, family friends and neighbors, parts of the education systems, books, …, etc. Heck dolphins, orcas, elephants, lions, and wolves do a lot of this! US young people need a LOT more of this.Here are some of the chuckholes:(1) For a while in, I’m guessing, 1900 – 1960, the media or whatever glorified chemistry — lots of white lab coats, test tubes, boiling pots of goo, etc. Well, far TOO MANY young people tried to make chemistry their careers. That ended quite badly with lots of waste and pain.(2) With the Bomb, the Cold War, and the Space Race, there was a lot of publicity glorifying math and science. The US NSF funded lots of summer programs for high school and college students. Suddenly via the NSF and the DoD, US research universities could get significant grants for research in the STEM fields. About 60% of the grant money went to university “overhead”, and about 60% of the universities’ budgets were from that grant money. The NSF made the universities an offer they couldn’t refuse — take the money or cease to be a leading research university.Some worker bee level STEM people got to buy a single family, detached house in a good neighborhood, with two late model cars, maybe a 25′ boat, and raise a family with a stay at home mom. US capital said “HORRORS, they are just worker bees, not big time managers and owners like we are.”.(3) So, capital and the US defense and technology industries made their concerns known at the top. Then the NSF wrote into university research grants that so many students had to be supported and a university could get these students from England, France, Germany, Canada, and Italy? Well, not likely. But try India, Taiwan, and South Korea!!!!(4) Currently a huge fraction of STEM field students in US universities are not US citizens but immigrants with essentially full financial support paid for by US taxpayers who are having trouble paying for the educations of their own children.For more, there is the HxB scam to put US citizens out of work. For more there is the refusal to enforce US immigration laws which, then, is putting a lot of US citizen blue collar people out of work. For more there is a big push to import cheap foreign made products and put US citizen manufacturing workers out of work.Bait and switch — Lucy dropping the football on Charlie Brown.(5) Part of what a lot of US young people got from their parents was, do well in school, get a college education, maybe with a Master’s, get a job, do the job well, buy a nice house, raise a family with a stay at home mom, have plenty of money for luxuries and savings, retire comfortably, be a good grandfather. Dreamland. Too often, a flim-flam, fraud, scam. Naive, poorly informed.Why? The company may shrink or fail due to bad management, market changes, new technology, foreign competition, etc. No well informed, prudent young person would bet their career and family on such a path. For a first patch up in the situation, the young person darned better well quite early on get a nice “equity stake”, a case of actual ownership in something valuable or likely soon to be valuable, stock or stock options, etc. Just a job and a salary just will NOT cut it as a way to fund a family and life.The main solution I see is just for US citizens to become informed. There are some ways to do that, but there is an enormously strong need for more and better ways (right, a market need that can help some startups — maybe in part mine).Some of the ways should be the mainstream media (MSM), but that seems not to be true. I’m reminded of a remark of Sharyl Attkisson, IIRC, e.g., via TeD, that I revise:Essentially everything you see in the MSM was paid for and put there by someone with money and power who wants to influence your opinion, manipulate you, and feed you propaganda to their benefit and your harm.So, it’s crucial that the US has a free press; now it is crucial that US citizens without big money and power make good use of the free press to get the crucial information. E.g., no way should the NSF have been able to lead US STEM field students down the primrose path and then stab them in the back — there should have been demonstrations, new politicians elected, etc. Instead, the US STEM field students were in the dark and led like lambs to the slaughter. The US citizens have ALL the power: They just need the information and then to VOTE.The chuckholes I’ve outlined above are important but, still, in the larger scheme of things, small potatoes.A basic fact remains: For US citizen workers and their families, the US economy is darned unstable, having each US worker in a small canoe on a 45 year voyage across stormy seas. Chances on that 45 year journey of doing well, staying dry, or even not getting seriously hurt, are NOT good.Good news: People can be very highly motivated; they can apply a lot of creativity. The storms that sink some canoes can convert some others to giant ships. If the economy suddenly has an unmet need and/or suddenly has a means to meet some old unmet need, then there can be strong efforts to meet that need.Bad news: A LOT of canoes get sunk; a LOT of quite capable people get hurt for no good reason.Broad, simple solution from the three ring circus: If we are to have our economy a high wire act, then we need a good safety net, and one that permits a person to get out of the safety net and back on the high wire. For this I see nothing good from either the political left or right, from Karl Marx, …, or Adam Smith, or anyone else. We need to burn some glucose between some ear pairs.From 50,000 feet up, if the high wire act economy is so productive, then, like a financially successful three ring circus, it should also be able to fund the safety net.In all of this, IMHO, in the US, and with voting citizens, the main need and solution is an “informed citizenry”, information, and then having the citizens VOTE their interests.E.g., letting greedy, bloody capital flood the US with cheap products, cheap labor, and MSM propaganda and tax US citizens to pay for higher educations of non-citizen immigrants, those US citizens can’t afford for their own families, to cut off career opportunities for US citizens are just outrageous attacks on US citizens that long since, decades ago, should have had US citizen voters in the streets, on the Washington Mall, in the Capitol Hill offices, and VOTING the capital lackeys OUT of office.

  15. Cindy

    I disagree. Tech companies probably have the highest income inequality among all industries. Software engineers at tech companies (the whole class of workers) make 2 to 10x the lowest paid workers at these companies and most of the low-pay workers are not even hired as employees anymore and so lack benefits and job security. I don’t begrudge the software engineers, but the tech companies who take advantage of every labor loophole and lack of worker unions to squeeze the incomes of the warehouse worker, content curator, map checker, customer service agent, janitor, cafeteria worker, driver, security guard.

    1. lauraglu


    2. Michael Elling

      Modern equivalent of forced indenture? What alternatives are there. Ironic that the same managers and owners would be the ones primarily supporting BIG.

      1. Cindy

        Well, Its not that bad, but its not as generous as Fred was making tech companies out to be either. I guess at some point the people getting squeezed won’t be left with enough money to buy iphones or enough opt out and pursue alternative lifestyles like hunting and farming to feed themselves.

        1. Michael Elling

          Henry Ford taught us the lesson that his workers should be able to buy Ford cars on their salaries. Like much, forgotten.

  16. JLM

    .’Labor Day is really not about people employed in the tech industry. It was a celebration begun by the labor unions to honor the contributions and achievements of “muscle labor.”At the time of its inception, workers routinely worked 6 days a week for 12 hours a day. The labor unions brought that down to 5 days a week for 8 hours a day with overtime for any time in excess of 40 hours weekly.If you study the history of the labor movement in the US, this was a huge improvement. Like getting out of jail.In the 1960s and 1970s, during high school and college summers, I was a member of the Operative Plasterers and Cement Masons Local 29 (Jersey City), Area 5 (Monmouth and Ocean counties) by virtue of working for a union company which was a sister to a non-union company.Father Horan, local parish rector, got me the job. I was also working cutting grass, as a relief lifeguard, and as a pearl diver and short order cook in a restaurant. I used to make $4,000 in a summer when a full grown man was only making that much all year. When I went back to school, it was like a vacation. I was a hustler.The union was a force for good. The union boss would come by and ask, “Everything good, kid? Need anything?” I would see him in church every Sunday. He would pinch my cheek and tell my mother, “This one is a good kid.”The union used to have an apprenticeship program whereby I learned to finish concrete (roll the snot) and, most importantly, how to run the big automatic finishing machine – which got me $0.50/hr more money and tons of overtime because the finishers on the machines are the ones who put the concrete to bed after a big pour. Minimum wage was $1.60/hr (up from $1.40/hr the prior year).The union used to have a “bench” and if you didn’t have a company job, you sat on the bench until somebody needed a cement finisher. The union was a hiring hall. I always had a company job, so I never rode the bench.If a guy didn’t get work, then the union would put groceries in his kitchen. Literally.Somewhere along the way, the unions lost their purpose and became mercenary, corrupt, political operations. Not in my day, but now.Men, in those days, worked their asses off at hard, physical, muscle labor and went home stinking like goats with the pride in their hearts that they had put food on the tables for their families.One of the things which is happening again today is that we are nearing full employment. When I see black and Hispanic unemployment below 10%, I want to jump up and cheer.That hard work made me want to be an engineer because the engineers used to come to the job sites and shoot the levels and set the forms for big concrete jobs. They wore khakis and drove Suburbans with their equipment in back.When I was in college and knew how to run a level and a theodolite, I used to shoot the levels for the non-union company making $4/hr. That was big money.Hard work is good for us. It makes us remember where we came from and to appreciate the hard work of others. One of the greatest pleasures of my life is working with small contractors who are on their own and keeping the wolf from their door with sweat and muscle labor. I am renovating 6 bathrooms in my house right now and every day I enjoy talking to these guys.God bless American pluck and labor. This country? We built the motherfucker. Bravo!JLMwww.themusingsofthebigredca…

    1. sigmaalgebra

      Dad was really good with essentially all the construction trades, framing carpentry, finish carpentry, cabinet making, masonry, automated wood carving, metal forging, cutting, machining, welding, basic electricity, printing, chemistry, strength of materials, etc.He introduced me to grass mowing, more on lawn care, hedge trimming, etc.What he didn’t introduce me to was getting into small business at the work he knew as summer jobs to make money. I was plenty strong enough — 6-3, able to cut grass in 100% humidity and 103 F. He could have gotten me going on making good money in the summers. I was plenty willing but didn’t really understand. He understood plenty but somehow just didn’t see either of us being owner-entrepreneurs.He could have been terrific as a general contractor, a guy who puts up buildings and rents them, etc. He could have run a high end, carriage trade, custom furniture manufacturing and repair shop. He was also good enough at sewing to do a great job on the living room curtains and could have gotten Mom into such things — she had plenty of entrepreneurial drive and some just terrific formal situation social skills but didn’t understand business. He just didn’t do those things.Maybe he just thought that such work was beneath anyone with a good college education — I’ll never be sure.All that was strange: His father owned the town general store so was an entrepreneur, business owner, store keeper, to meet, greet, and please the public. His stepfather was much the same except owned the town feed and grain mill. Dad just had something of a blind spot for business ownership and entrepreneurship. Or maybe what he saw of his father and stepfather was to get an education and use it to avoid such work; for whatever is good about education, likely being “hands on” remains important.So, I had to learn. Okay.

    2. Michael Elling

      Full employment at wages that don’t account for the basic necessities (housing, healthcare, education, food, security, transport), let alone modest luxuries, is slavery.The unions were plenty corrupt in the 1960s and 1970s, because they were monopolies. That’s why Reagan could take them on.Who’s distorting history?

      1. JLM

        .Wow, can’t imagine where that came from.The unions were not monopolies.In my personal experience, there were a number of construction companies which were double-vested: both a union and non-union sister company to comply with “prevailing wage” contracting.The history of the prevailing wage goes back to the post Civil War era wherein the gov’t decided it could not regulate private industry, but could regulate gov’t contracting. From this came the National Eight Hour Day legislation.For many, the attraction to the union was the training. A kid could join the cement finishers union and be trained in the basics, but also advanced skills which commanded a higher wage rate. This skill was available to both the union and non-union shop. Most importantly, it commanded the same incremental wage for the added skill.I am going to have to give you failing marks on your Reagan comment.First, recall that Ronald Reagan was the President of the Screen Actors Guild and was responsible for negotiating “residuals”, health benefits, and pensions for all actors. This was one of the most impactful labor actions ever. He led the SAG through a strike against the producers.It cost him his acting career.Second, Ronald Reagan fired the PATCO (Professional Air Traffic Controllers Organization) when the NLRB predecessor, the Fed Labor Relations Authority, ruled their walkout was a violation of their contract.Reagan then championed the formation of their successor union, the National Air Traffic Controllers Association, which was able to pick up some of the former PATCO workers, but not their leadership.It was an artfully executed exercise of executive power.President Reagan’s support for Lech Walsea’s Solidarity union in Poland was arguably the stroke which broke the back of Communism.How artful were these actions?Reagan was inducted into the Union Labor Hall of Honor which requires nomination by a labor union.History?JLMwww.themusingsofthebigredca…

        1. Michael Elling

          Go back and read what I said. They got too big. And yes, they had too much control over management’s ability to implement technological change across numerous industries. They were, in effect, monopolies and not sustainable. They were easy prey. I never said Reagan was anti-union, merely that he could take them on because they were already weak from within. But he is credited with accelerating their decline.https://www.huffingtonpost….…Unions are a big reason NYC can’t build a lot of public infrastructure that is so necessary today to handle and sustain its growth.…Unions can be very beneficial if structured well. Just look at (socialist) Germany!Lastly, I questioned what full employment really means for a majority of people when cost of living is so high. The system is broken in many ways.And yes, WE built the motherf–king deficit. An unbelievable feat!

  17. sfrancis

    would be interesting to tax labor and capital the same percentage (not sure what the right percentage is, just saying it would be interesting if it was the same percentage). value them the same, explicitly, in the tax code.

    1. Michael Elling

      Why should they be taxed at similar rates when the benefit disparity is so enormous? “Capital” captures all the geometric value from network effects, while labor only participates indirectly in the general uplift in value. Labor’s benefit is linear.Looked at another way capitalism recognizes that labor provides the returns. So capital’s benefit from government services is geometric vs labor’s which is linear. Even then I don’t believe taxes and our current form of government are the answer. The current system is bereft of incentives and disincentives and extremely inefficient.

      1. sfrancis

        Tax is just a way to fund the government. lower labor taxes to whatever capital taxes are… (if that’s the right level to fund government). phrased another way – why should labor be taxed at a higher rate – when the labor performed gets no geometric result for the person performing the labor (effectively, the tax rate is even that much higher). (capital’s benefit from government services being geometric sounds like an argument for higher taxes on capital, rather than lower, if our argument is that we should tax the benefit received…).

        1. Michael Elling

          I’m agreeing with you. Your initial point was that they should be the same. But we’re probably also questioning the returns being realized on all that government spending. As it were, the amount of debt that has been foisted on future generations is criminal.As I’ve said elsewhere entitlements can be viewed two-ways: 1) the subsidies from wealthier to less wealthy/poor, and 2) those in government who feel entitled to spend other people’s money without any ramifications.

  18. Thái Sơn Nguyễn

    i find joy reading this article, thank you :))