The HR Dept. – How Socialism Kills Economic Progress

A common-sense principle of business is that managers must have the authority to hire and fire at will. After all, the very reason for a business to exist is to generate a profit for the owners and investors. So managers will compete for the best employees to maximize returns, just as they compete for customers by trying to provide the best product or service at the best price. The companies who hire and retain the best people will thrive, while the others will fade away.

HR (human resources) departments are poison to profit.

A product of the civil rights movement in 1965, the federal government created the Equal Employment Opportunity Commission to eliminate hiring discrimination on the basis of race, creed, color or national origin. Every company that does business with the federal government and has 50 or more employees must implement and document an “affirmative action program”.

The EEO/AAP was, and is, a typical big government solution to a problem that should be solved by free market supply and demand. It established rigid quotas based on race, which was then expanded to protect women and the disabled. Soon every minority group, including the evolving alphabet-soup of genders, was lawyering up.

Faced with a mountain of reporting requirements and legal complications, businesses responded by creating and staffing HR departments, a phenomenon that may have done more damage to the economy than any other factor since the depression.

While a manager or owner will make every effort to find the most talented, qualified, and industrious people to fill positions, and reward them well with promotions and compensation, HR departments exist only to meet “diversity” requirements. The result is companies are staffed with many unqualified, unmotivated, and sometimes underpaid minorities (often H1B visa holders) who know they can’t be fired. The “Peter Principle” (individuals are promoted beyond their level of competence) is rampant in many large organizations.

Managers who try to hire or promote talented non-minority employees are stymied by HR. Add the influence of union protection (i.e. government employees), and performance predictably suffers.

Despite 53 years of EEO/AAP and all kinds of other identity-driven programs, liberal politicians still pander for votes by screaming “RAAAAACIST!” at common-sense conservative opponents, who know that for-profit businesses will hire and promote the best people regardless of minority status, which encourages all workers to improve their performance (not their pigmentation or gender) and compete for the best jobs. And that propels the economy and raises standards of living for everybody.

You got me runnin’ goin’ out of my mind
You got me thinkin’ that I’m wastin’ my time
(Don’t bring me down, no no no no no)
I’ll tell you once more before I get off the floor
(Don’t bring me down)

Don’t Bring Me Down – Electric Light Orchestra

Profit! What a Concept!

GoodJobI recently visited with a high school “job coach”.  This instructor works with local businesses who provide part-time jobs for students to give them an introduction to the working world.  Many years ago as a high school business teacher I had a similar program – back then it was called “distributive education.”  I found it to be a great learning experience for my students, and some moved right into good jobs with their sponsor employers upon graduation.

I asked the job coach what kind of preparation the student receives before embarking on the job.  It was not a trick question, but the teacher was caught by surprise, and really didn’t have an answer.   I admitted that my recent experience with school jobs programs as an employer had not been very enjoyable.  The student-workers I was assigned were arrogant, lazy, and not really interested in learning anything.  It may have just been the luck of the draw.  I did my best to get them on track.

At the end of our visit, I offered a suggestion to the instructor.  Having been on both ends of the equation – as an employer and a job coach – I think the most important wisdom one can impart to a student, or any job seeker, is an understanding of why a business exists.   Most students (and adults for that matter) when asked “why is that grocery store there?” will answer “because we need food.”

And there lies the problem. 

I gave my new job coach friend the correct answer:  that grocery store exists to make a profit for its owner or investors, who seek to feed their families and improve their standards of living.

It’s a subtle, but important distinction.  Yes, we need food.  But that doesn’t mean someone else is required to give it to us.  Free markets only work when each of us offers something of value to someone else.  We must all be producers of wealth or added value.  Those who succeed understand this concept clearly.  Want to make $5 million a year throwing a baseball?  You had better be good enough that people will fork over big bucks to watch you.  Do you want to own a business?  You’ll do great as long as you offer what a customer wants to buy, at the right price.

Do you want to have a job?  Then you had better understand that the only reason someone else will pay you is if you help them make a profit.

And that was my suggestion to the job coach.  “Make sure your student goes to the job with the knowledge that his or her purpose is to make money for the employer.  And that employers share their profit with their employees – the more you contribute to profit, the more you will be rewarded.  The employer owes you nothing, but he is always looking for somebody who will help him make money.  When you both are making more money, and spending it, the economy grows and everybody does well.”

A light bulb lit above the job coach’s head.  “Why, I never thought of that!  What a great idea!”

Yes, it’s a great idea.  It used to be what made the world go around.  Some may think it’s “old school”, but I’ll put my money on free enterprise, supply and demand any day of the week.

Tom Balek – Rockin’ On the Right Side

Rockin' On the Right Side
Big Time, I’m on my way, I’m making it,
Big Time, I’ve got to make it show yeah!
Big Time, so much larger than life,
Big Time, I’m gonna watch it growing!
Big Time, my car is getting bigger!
Big Time, my house is getting bigger!

Big Time – Peter Gabriel

One of the quirkiest, and most popular, videos ever!

Walk the talk, Democrats!

Our nation faces a two-pronged economic problem.  We no longer produce the wealth or the jobs that our growing population requires.

That’s mainly because we don’t manufacture like we used to.  The USA has become a service-based economy, and most of our service activity does not create wealth – it merely pushes it around from one pocket to another.  We have abdicated our manufacturing prowess to developing countries, and according to the economic concept of “comparative advantage”, that should be a good thing – but only if we still have a way to make a living.

We have agricultural output that is the envy of the world.  But technology and corporate consolidation of farmland have largely eliminated employment in that sector.

We still are recognized as the world’s top producer of intellectual property – ideas, concepts, programs, designs, inventions.  Some of us are creative, and that generates wealth.  But not enough wealth to carry those of us who aren’t – the ones who used to work in factories and on farms.

So what does that leave us?  How will the US build employment and create wealth in the new world economy?

It always comes back to supply and demand, as I pointed out in a recent post.  Wealth comes from producing what the customer wants and needs.  Scarcity has value.  And in the United States, we have something scarce and valuable that the rest of the world desperately wants and needs:  Energy.

We are reminded every day how rich our homeland is in energy resources.  And we have the technology to extract, convert, and transport energy safely and efficiently.  It would generate much needed wealth and employment.  What’s holding us back?

Intransigence.  Bull-headed stubbornness.  The inability on the part of the liberal half of our nation to admit that they have been wrong.

Those who still oppose developing our traditional energy resources can’t admit that wind and solar are a colossal failure.  They won’t face the fact that nobody wants electric cars because they suck.  They hide the fact that more than half of the solar companies the federal government has subsidized have collapsed.  They pretend that today’s oil, gas, and coal industries still operate with ancient, polluting facilities and methods.

President Obama feigns concern about our energy dependence, the cost of fuel, and the sour economy.  He brags about how oil and natural gas production are up on his watch.   But he won’t admit that he has significantly cut oil leases on federal land.  And at the same time he announces that he has unilaterally (without Congress) decided to further restrict leases in the National Petroleum Reserve of Alaska, which was created 90 years ago specifically for oil production.

The Democrats say they want to create jobs.  They say they want to improve the economy and reduce our debt.

Why don’t they do what they say?

Tom Balek – Rockin’ On the Right Side

Enjoy some of the best rock of the 80’s

Why don’t they do what they say?
Say what they mean?
One thing leads to another.
You told me something wrong,
I know I listen too long,
But then one thing leads to another.

Supply and Demand – Another Law No Longer Enforced

Supply and demand.

Please close your eyes, stop your busy brain for a second, and say those three words.  Give me a quick one-sentence explanation of what it means to you.

Okay, ready?

Supply and demand.  Did that phrase register with you?  Was it a simple concept, an obvious and common thing like salt and pepper?  Or did it kind of bounce off, a hazy theory, something you have heard of, but never really thought about?

Even if you can’t give a pretty definition, you probably do understand the concept.  While economists can discuss nuances of the law of  supply and demand for years, the basic concept is simple and intuitive:  the less there is of something, the more valuable it is.  A pound of gold is worth more than a pound of rocks, because there are a lot of rocks in the world, and only a little bit of gold.

Supply and demand is why we get up in the morning and go to work.  We have needs and wants, we want our families to live better.  Every single waking moment of our lives we are active on both sides of the law of supply and demand.  We want to improve ourselves so that the demand for what we do is higher (competition), so we can make more money.  Others want to get our money, so they try to provide something we demand (competition).  The price of everything in the world is controlled by supply and demand.

I can think of no concept more critical to the success of every human being than a gut-level understanding of the law of supply and demand.  It is as undeniable and righteous as the law of gravity.  It should be the basis of our education system.  Sadly, it isn’t.  In fact the law of supply and demand is increasingly ignored, denied and dismissed in our schools, in the media, and certainly by our government.

To keep this sermon to a manageable length, here is an illustration:  if you had a choice between two identical loaves of bread – one cost a dollar and the other cost two dollars – which one would you buy with your own money?  Duh.

Now, if you had a choice between two employees doing the same work – one cost $50,000 and the other cost $100,000 – which one would you buy with your own money?  Double Duh!  So why do federal employees receive more than DOUBLE the compensation of the private-sector employees who pay their salaries?

How can that happen?  The law of supply and demand has been broken.  There is no scarcity of federal employees (over a half million of them make more than $100,000 per year).  They are no more valuable than their private-sector counterparts.  What’s going on here?

The answer is:  Corruption.  Pay to play.  Quid pro quo.  We have allowed government employees to unionize.  The unions promise money, logistical support, and votes to elected officials in exchange for more union jobs and higher pay and benefits.  Get me elected, I’ll pay you back, with somebody else’s money. Pay me back, I’ll get you elected.  The taxpayer has no input or control over this.  It is a done deal.  The law of supply and demand has been broken, and until we eliminate government employee unions, this corruption will escalate until our economy and nation is destroyed.

There are many more examples of government breaking the law of supply and demand – crooked contracts, cronyism, manipulating interest rates, all the things that make elected officials stinking rich.  But this one – government employee unions – is the big kahuna, because of the vast number of people involved.  ObamaCare promises another 21 million government union employees.  It’s the perfect crime.

I can’t help but wonder if more Americans understood and recognized and respected and enforced the law of supply and demand, would they hold their government accountable?

Tom Balek – Rockin’ On the Right Side

These days the buck stops nowhere
No one takes the blame
But evil is still evil
In anybody’s name
If dirt were dollars
If dirt were dollars
If dirt were dollars
We’d all be in the black

If Dirt Were Dollars – Don Henley