Tag Archives: business

Skilled labor isn’t cheap; cheap labor isn’t skilled

Popular emblem for hard hats in the USA. The original quote is attributed to Sailor Jack, a famous tattoo artist.

Popular emblem for hard hats in the USA. The original quote is attributed to Sailor Jack, a famous tattoo artist.

The title for this post is a popular emblem on US hard-hats and was the motto of a famous, WWII era tattoo artist. It’s also at the heart of a divide between the skilled trade unions and the labor movement. Skilled laborers expect to be paid more than unskilled, while the labor movement tends to push for uniform pay, with distinctions based only on seniority or courses taken. Managers and customers prefer skilled work to not, and usually don’t mind paying the skilled worker more. It’s understand that, if the skilled workers are not rewarded, they’ll go elsewhere or quit. Management too tends to understand that the skilled laborer is effectively a manager, often more responsible for success than the manager himself/herself. In this environment, a skilled trade union is an advantage as they tend to keep out the incompetent, the addict, and the gold-brick, if only to raise the stature of the rest. They can also help by taking some burden of complaints. In the late 1800s, it was not uncommon for an owner to push for a trade union, like the Knights of Labor, or the AFL, but usually just for skilled trades for the reasons above.

An unskilled labor union, like the CIO is a different animal. The unskilled laborer would like the salary and respect of the skilled laborer without having to develop the hard-to-replace skills. Management objects to this, as do the skilled workers. A major problem with unions, as best I can tell, is a socialist bent that combines the skilled and unskilled worker to the disadvantage of the skilled trades.

Not all unionists harbor fondness for welfare or socialism.

Also popular. Few workers harbor a fondness for welfare or socialism. Mostly they want to keep their earnings.

Labor union management generally prefer a high minimum wage — and often favor high taxes too as a way of curing societal ills. This causes friction, both in wage-negotiation and in political party support. Skilled workers tend to want to be paid more than unskilled, and generally want to keep the majority of their earnings. As a result, skilled laborers tend to vote Republican. Unskilled workers tend to vote for Democrats. Generally, there are more unskilled workers than skilled, and the union management tends to favor Democrats. Many union leaders have gone further — to international socialism. They push for high welfare payments with no work requirement, and for aid the foreign socialist poor. The hard-hats themselves tend to be less than pleased with these socialist pushes.

During the hippie-60’s and 70’s the union split turned violent. It was not uncommon for unionized police and construction workers to hurl insults and bricks on the anti-war leftists and non-working students and welfare farmers. Teamster boss Jimmy Hoffa, supported Nixon, Vietnam, and the idea that his truckers should keep their high wages at the expense of unskilled. Rival teamster boss, Frank Fitzsimmons pushed for socialist unity with the non-working of the world, a split that broke the union and cost Hoffa his life in 1975. Eventually the split became moot. The war ended, US factories closed and jobs moved overseas, and even the unskilled labor and poor lost.

Skilled workers are, essentially managers, and like to be treated that way.

Skilled workers are, essentially managers, and like to be treated that way.

The Americans with Disability Act is another part of the union split. The act was designed to protect the sick, pregnant and older worker, but has come to protect the lazy, nasty, and slipshod, as well as the drug addict and thief. Any worker who’s censored for these unfortunate behaviors can claim a disability. If the claim is upheld the law requires that the company provide for them. The legal status of the union demands that the union support the worker in his or her claim of disability. In this, the union becomes obligated to the worker, and not to the employer, customer, or craft — something else that skilled workers tend to object to. Skilled workers do not like having their neighbors show them high-priced, badly made products from their assembly line. Citing the ADA doesn’t help, nor does it help to know that their union dues support Democrats, welfare, and legislation that takes money from the pocket of any one who takes pride in good work. We’ll have to hope this split in the union pans out better than in 1860.

Robert Buxbaum, June 5, 2016. I’m running for water commissioner. I’d like to see my skilled sewer workers rewarded for their work and skill. Currently experienced workers get only $18/hour and that’s too little for their expertise. If they took off, they’d be irreplaceable, and the city would likely fall to typhus or the plague.

Loyalty, part 2: power hurts the leader

In a previous post, I made the case that one should avoid accepting loyalty requests as these are generally requests for your self-destruction. Someone who asks for loyalty is not saying he’ll provide you with good pay, a comfortable environment, empowerment, and good security. Rather that he wants your service despite little or not pay, discomfort, enslavement, and likely death or disgrace. There are some, few exceptions, but loyal service of this type rarely serves the servant.

Your chance of surviving as a minion is low; your chance as master is lower.

Your chance of surviving as a minion is low; your chance as master is lower.

I’d now like to claim that having loyal followers hurts the leader, too, costing him good service, and separating him from health, friends, and family. Most leaders are better off as half of a duopoly, without minions, and only loose control of their workers. The first reason for this is to note that minions don’t do good work relative to free men. They die for no good reason (e.g. you forgot to feed them), or they stop work and wonder what you’d like next, or they get drunk and gripe, or they beat each other up over fervor or small territorial issues. They very rarely innovate or work together, and for any complex project like taking over the world (or the tristate area) needs workers who do. Good work requires pride in achievement, and a loyal slave has none.

Having loyal followers precludes one from having a close relationship with the followers (you can’t appear weak), and also with friends (your minions must have one leader, not two). The leader gets used to being surrounded by sycophants, and begins to doubt those who behave otherwise. The boss will begin to distrust friends and allies, those he needs to stay in power, as these are the very people who could most easily assist others to take leadership from him. Over time, the king, boss, monopolist and dictator share less and less. As a result they end up secret and bitter, with many fears and none he can call close. And what pleasure is there in power, if one can’t share the rewards with friends and family, or share the burden with others.

Only support someone who could rule reasonably honestly and well. Chaos is worse than a dictator. Kanin from the New Yorker.

Only support someone who could rule reasonably honestly and well. Chaos is worse than a dictator. Kanin from the New Yorker.

A great number of kings have killed themselves in one way or another, very often because of overly large ambitions (see cartoon). King Saul, in the Bible is perhaps the first, Hitler is perhaps the most famous, and Colonel Qadhafi of Libya is perhaps the most recent. More often, maximum leaders are murdered, typically by friends and family. Famous examples include Julius Caesar, Augustus Caesar, and Nero; Charles I, Louis XVI, Richard III, and Tzar Alexander. Both the king of rock (Elvis) and the king of pop (Michael Jackson) killed themselves with drugs. Yet others died in needless wars or were exiled. Napoleon was defeated, exiled, returned, re-exiled and then murdered by an associate.  It’s not that safe to be the infallible king. Perhaps the wisest move is that of Pope Benedict, who last year left Rome for a life of monk-like solitude. Machiavelli points out, in “The Prince”, that only two Roman Emperors died of natural causes, one because he became emperor at a very old age, and the other was Marcus Aurelius, an advanced ruler who empowered his subjects.

The great leaders create so much space for others to lead that they are almost invisible: they lead by offering encouragement.

Political bosses and monopolist businessmen, though lower in power, don’t fare much better in life. Boss Tweed died in jail, as did Capone, Boss Pendergast. Even if they avoid jail, the fact that no one likes you takes a toll. No one liked Vanderbilt or Rockefeller, Carnegie, Morgan, or Fisk. While they lived, they could expect nothing more than senate investigations and ugly lampoons in the free press, plus an unfavorable memory after death. William Hearst and Howard Hughes died as virtual hermits, best remembered as the inspiration for “Citizen Kane” and “The Navigator.” Peter Cooper and Steve Jobs are different,  industrialists liked in life and in death; and Bill Gates may join them too. Their secret was to empower others.

He's being eaten alive by his power, money, and respect. In the end, he had none.

He’s being eaten alive by his power, money, and respect, as are all those he might love.

Woe to the wife, child or friend of the dictator. The wife and children of a king or king-pin rarely enjoy much of the power. The king-pin doesn’t trust them (often with good reason), and neither do the people. Stalin killed his wife and children as did Nero, Frederick the Great, Herod, Hitler, and quite a few others. It was said that is was preferable to be an animal in the courtyard of these greats than a son at their table. And even if the king or king-pin doesn’t kill his wife child or son, the people often do e.g. Marie Antoinette was killed shortly after Louis XVI and the Tzarina of Russia alongside Alexander III. Similarly, the wife of Hitler, the Mistress of Mussolini, and the wife of Nicolae Ceausescu all died at their husband’s side, sharing the punishment for their husband’s ambition.

The kings of Sparta fared relatively well, as did their wives, despite the militarism of Sparta. Their trick was that Sparta was a du-archy, a country with two kings. Sparta was strong and stable, and their kings (mostly) died at home. In business too, it seems the selfish leader should step back and become almost invisible. It helps him, and helps the people too. If the leader can’t share power this way, he or she should at least give people a simple choice between two things he controls and accepts (chocolate and vanilla; Democrat and Republican). Workers with a choice, even a small one, learn to act somewhat independently, and customers (or citizens) don’t complain as much either if they have some control over their fate. All will come to like the leader more, and the leader will like himself more. People stopped resenting Microsoft when there was a viable alternative, Apple, and Microsoft engineers benefitted by having a competitor to their products. I suspect that Bill Gates realized this would happen when he helped fund Apple’s return to the market. Unfortunately, most monopolists, bosses, and king-pins are too stupid, or too afraid to do this. In the end, it’s the trapped employee or follower who shoots the leader from behind.

Einstein on freedom producing good. I'd say freedom is also a good in itself

The ideal situation is a delicate balance between control and freedom. A great leader will empower those around him and support the opposition. That was the unrealized sense of Mao Tse Tung’s hundred flowers movement (let 100 flowers bloom; left 100 schools of thought contend). It’s political tensegrity. Most leaders can not let go to do this (Mao could not). Still, there IS a sanity clause, Virginia. And a leader should know that there is no benefit to the king who gains the whole world and loses his friends, family and sleep.

Robert Buxbaum. Remember, remember the 5th of November; those oppressed, and those imagining themselves oppressed rise and plot.

When is loyalty a good thing? pt. 1

Loyalty to a person or institution is generally presented as a good thing — a sign of good character. Disloyalty, by contrast, is considered one of the basest of character traits — the sign of a dastard, a poltroon. But I’d like to make the case that the loyalty that leaders demand (the most common loyalty situation) isn’t real loyalty, but stupidity or worse, toadyship disguised as loyalty. I’d further like to suggest that this attachment hurts the leaders as much as the followers in most situations — well, nearly as much. That is, a sane leader is better off where there is a viable alternative to his product, leadership, or service — a loyal opposition party, as it were.

If you give loyalty for free don't expect it in return.

If you give loyalty above your self interest, don’t expect it in return. If you don’t value yourself, no one else will.

But first, what is Loyalty? If I believe a teacher because he makes sense, or serve a boss because he pays me well, this is not loyalty, but common self-interest. Similarly, if I eat at a restaurant or buy a product regularly, it isn’t loyalty if the quality is particularly good and the prices particularly reasonable. Loyalty is when you eat at a place despite the quality being bad, or the prices high; or follow a leader who pays poorly and provides only danger and hardship. Or who’s crooked and damaging to your sense of self.

If you give a company or group loyalty for free, they are likely to take it and you for granted; if you don't value yourself, no one else will.

If you give a company or person loyal service, they are likely to take it and you for granted; Matt Johnson, 2010.

In general, there are only two reasons why any person would follow a leader like this. One is an attachment to the leader’s vision of the horrible future if you do not. Tales of grisly torture from a distant enemy are good to keep the underlings in their place. An even better reason is attachment to a brilliant future if you do suffer in the present. Tales of the glorious messianic future where you and those you love benefit from the current struggle and sacrifice. It doesn’t have to be a godly messiah; communism presents a messianic vision without a god, but it’s glorious, and the sun always shines. Generally speaking leaders who ask for loyalty ask from both perspectives: a horrible enemy at the gates, and a glorious future if you follow.

There may be a rational basis to fear a grisly enemy, or to suffer and follow in hopes of a glorious future, but if you find you are being asked to follow a single individual or a group that’s controlled by one individual, it’s worthwhile worrying that the leader may not be loyalty to you. Ask yourself: does the leader share real power and information? Does the leader make you feel worthless for the heck of it? If you have a leader like that, it might be worth considering: if the messianic vision ever does materialize (unlikely) the leader may forget to reward your part. History has quite a few examples of this.

Loyalty to country includes the imperative to try to improve the leadership.

Loyalty to country requires one try to improve the leadership. Leadership rarely agrees.

Where real loyalty shows up as a sign of a fine personality, is in marriage where both parties share power, money, and information. Or in loyalty to a country where you (or your child) has a real, rational chance of being leader. If you really trust the significant other (a good marriage) or where there is reason to think one’s home and family will benefit from one’s personal sacrifice, one might rationally give up ones comfort and life following to protect one’s significant others. Even so, the real loyalty is not to the leader, but rather to an organization that one believes will protect one’s children and community. A leads who asks you to kill innocents (Al Qaeda, Stalin, HItler, Jonestown), or who amuses himself by your suffering, e.g. (Stalin) probably has lost the connection between your loyalty and the goal. (Cue the song– we don’t get fooled again).

An honest military leader will have a soldier council or protective group above him to keep him (and others) from over-reaching. There will also be a time limit on the loyalty commitment and an explicit understanding that service does not include suicide, genocide, immolation, or personal embarrassment for the amusement of others. There is an also understanding that the follower’s life and well-being will not be sacrificed in vain, and that no one will be expected to accept suicide rather than capture. On the other hand, a soldier who runs away from all danger and thus endangers his fellows or mission should expect punishment or courts-marshal.

Church groups don't often look favorably on oversight

Church groups don’t often look favorably on oversight

Many groups don’t tolerate oversight of this type, and these groups should be viewed with suspicion. Church groups for example, are often led by those would like you to believe that suspicion of them is suspicion of God, it isn’t — it’s suspicion of a person. An honest leader gives the option of going to the police or the union representative, or the newspaper if necessary. Without redress, the worker/soldier/churchman may come to suffer needlessly or come to commit atrocities because of the power of the organization or the personal charisma of the leader. Any organization with a messianic vision of the future is dangerous; all the more so if there is no half-way point, no real sharing of power in the way to get there, and no real oversight for the grand-high pooh-bah (or whatever the grand leader’s title). Let the follower beware.

A Parable: The Donkey and the Brigands, by I don’t know who (I can’t find a source, but know this isn’t my own creation).

There once was a farmer who had a donkey — a talking donkey, as is the way with these parables. At one point, as they were traveling through the woods, they heard the approach of brigands (thieves). “Move quickly,” the farmer said to the donkey, otherwise we’ll be captured.” “Will the brigands treat me any worse than you do?” asked the donkey. “No,” said the farmer, about the same.” “Will they feed me any less than you do, or beat me any more?” “No,” said the farmer, about the same, I’d guess.” Will they load me any heavier, or make me go on longer journeys?” No, said the farmer, about the same, I’d guess.” “When I’m too old to work, will they keep me in my old age, or will they kill me, as you likely will for animal feed and for my bones and skin?” “Probably they’ll do as I would,” said the farmer. “In that case,” said the donkey, “I’ll go at my pace and what will be with the capture will be.” The moral: loyal service has to be a two-way street.

In part 2 of this essay, I’ll explain why even the leader doesn’t benefit from your complete loyalty.

Robert Buxbaum, October 20, 2014. I run my own business, and sometimes think about it, and life.

How do technology companies sell stuff?

As the owner of a technology company, REB Research, hydrogen generators and hydrogen purifiers, I spend a fair amount of time trying to sell my stuff, and wondering how other companies connect to potential customers and sell to them. Sales is perhaps the most important area of business success, the one that makes or breaks most businesses — but it was sadly ignored in my extensive college education. Business books are hardly better: they ignore the salesmen (and women); you’re left to imagine sales and profit came of themselves by the insight of the great leader. The great, successful internet companies are applauded for giving away services, and the failed interned companies are barely mentioned. And hardly any book mentions smaller manufacturing businesses, like mine.

So here are some sales thoughts: things I tried, things that worked, and didn’t. I started my company, REB Research, about 20 years ago as a professor at Michigan State University. I figured I knew more about hydrogen purifiers than most of my colleagues, and imagined this knowledge would bring me money (big mistake: I needed customers and profitable sales). My strategy was to publish papers on hydrogen and get some patents as a way to build credibility (worked reasonably well: I write well, do research well, and I’m reasonably inventive). Patents might have been a better strategy if I had not then allowed my patents to be re-written by lawyers. I built the company. while still a professor (a good idea, I think).

When I realized I needed sales, I decided to use trade fairs, conferences, and ads as the big companies did. Most of my budget went for ads in The Thomas Register of American Manufacturing, a fantastically large compendium of who did or sold what (it worked OK, but was since rendered obsolete by the internet). I bought $1500 worth of ads, and got 2 small lines plus a 1/8 page. That’s where I got my sales until the internet cam along. In retrospect, I suspect I should have bought more ads.

William Hamilton cartoon from the new-yorker. I sure wish I could make deals.

William Hamilton cartoon from the new-yorker.

My other big expense was trade fairs. Many big companies sold at trade fairs, events that are widely attended in my field. Sorry to say, I never found customers at these fairs, even when the fairs were dedicated to hydrogen, everyone who’d come by was was selling, and no one was buying, as best I could tell.Somehow, my bigger competitors (also at the fairs) seemed to get interest but I’m not sure if they got sales there. They seem to find sales somewhere, though. Is it me? Am I at the wrong fairs, or are fairs just a scam where no one wins but the organizers? I don’t know. Last month, I spent $2000 for a booth in Ann Arbor, MI, including $350 for inclusion into the promoter’s book and $400 for hand-out literature. As with previous events, few people came by and none showed anything like interest, I got no e-mail addresses and no sales. Some hungry students wandered the stalls for food and freebees, but there was not one person with money in his/her pocket and a relevant project to spend it on. I doubt anyone read the literature they took.

To date, virtually all of my sales have come from the internet. I got on the internet early, and that has helped my placement in Google. I’ve never bought a google ad, but this may change. Instead I was lucky. About 20 years ago, 1994?, I attended a conference at Tufts on membrane reactors, and stayed at a bed-and-breakfast. After the conference let out, the owner of the BnB suggested I visit something that was new at Harvard; a cyber cafe, the second one in the US. They had Macintosh computers and internet explorer a year before the company went public. I was hooked, went home, learned html, and wrote a web-site. I bought my domain name shortly thereafter.

The problem, I don’t know the next big thing. Twitter? Facebook? LinkedIn? I’m on 2 of these 3, and have gotten so sales from social media. I started a blog (you’re reading it), but I still wonder, why are the bigger companies selling more? The main difference I see is they attend a lot more product fairs than I do, have slicker web-sties (not very good ones, I think), and they do print advertising. Perhaps they match their fairs to their products better, or have a broader range of products. People need to see my products somewhere, but where? My latest idea: this week I bought HydrogenPurifier.com. Send me advice, or wish me luck.

Robert E. Buxbaum, flailing entrepreneur, September 10, 2014. Here’s a feedback form, the first time I’m adding one. 

Detroit: maximum punishment

Some moths ago, I argued that getting rid of its extra-high minimum wage was perhaps the single best thing that Detroit could do to improve its bankrupt finances and to provide jobs for its youth. I argued that this living wage of $11 or $14/hr, depending on whether healthcare was provided, was too much for the city to pay for it’s minimal skill workers. I also argued that a lower minimum wage would help the city finances, and would allow the unskilled of Detroit to find jobs: it would provide the first rung of a ladder. Well, sort-of good news: Detroit’s living wage has been declared unenforceable by the Michigan Supreme court.

Unenforceable does not mean that wages will lower immediately: anyone working for the city will keep their high salary job, so the finances of the city will remain strained. Also, private companies can not lower anyone’s contracted wages. The only difference is that workers on non-city jobs who agree to be paid $7.50 to $14/hr, can no longer sue to recover additional dollars to meet Detroit’s “living wage.” Bit by bit I expect that more low-skilled workers will be hired, and that their wages will stabilize downward to a free-market value.

The next big things that are needed are reduced crime and increased population who are employed in businesses other than selling drugs or themselves. One way to reduce crime, I think is to have less-stiff minimum penalties for non-violent crimes like drug possession and driving with a suspended license. Currently the penalty for possession runs to 15-20 years. No one who spends that much time in prison will fit back into society. Let’s do them and ourselves a favor by reducing minimum sentences so that the normal sentence is only 1-5 years (ideally with < 1 oz marijuana possession punished by a fine).

Another horror is the penalty for driving with a suspended license. It’s $3000 for a start (a reasonable amount, I think), but then the state adds a $4000 per year penalty for the next 3 years: a total of $15,000. That’s too much for a minimum-wage earner to pay, but the minimum wage earner needs a car to get to work. So he/she can’t work, or he/she drives without a license or insurance. Is this what we want? Lets give a second chance and lower the penalty to produce more working, law-abiding citizens. There is nothing wrong with Detroit that could not be fixed by 200,000 more, law-abiding, employed Detroiters.

R.E. Buxbaum owns REB Research, a maker of hydrogen purifiers and hydrogen generators. We used to be located in Detroit, but are now in Oakland county, 1/2 mile north of the Detroit border.

Why the Boeing Dreamliner’s batteries burst into flames

Boeing’s Dreamliner is currently grounded due to two of their Li-Ion batteries having burst into flames, one in flight, and another on the ground. Two accidents of the same type in a small fleet is no little matter as an airplane fire can be deadly on the ground or at 50,000 feet.

The fires are particularly bad on the Dreamliner because these lithium batteries control virtually everything that goes on aboard the plane. Even without a fire, when they go out so does virtually every control and sensor. So why did they burn and what has Boeing done to take care of it? The simple reason for the fires is that management chose to use Li-Cobalt oxide batteries, the same Li-battery design that every laptop computer maker had already rejected ten years earlier when laptops using them started busting into flames. This is the battery design that caused Dell and HP to recall every computer with it. Boeing decided that they should use a massive version to control everything on their flagship airplane because it has the highest energy density see graphic below. They figured that operational management would insure safety even without the need to install any cooling or sufficient shielding.

All lithium batteries have a negative electrode (anode) that is mostly lithium. The usual chemistry is lithium metal in a graphite matrix. Lithium metal is light and readily gives off electrons; the graphite makes is somewhat less reactive. The positive electrode (cathode) is typically an oxide of some sort, and here there are options. Most current cell-phone and laptop batteries use some version of manganese nickel oxide as the anode. Lithium atoms in the anode give off electrons, become lithium ions and then travel across to the oxide making a mixed ion oxide that absorbs the electron. The process provides about 4 volts of energy differential per electron transferred. With cobalt oxide, the cathode reaction is more or less CoO2 + Li+ e– —> LiCoO2. Sorry to say this chemistry is very unstable; the oxide itself is unstable, more unstable than MnNi or iron oxide, especially when it is fully charged, and especially when it is warm (40 degrees or warmer) 2CoO2 –> Co2O+1/2O2. Boeing’s safety idea was to control the charge rate in a way that overheating was not supposed to occur.

Despite the controls, it didn’t work for the two Boeing batteries that burst into flames. Perhaps it would have helped to add cooling to reduce the temperature — that’s what’s done in lap-tops and plug-in automobiles — but even with cooling the batteries might have self-destructed due to local heating effects. These batteries were massive, and there is plenty of room for one spot to get hotter than the rest; this seems to have happened in both fires, either as a cause or result. Once the cobalt oxide gets hot and oxygen is released a lithium-oxygen fire can spread to the whole battery, even if the majority is held at a low temperature. If local heating were the cause, no amount of external cooling would have helped.


Something that would have helped was a polymer interlayer separator to keep the unstable cobalt oxide from fueling the fire; there was none. Another option is to use a more-stable cathode like iron phosphate or lithium manganese nickel. As shown in the graphic above, these stable oxides do not have the high power density of Li-cobalt oxide. When the unstable cobalt oxide decomposed there was oxygen, lithium, and heat in one space and none of the fire extinguishers on the planes could put out the fires.

The solution that Boeing has proposed and that Washington is reviewing is to leave the batteries unchanged, but to shield them in a massive titanium shield with the vapors formed on burning vented outside the airplane. The claim is that this shield will protect the passengers from the fire, if not from the loss of electricity. This does not appear to be the best solution. Airbus had planned to use the same batteries on their newest planes, but has now gone retro and plans to use Ni-Cad batteries. I don’t think that’s the best solution either. Better options, I think, are nickel metal hydride or the very stable Lithium Iron Phosphate batteries that Segway uses. Better yet would be to use fuel cells, an option that appears to be better than even the best batteries. Fuel cells are what the navy uses on submarines and what NASA uses in space. They are both more energy dense and safer than batteries. As a disclaimer, REB Research makes hydrogen generators and purifiers that are used with fuel-cell power.

More on the chemistry of Boeing’s batteries and their problems can be found on Wikipedia. You can also read an interview with the head of Tesla motors regarding his suggestions and offer of help.


Healthcare thoughts

I offer healthcare to keep workers working for me — it’s an employee retention benefit that helps cover the cost of training. As it is now, if they quit, covered workers will have to pay for their own heathcare or find another company that’s willing to pay for it.

Perhaps that’s mean to think this way, but it’s really my only means to keep people from jumping shop at the first higher-paying opportunity. Anyway, that’s what I do/did. When congress gave free healthcare to everyone as of this year, they not only raised my taxes, and my company taxes, they also removed a key tool I have for keeping people on the job. In return, I suppose my healthcare fees are supposed to go down, but I have no faith they will, in part because I worked for the government and have no faith in their ability to be efficient or fast moving; in part because my ability to pay for healthcare comes from my ability to keep trained workers.

Though I’m not too happy about the change, I imagine (hope) that my employees are happy. Their  taxes will go up a bit, but they will be more free to jump ship at will. I imagine that the unemployed are especially thrilled, though I don’t know why that was not implemented through an increase in Medicare and Medicaid. In a sense I’m surprised it took congress this long to give everyone “free” healthcare without forcing them to work for it.

Michigan tax wrongs righted

This month, at last, the Michigan legislature began to take seriously the job of correcting some tax wrongs that needed correcting for years. The most important change: they decreased the tax on business property (only by 10% but it’s a start) and shifted the burden to a tax on business profit.

The personal property tax was paid on any equipment, inventory, or supplies that a business kept in-house. No matter if their were sales or none, a tax was due so long as a business had equipment or unsold inventory. Even in years where there were no profits or sales, money was due to the state — a tax on your dreams of somehow making a go of things. Aside from its complexity of valuing your unused supplies and inventory, the tax guaranteed that struggling businesses would fail — immediately. The governor (Granholm – glad she’s gone) claimed that taxing unused equipment and inventory protected the state coffers from the ups and downs of the business cycle, but the state was is far better shape than a struggling business when it came to the cost of borrowing. Besides, I’m not sure she was doing Michigan any favors by destroying businesses that were barely hanging on.

Governor Granholm (thank G-d she’s gone) gave out the money she collected to the right sort of people, her friends, and to targeted businesses that she liked: e.g. movie makers who made money-losing, dystopian films and left as soon as the checks cashed. The current governor, Snyder claims his aim is to eliminate the business property tax in 10 years, 10% at a time. I hope, we’ll see.

Another tax that’s now gone, at last, is the 0.8% on transactions between businesses. It wasn’t an unfair tax like the property tax, but was annoying to keep track of. What a mess. Keep up the good work, lads. Now if only they can do something about Detroit’s uncommonly high minimum wage.

Robert Buxbaum, November 20, 2012