Czartoryski’s Sale

This is interesting:

The Polish government has bought a world-famous art collection, including a rare Leonardo da Vinci painting, for a fraction of its market value.

The Czartoryski collection was sold for €100m ($105m; £85m) despite being estimated at about €2bn.

The head of the Czartoryski family, which owned the collection, said it was a “donation”, but the board of its foundation resigned in protest.

The Czartoryski Foundation’s management board said it was not consulted about the sale, which was negotiated between Poland’s culture ministry and Adam Karol Czartoryski, a descendent of Princess Izabela Czartoryska, who founded the collection in 1802.

Mr Czartoryski, the foundation’s head, said he was following his ancestors who “always worked for the Polish nation”.

“I felt like making a donation and that’s my choice,” he said.

I have no idea how foundations work, let alone how this one worked, but I suspect Mr Czartoryski (or his forebears) ceded partial control of the Czartoryski Foundation to a board but retained certain rights, one of which was the right to flog the collection.

The Czartoryski Foundation’s board of management said it did not oppose selling the collection to the government, but that it was concerned that selling without due diligence – including estimating a fair price – may be against its bylaws, Reuters reported.

It may be?  You’d have thought a board of management would know this, wouldn’t you? I suspect they are just pissed off they’ve been utterly bypassed by Czartoryski and/or stood to gain something should the collection have been sold at full price.

Either way, it’s hard to see what Czartoryski has done wrong.

Chairman Marian Wolkowski-Wolski told the news agency there was a risk of the collection’s eventual dispersal out of public control.

Erm, it wasn’t in public control when it was part of the Czartoryski Foundation.  What angle are you pushing here, madam?

The Real Challenge Facing Rex Tillerson

There is much speculation as to whether Rex Tillerson will make a good Secretary of State in a Trump administration, much of it to do with his relationship with Russia.  Personally I think ExxonMobil’s dealings in Russia are of no concern, and if anything make him more suited to the job.  (For some good articles on this subject see this from Steve Coll, author of Private Empire: ExxonMobil and American Power; this post from Streetwise Professor; and these two posts from The Dilettante).

I think Tillerson will do very well on the world stage in front of what passes for global leaders these days, and will do a fine job of representing America’s interests abroad.  Where I think he might struggle is when he stops looking upwards and outwards and casts his eye downwards through the organisation he will inherit.

ExxonMobil is extremely well run by any standards, let alone those of the oil industry.  It is by far and away the standout supermajor, and the only one that appears to have considered the full business cycle in its long term plans.  They haven’t even had to shed many workers during the downturn because they weren’t overstaffed in the first place.  ExxonMobil has a reputation for efficiency which Tillerson inherited from Lee Raymond, his predecessor as CEO, and it is well deserved.

ExxonMobil has achieved this largely by putting in place a rigid corporate management system containing ultra-strict procedures which are adhered to universally by a workforce who is under no illusions as to what happens to those who breach them.  This can often border on paranoia: I once saw an ExxonMobil staffer go purple in the face and demand to know from where I obtained a certain document, which was actually one that was specifically written to inform outsiders of a particular ExxonMobil internal process.  Nevertheless he snatched it from me as if it were reservoir data, leading me to joke for several years afterwards that ExxonMobil employees don’t give out business cards because they consider them proprietary information.

Like those of all large organisations, ExxonMobil’s employees are expected to toe the corporate line at all times, and departure from the company way of doing things is not tolerated for long.  In return for their cooperation and loyalty, ExxonMobil staff enjoy generous salaries, perks, work conditions, and career opportunities.  It also helps greatly that the ExxonMobil way produces some quite outstanding results, which cannot be said for all corporations which insist on absolute obedience and compliance from its workforce.  I can think of some exceptions, but if you ever come into contact with ExxonMobil employees they nearly all fit the same mold: well presented, intelligent, and ready to explain things with a PowerPoint presentation.  They speak always with caution, and are extremely aware of the applicable corporate policies and they refer to them constantly.  The attraction of remaining an ExxonMobil employee is too great for anyone to deviate too far from the norm, and any revolutionaries won’t last long.  Naturally, and like all oil majors, ExxonMobil can afford to recruit the best graduates from the top technical, oil and gas, and mining schools in the country.

It is one thing managing a giant corporation full of ultra-obedient high-flyers whose loyalty is beyond question and who can be fired immediately for the slightest breach of a corporate policy or directive, but quite another to manage public sector workers who are heavily unionised and many of whom shunned the private sector because it looked too much like hard work.  I don’t know what public bodies fall under the Secretary of State, or what the equivalent is of the British Civil Service is in the United States, but you can be sure that whatever there is will be chock-full of vested interests, entrenched archaic work practices, troublemaking employees, appalling inefficiencies, treachery, disloyalty, back-stabbing, dishonesty, and laziness.  These will be organisations of a type that Rex Tillerson will have no experience being in charge of: when he says “jump” as ExxonMobil CEO his entire workforce leaps into the air in unison; in his new job, be probably has to go around waking people up first only to hear them telling him that Kerry let them sleep until lunchtime before they go home crying about racism.

Rex Tillerson looks like a good fit for Secretary of State, but his greatest challenges might not be Russia, Iran, and China.

Wrong Lesson Learned

Professional troubleshootermaker and former blogger TNA points me to this story:

Former Telstra CEO David Thodey has shared the story of how he was publicly shamed in front of an arena crowd by world-renowned diversity trainer Jane Elliott in what he calls “one of the most significant moments of my career.”

This ought to be good.  We need more senior executives finally waking up to the sham that is “diversity” in modern corporations and the destructive effect of identity politics.

While working for IBM around 2000, Thodey was invited to an event sponsored by Big Blue at which Jane Elliott would be talking.

Elliott is famous for her then controversial Blue Eyes/Brown Eyes experiment which started in an Iowa classroom in the days after Martin Luther King was assassinated. Elliott, then a primary schoolteacher, segregated the class into the blue eyed and brown eyed. She then gave one group special privileges and chastised the other, before reversing the special treatment the following week.

Thus ramming home the point that people ought not to be divided into groups based on physical characteristics and then treated differently?  I’m fully on board.

She went on to become a leading workplace diversity trainer for the likes of IBM, General Electric, Exxon, and AT&T, notoriety that brought her to Sydney to speak to a 3,500 strong Sydney Entertainment Centre crowd.

Thodey was brought up to stand on one side of the stage and a Torres Strait Islander woman was brought up to stand on the opposite side. Elliott then asked Thodey how tall he was and how he felt about it.

“I said, ‘I don’t really think about it’. She turned to the Torres Strait Islander woman and asked. She said ‘I’m 5 foot one and well it’s really hard actually. I go into rooms and I can’t see people. I tend to be looking up and it’s really hard and I find it really quite difficult.’”

I’m 6’4″ tall, and were I Thodey I’d have had a simple response to that: economy-class travel.  And why does it matter that the woman was a Torres Strait Islander?  Why not just say it was a woman?

Elliott then asked Thodey how he felt about being a man. He said: “I was just born that way and I don’t think about it”. The woman said: “It’s very hard being a Torres Strait Islander woman. People don’t listen to me when I say things.”

This is hardly unique to women who hail from islands in the Torres Strait and people not listening to you is probably not the best example of a life of hardship: that would put every wife on the planet into the category of Mumbai Street-Urchin.

“This went on. I was totally unconscious of the awareness of my perspective and someone else’s. This is in front of thousands of people. And I got smaller and smaller. I was really embarrassed,” Thodey said.

Yeah, I’d be pretty embarrassed at this ludicrous display of virtue signalling, too.  I’m beginning to understand why the penny dropped.

But the humiliation wasn’t over. As Thodey left the stage he remembers touching Elliott on the back.

A kidney punch?

“She turned and said – ‘What gives you the right to touch me!?’ At which point I ran off the stage completely! That was probably one of the most significant moments of my career. It’s always caused me to reflect.”

I can well believe it!  This would cause any half-sensible executive to tear up their Corporate Diversity Policy, cancel all associated training courses, and fire the idiot who booked this Elliott woman to speak in the first place.

Oh wait.

Oh no.

That’s not what he did at all.

During his time as head of Telstra, Thodey enacted a ‘flexible working for all roles’ policy and set-up a diversity council.

Oh dear lord.

He also enforced a ‘50/50 if not why not?’ missive to all levels of the telco and was a founding member of the Male Champions of Change group.

The problem of gender equity had to be tackled on a personal level, he said.

What I thought was an article on a brainwashed fool waking up and smelling the roses has turned out to be one whereby a feeble-minded climber of the greasy pole is bullied into buying a barrow of fresh horseshit before spreading it around a large corporation.

“You can get all carried away with inclusion and gender equity as an ethical or equality or egalitarian perspective.

An issue that has yet to plague me.

But this goes deeper and often we don’t have very honest discussions about it and I think it’s really important we do. This needs to be personal because if it isn’t it won’t change.”

Lots of discussions bring about change?  Have all these people been educated in France?

Success would only come from being bold, Thodey added.

Would examples of such boldness include running off the stage when some harpy levels some ludicrous accusation against you?

“You need to be bold. The problem is it’s easy to get into the status quo and not change. The only way I know how to change is push the boundaries. You’ve got to be willing to be unaccepting of bad behaviour, you’ve got to call it out, and you’ve got to be really strong with it,” Thodey said.

Right, but what’s this got to do with a Torres Strait Islander woman being short?  Will she be offered free sessions on the rack they have down in the local museum of medieval torture?  Or is Longshanks Newman requested to come to the conference room for leg amputation?

“You need to measure you need to be incredibly detailed in terms of the data.

A CEO meticulously collecting data on his employees?  Sounds wonderful.

Then you’ve got to put in good programmes to support it. Then you’ve got to look for the unseen signals. Talk to people and ask them how things are going because people will actually put up with too much.”

I wonder who was doing the CEO’s job when this Thodey clown was playing Social Worker?

UPDATE

Adam has recently written on the Male Champions of Change that Thodey helped found.  Do go and read, but don’t expect him to be any more forgiving than I am.

Airbnb and the Right to Discriminate

Over at Samizdata, Perry de Havilland tells us why he’s cancelling his Airbnb account.  Understandably he objects to being told to sign some pledge stating, among other things, that he will commit to:

treat everyone—regardless of race, religion, national origin, ethnicity, disability, sex, gender identity, sexual orientation or age—with respect, and without judgment or bias.

Perry’s objection is to being told he is not allowed to judge that which is entirely voluntary on the part of the other party, e.g. their religious views.

I happen to take the rather extreme view that an individual’s freedom to interact and associate with whomsoever they please is paramount and as such discriminatory behaviour ought to be permitted on this principle.  I’ll write more on this shortly.

Back in 2013 there was a case whereby two Christian owners of a B&B in Cornwall refused to allow a gay couple to stay on their premises, citing to do so would conflict with their religious beliefs.  They were sued and lost.  In their defence they said:

“Our B&B is not just our business, it’s our home. All we have ever tried to do is live according to our own values, under our own roof.”

Many people who took the side of the gay couple held the view that the moment somebody charges money and their activity becomes a business, the state must get involved and they no longer have the right to discriminate.

What I have yet to find out is whether they think this ought to apply to prostitutes.

I genuinely think within five years we’ll have seen a case where an escort or prostitute is sued for discrimination, and dating apps and websites are being put under pressure to remove preferences based on race and other criteria.

More Food for Thought

A friend has pointed out that in yesterday’s post about supermarkets and expired food I overlooked the practice of their deliberately destroying the food that goes into their bins.  The complaint of many seems to be that supermarkets do this simply because they don’t want poor people hanging around their bins.  Taking this at face value, it would sound pretty callous that supermarkets are denying hungry folk food simply because – for whatever reason, but probably because they are just bastards – they don’t want poor folk nearby.  Or maybe they don’t want poor folk feeding themselves for free when they can be forced into paying for it?

But there are valid reasons why supermarkets wouldn’t want this, aside from their just being bastards for fun.  Having anyone regularly rummaging through your bins is probably going to come with additional problems, such as people camping semi-permanently beside them waiting for food to be dumped and being a nuisance for staff and the public.  Private householders wouldn’t want people in their back yard rummaging through their bins, so I don’t see why supermarkets would be happy about it.

But in reality it feeds in (sorry!) to the main point I made yesterday regarding liability.  A company is still responsible for its waste products up until custody changes hands in the collection process.  A supermarket has a duty of care towards the public which includes doing everything reasonably practicable to ensure they are not harmed by its operations and products, which includes the waste food as it lies outside discarded in the bins.  This will also include ensuring nobody will come to any harm if they decide to climb into the bin to eat something: if somebody does so and injures themselves somehow, the supermarket is liable.  Stupid, but this is how the law works.  The supermarkets are also liable should somebody fall ill by consuming waste food which by the supermarket’s own definition is unfit for consumption.  The supermarkets are especially liable because they know in advance that people will try to gather and consume this stuff, so they cannot claim ignorance for not doing more to prevent it.

And this is the issue: the supermarkets are legally obliged to prevent people from eating out of their dumpsters.  If they just leave them open and unguarded, they are being criminally negligent in their duty of care towards the public.  And this is what the campaigners don’t get: those among their numbers have imposed these rules and regulations and set these legal precedents and this is the result.

Supermarkets have two realistic options here: secure the bins in such a way that nobody can get at them, or destroy the food so thoroughly that nobody will try.  This new law will be discarded as soon as a liability case arises, it is pointless posturing by the wealthy middle-classes.  If the welfare programmes that exist to ensure nobody goes hungry are failing, they need to be fixed: but that would likely involve shaking up bureaucracies and firing useless managers, and that would never do.  So instead they take a cheap swipe at the supermarkets for dealing with a set of conditions that they themselves created.

Will Pike and the Costs of Legislation

There’s another video doing the rounds on social media made by a chap called Will Pike, a Brit who was injured in the 2008 Mumbai terror attacks and is now wheelchair bound.  It goes without saying that I have every sympathy for Mr Pike and his predicament, and I can imagine the frustration he feels when he encounters the difficulties presented in the video:

His problems are real, and I take no issue with them.  But I have a problem with his proposed solutions:

The law protecting disabled people from discrimination when accessing goods and services has existed for 10 years and is supposed to be enforced by the Equality and Human Rights Commission. The Equality Act requires that service providers make reasonable adjustments to make sure disabled people are not disadvantaged when accessing their services. However, there are significant flaws with the enforcement of the act. In the majority of cases it is left to disabled people to sue service providers for discrimination. Moreover changes to legal aid have made it much harder to start legal action. Court proceedings can be very time consuming and costly. They are not accessible to all disabled people, many of whom just want to get on with their life.

The main issue here is one of expectations versus reality of what passing a law can achieve.  Since I was a student and I became aware of these things there seems to have been a headlong rush in the developing world to solve every problem in existence by passing a law, as if by doing so the problem merely goes away.  Only if this worked, nobody anywhere would be doing drugs.  Oops.

The key word in the legislation is “reasonable”:

The Equality Act requires that service providers make reasonable adjustments…

What is reasonable or not depends on the individual.  Most viewers of the video would see a flight of steps in a clothing store and think “Why can’t they put a lift in?”  A building services expert hired to testify on behalf of a company defending a case brought before the EHRC would explain in detail the costs and practicalities of doing so, and an engineer would go further, into details of the structural design of the building.  London is an old city, the buildings are old.  Retrofitting a lift or making substantial modifications to a building could well cost as much as demolishing it and building a new one.  Not in all cases for sure, but in some.  It could be that the owner of the shop premises doesn’t own the whole building, or maybe even the floor above.  Whatever the case, it is not immediately obvious that the lack of a lift in a shop means the owners or the tenants have not made all reasonable adjustments to allow disabled people access to their services.

There is one answer to this.  Take away the “reasonable” qualifier and ensure all companies provide full disabled access that caters for every type of individual that might cross their threshold.  This would cost a phenomenal amount of money, which would be passed directly onto customers, and would entail moving almost every business out of city centres and into purpose-built retail parks or strip malls, but it is certainly possible.  Only major complaints I hear from the sort of people who campaign for greater disabled access are: the cost of living in Britain (especially London) is already way too high and we need government intervention to force companies to pay employees a Living Wage; town centres are dying and everything is moving to purpose-built retail parks in the outskirts; and independent “local” shops are disappearing, replaced by endless outlets of multinational chains who “send their profits overseas and out of the local community”.

So which is it to be, folks?  Strip-malls filled with faceless multinationals with full disabled access, or smaller franchises and independent shops in city centres and high streets?  You can’t have both for simple reasons of practicality and economics. And if you insist on having both, you’ll end up with neither: nobody is forced to open a shop, and anyone doing so much be able to envisage an economic return.  Sadly, I suspect people will insist on having both and wonder why their towns look empty.  This has already happened.

I have my sympathy with Will Pike and his video might well have identified companies that could have provided better access at a reasonable cost but didn’t.  But I suspect most people sharing his video on Facebook won’t have thought much beyond the initial, emotional reaction to a guy in a wheelchair struggling through life.

Food for Thought

Earlier this year France passed a law banning supermarkets from throwing away or destroying unsold food.

France has become the first country in the world to ban supermarkets from throwing away or destroying unsold food, forcing them instead to donate it to charities and food banks.

Charities will be able to give out millions more free meals each year to people struggling to afford to eat.

I’m not sure when the ban actually comes into effect, but there has been a recent spate of articles doing the rounds on social media about how wonderful this is and how the US should adopt the same laws.

The narrative is that supermarkets are callously destroying food while the starving, huddled masses are gathered outside their automatic doors pleading for some sweepings from the delicatessen floor.  Why not just give this food away?

I can already think of two reasons why not, with the first being that of liability.  I haven’t visited every supermarket in France, but I know British supermarkets pretty well and if you go to one in the late evening just before closing you see a section filled with produce expiring that day which has been marked down, and further marked down, and then reduced to almost nothing in a desperate attempt to get rid of it before it goes in the skip out the back.  As far as I know this is common practice among supermarkets everywhere, and there are a lot of people out there who have made buying groceries from these sections an art form.  In other words, supermarkets already go to considerable lengths to avoid destroying food.

There is a good reason why expiry dates are put on food, and it’s mostly to do with liability and ensuring the customer is adequately informed.  Present in the contract a customer enters into with the supermarket when he or she buys a product is the expectation that the food is fit for consumption; the onus is therefore on the supermarket to adequately inform the customer when he or she should consume it before it goes bad.  The dates on the products might be a bit conservative and sometimes even silly, but they exist in order to ensure the customer is informed and the supermarket has carried out its duty of care to the best of its ability.  If they fail in this duty of care and a customer gets ill, they can and will be sued for compensation and suffer a loss of reputation.  This is why supermarkets will not take the risk of selling food past its expiry date: customers could get ill, and both parties will suffer.  All of this is entirely sensible across a colossal, multi-billion dollar, international logistics operation – and it remains sensible even if somebody can pick up a can of beans a day past its expiry date and say “Oh, this is stupid, they are still perfectly edible.”

So what’s the supermarket to do with those few items they can’t sell before their expiry date (and as a percentage of overall stock the volumes will be tiny, even if the poverty campaigners will cite numbers which sound large in isolation)?  The most sensible and cost effective thing to do from a business and liability point of view is to toss it into a skip and replenish the shelves with fresh stuff for the hungry customers who come in the next morning, and indeed that is what they do.

But now they are being forced to give away food which they have deemed unsuitable for sale to their customers, several problems will arise.  The first of these is actually mentioned in the article, but being The Guardian they’re too dense to follow through:

The law has been welcomed by food banks, which will now begin the task of finding the extra volunteers, lorries, warehouse and fridge space to deal with an increase in donations from shops and food companies.

Lorries, warehousing, refrigeration, and distribution all cost money.  And by far the best people at doing these operations are supermarkets, as evidenced by their commercial success.  So if the supermarkets, with all their expertise, have decided these operations aren’t worth doing for certain items, maybe they are onto something?

But now the supermarkets have handed over the food, who is going to pay for these operations?  Where is the money for the refrigeration going to come from?  And more importantly, who is responsible for ensuring these products are handled and stored properly such that they are still fit for consumption when handed to the recipient, and that the recipient is correctly informed as to when he or she should consume it?  The expiry date on the package has already gone by, remember?  That was yesterday.  Are a team of volunteers and charities seriously going to be able to manage the receipt, storage, and distribution of thousands of tonnes of food at or near its expiry date such that nobody is going to get sick?  Are these charities and volunteers going to accept responsibility if somebody gets food poisoning and dies?  If not they, then who?

What’s happened here is some (undoubtedly wealthy middle-class) busybodies have decided they can effectively extend a supermarket’s operations beyond their doors at no cost and with no accountability, and now this has become law.  I suspect the liability issue alone will prevent this being adopted in the US, there would be lawsuits within the first month.  Only against Wal-Mart, probably.

There’s also another problem with forcing supermarkets to give away products, one that we’ve seen with food banks in the UK: some people will take the free stuff instead of doing regular grocery shopping.  Supposing a supermarket sectioned off a corner of its floorspace, filled it with free products, and opened it up to the public for an hour after normal shopping hours.  Now repeat across the country.  Very quickly this would be captured by organised third parties who would employ people (of the type you see on nightclub doors in Manchester) to swoop in and collect everything on offer in what would become a large-scale industrial operation: just as charity clothing has become a lucrative, large-scale, international business.  The idea that a little old lady whose pension won’t stretch to three meals per day would be able to get free food is ludicrous.

If people are substituting products they would have paid for with free stuff, the supermarkets (or the wholesalers) will be losing revenue.  Yes, it is true: if supermarkets are forced to give away products they would otherwise have destroyed, they will lose revenue because of the substitution effects.  This will either result in a fall in profits for the supermarkets – which is what the campaigners think will happen – or, more likely, they’ll just distribute the costs of the new law among the sale prices.  In other words, food will get more expensive.  How does that help the poor, again?

Practicalities aside, this whole thing is annoying me on another level.  For the first time in human history we as a species are able to produce and distribute enough food so that real hunger in properly-run countries is something only our grandparents knew about.  We do this so effectively we can feed ourselves and our families without any more inconvenience than a quick trip to a nearby supermarket.  Furthermore, we can obtain our food without worrying if it’s going to kill us if we eat it.  This in itself is one of the most astonishingly, staggeringly, brilliant outcome that humankind has managed in its existence.  We have solved the millenia-old problem of constant hunger.  So what do we do?  We moan like fuck and attempt to sanction those who have brought it about.  Like the attempts to dismantle our reliable energy supply and replace it with one that doesn’t work, historians are going to look back on this era and think we went collectively insane.

People do go hungry in the developed world, I don’t deny that.  This is why we have a welfare system, food stamps, charities, and a whole load of other measures in place to do what we can to alleviate poverty and hunger.  Supermarkets and their stock-management practices are not the problem, by contrast they are the very things that are keeping the majority of us fed so that we have enough surplus wealth and energy to help those who are not.

Finally:

Campaigners now hope to persuade the EU to adopt similar legislation across member states.

And people are wondering why Britain voted to leave.

Ludicrous Indeed

Unsurprisingly, the BBC gives us a puff-piece on Tesla’s latest offering:

[T]his upgrade enables the Model S to travel from 0 – 60 mph in 2.5 seconds, giving it the fastest acceleration of any currently available production car … Like all electric vehicles, that more powerful battery delivers 100% of its dual-engine torque immediately, pushing the four-wheel-drive saloon past records heretofore the domain of million-dollar supercars.

Million dollars? Let’s first be generous and assume this car actually can do 0-60 in 2.5 seconds and will make it into production (visit Streetwise Professor to see why skepticism over Elon Musk’s pronouncements is warranted).  According to Wikipedia, the Porsche 991 can match this which, according to Porsche USA, costs about $188,000.  This isn’t so cheap, but it’s not a million dollar supercar.  And the Tesla is no bargain, either:

The Model S P100D saloon will start at £114,200 and the Model X 100D sport-utility vehicle begins at £117,200, and older Teslas can upgrade their battery packs for a mere £15,000.

£114k is about $150k in today’s money.  That would buy you an awful lot of Porsche.

That’s expensive, but Tesla is taking the Toms shoes model approach to your wallet. “While the P100D Ludicrous is obviously an expensive vehicle, we want to emphasize that every sale helps pay for the smaller and much more affordable Tesla Model 3 that is in development.” In other words, your need to go very far, very fast helps fund the electric vehicle needs of others less fortunate than you.

Hmmm.  As a business model, this doesn’t sound very sustainable.  You could probably expect some cross-subsidising between models in order to maintain a brand and market share, but this seems to be ass-backwards: it’s normally the high-volume margins on the cheaper brands which provide the cash for developing high-end niche products, not the other way around.  Are Tesla really going to be selling enough of these $150k supercars, and the margins high enough, to be able to reduce the cost of the mass-produced models?  I’d love to see the numbers on that.

The holy grail of EV range has long been 300 miles, which would bring electrics into the full-tank range of most petrol-powered vehicles. Now, 300 miles doesn’t make for a stress-free cross-county road trip, but there’s a lot to be said for enjoying a real meal while your Tesla charges rather than buying Slim Jims and Diet Dr Pepper in the 10 minutes it takes to gas up your petromobile.

If sitting and having a meal for a couple of hours is preferable to stopping for 10 minutes, why don’t more people do that already?  After all, there is nothing preventing owners of petrol cars doing so, is there?  What the article is doing is trying to make light of the biggest issue facing electric cars, which I’ve written about before:

The limited range isn’t actually the issue, as petrol cars also have a limited range.  The problem is the charging time, which renders the vehicle unavailable for several hours.  If you run low on petrol, you spend 5 minutes filling up and you’re on your way again.

The whole concept on which the current breed of electric cars is based will collapse as soon as there are more than a handful of stories of people being caught out miles from home – children in the back, howling – and having to wait at a charging station for hours before being able to continue the journey start to appear on the internet.

The author’s glib suggestion that people will be happy to sit and have a nice meal while waiting to continue their journey isn’t supported by people’s actual behaviour.  A decent journalist would have addressed this issue properly, but then this is the BBC: the entire article is simply a puff-piece for the latest darling of the political establishment:

Mr Musk is betting big on batteries. He’s going to make sure we get to the future  — and quickly.

This is what £3.7bn per year gets you.  Couldn’t they at least send Tesla an invoice next time?

Incentives matter, so best not ignore them.

A story was doing the rounds last week that was drawing praise and admiration from various quarters:

The idea began percolating, said Dan Price, the founder of Gravity Payments, after he read an article on happiness. It showed that, for people who earn less than about $70,000, extra money makes a big difference in their lives.

The idea began percolating, said Dan Price, the founder of Gravity Payments, after he read an article on happiness. It showed that, for people who earn less than about $70,000, extra money makes a big difference in their lives.His idea bubbled into reality on Monday afternoon, when Mr. Price surprised his 120-person staff by announcing that he planned over the next three years to raise the salary of even the lowest-paid clerk, customer service representative and salesman to a minimum of $70,000.

If it’s a publicity stunt, it’s a costly one. Mr. Price, who started the Seattle-based credit-card payment processing firm in 2004 at the age of 19, said he would pay for the wage increases by cutting his own salary from nearly $1 million to $70,000 and using 75 to 80 percent of the company’s anticipated $2.2 million in profit this year.

Those doing the praising were generally of a left-wing bent, and some went so far as to say this was a vision of the future and an example for other firms to follow.  Me, I’m not so sure, and I think Mr Price’s company is going to run into trouble over this at some point.

Now I’ll start by saying that Mr Price is perfectly within his rights to distribute his own salary among the workforce in such a manner.  And as I understand he is the owner, hell he can pay them $1m per year to watch TV for all I care.  I just don’t think he’s thought through the implications.  There are several problems which I think will arise, all of them to do with incentives.

The paychecks of about 70 employees will grow, with 30 ultimately doubling their salaries, according to Ryan Pirkle, a company spokesman. The average salary at Gravity is $48,000 a year.

His idea bubbled into reality on Monday afternoon, when Mr. Price surprised his 120-person staff by announcing that he planned over the next three years to raise the salary of even the lowest-paid clerk, customer service representative and salesman to a minimum of $70,000.

Firstly, if the lowest paid clerk is now on $70,000 per year there is almost no incentive for anyone to grow professionally by taking on more responsibility, tackling harder tasks, volunteering for the shit jobs, and putting in additional hours to increase their own value within the company.  If the clerk is on $70k, why would somebody from the middle-ranks with marketable skills and a higher education apply themselves if they were on similar wedge, or work extra hard just to earn $80k when by loafing he can earn $70k?  Better to take it easy and spend more time with the family.  And this will be made worse by the plan being phased in over 3 years.  Who is going to be interested in the new night manager role now the main incentive to take the crap hours is gone?  This will be felt even more keenly in sales: how much effort is the junior salesman going to put in now he’s on $70k per year?

Secondly:

Hayley Vogt, a 24-year-old communications coordinator at Gravity who earns $45,000, said, “I’m completely blown away right now.” She said she has worried about covering rent increases and a recent emergency room bill.

“Everyone is talking about this $15 minimum wage in Seattle and it’s nice to work someplace where someone is actually doing something about it and not just talking about it,” she said.

From the above quotation I think it is safe to assume that Hayley Vogt will never leave Gravity of her own free will because she is now paid 55% above market rate for being a communications coordinator.  Nobody above her is going to leave either, so it is an equally fair assumption that as long as Gravity exists, Ms Vogt – currently 24 – will be a communications coordinator.  So by the time she’s 40, Ms Vogt will still be a communications coordinator.  Do you see the problem here?  She’s undergone no professional growth.  She can’t be promoted internally because her superiors – also being paid well over market rate – will hang onto their jobs for all they’re worth.  So if Gravity goes tits-up in the future, Ms Vogt will find herself on the job market not only facing a severe cut in her income but also competing against people much younger from whom she cannot differentiate herself in any meaningful way.  For those on the lower rungs doing jobs which don’t require much skill or training, and thus youth, energy, and flexibility are major selling points, this could be a problem.

Of course, many people doing those kind of jobs aren’t looking for a career anyway, they just want to pay the bills.  Which brings me onto the third problem: with nobody leaving, how do you get rid of the underperformers?  Normally these people would leave because, having been passed over for promotion and higher pay for a few years running, want to try their luck somewhere else.  Now Mr Price is stuck with them.

Finally, how does Mr Price intend to bring new talent into the company?  Nobody is leaving, so that means only newly created positions will bring outsiders in.  Aside from not being a very healthy environment for any company, this creates an additional problem.  If a new position is created and advertised, every store clerk within 200 miles is going to apply for the job if it pays $70k per year.  Having an avalanche of CVs hit your desk is not helpful. When I worked in Dubai we advertised for an assistant accountant position and put an advert up somewhere.  Even though we were a small, unknown company we were receiving CVs by the thousand, mostly from Indians.  The problem was almost all the CVs were from labourers, forklift drivers, and other unskilled workers chancing their arm having seen a “big” salary (and indoor work) on offer.  Sifting through them all, trying to identify who was genuinely interested in the position and had the matching skills was a hopeless task.  Gravity Payments is going to find themselves with a similar problem: how many of the tens of thousands of CVs they will receive are from people who aren’t motivated solely by the incredible pay and couldn’t care less about the actual job?  And even those who are qualified, are they confident they will secure a suitable candidate from a shortlist all of whom are overwhelmingly motivated by the pay above everything else (and know they can likely loaf once they get in)?  HR departments in major oil companies will recognise this problem.

Despite his obvious success in business thus far, having set up Gravity Payments at he impressively young age of 19, I can’t help think Mr Price is still a bit wet behind the ears:

“Is anyone else freaking out right now?” Mr. Price asked after the clapping and whooping died down into a few moments of stunned silence. “I’m kind of freaking out.”

Whilst I might be persuaded that executive pay is too high in the US and the disparity between the lowest and highest paid is too wide in some companies, progressive pay scales are used and market rates adhered to for good reasons which might not be immediately obvious.  As Tim Worstall is fond of telling us, incentives matter.  Mr Price might end up learning this the hard way.

This will have Ronald quaking in his boots!

Michael Jennings alerts me to a new business idea in Russia:

Russia has a grand plan to launch its own, patriotic fast-food chain to rival Western burger joints like McDonald’s and rescue its struggling farmers.

The $18-million initiative stems from brothers Nikita Mikhalkov and Andrei Konchalovsky, two of the country’s most famous film directors.

Both have poured scorn on Western influence in the past and are known for their close ties to the Kremlin.

The brothers have already picked a name for their brainchild: “Let’s Eat At Home!” (Edim Doma!)

Andrei Vorobyov, the governor of the Moscow region, has welcomed the project.

“It’s a good idea,” he said. “Small businesses and chains create jobs, and the food produced on our territory is perfectly suitable for these cafes.”

The deputy chairman of the regional government, Denis Butsayev, has already hailed the proposed chain as a “McDonald’s killer.”

“The goal of this project is to promote import substitution and create alternatives to Western fast-food chains,” the brothers wrote in their proposal, quoted by the Kommersant daily.

The brothers want to open 41 cafes in the Moscow and Kaluga regions, all supplied by local kitchens and factories. Up to 40 percent of the menu will be made from regional produce.

This is dumbassed on so many levels.  Firstly, as I mentioned here:

The primary beneficiary of McDonald’s in Russia are those Russians wishing to purchase its products, who number in the millions.

The secondary beneficiary of McDonald’s in Russia are the Russian owners (it is a franchise), managers, employees, and suppliers whose income derives from its operations.

Pinching customers from McDonald’s is unlikely to result in a boost for Russia at the expense of the west.

Secondly, Russians eat at McDonald’s because they like McDonald’s.  They don’t eat at McDonald’s because they cannot find cafes selling pel’meni and borsch to sate their hunger.  As has been proven in any country you care to mention – but let’s take France as a good example – you can easily find an alternative burger which is almost always better.  But something about the whole McDonald’s setup, i.e. not just the food, attracts people.  I suspect eating in McDonald’s for young Russians is, like in France, seen as a cool thing to be doing.  Good luck getting the kidz to buy into the idea that ordering buckweat washed down with kompot is now cool.  As the article points out:

McDonald’s remains hugely popular among Russians, despite a number of recent setbacks amid deepening tensions between Russia and the United States.

Thirdly, given the low probability of being able to compete with McDonald’s, if this scheme gets lanched it will likely take business away from the dozens and dozens of small, independent stolovayas and cafes that already sell Russian food using locally-sourced produce.  The knock-on effect will therefore be felt by their existing suppliers and probably result in some of the current alternatives to McDonald’s going out of business.

Fourthly, if prominent Russians wants to “rescue its struggling farmers”, “create alternatives to Western fast-food chains”, and “create jobs” then they might want to start by getting rid of the brazen gangsterism, thuggery, and corruption that infest the entire country and prevent these things happening of their own accord.  But no, this is Russia so:

The $18-million initiative stems from brothers Nikita Mikhalkov and Andrei Konchalovsky, two of the country’s most famous film directors.

Mikhalkov and Konchalovsky had reportedly called on Russian President Vladimir Putin to help secure government backing for the project in light of its “sociopolitical character.”

According to Kommersant, Putin had personally ordered Deputy Prime Minister Arkady Dvorkovich to “examine and support” the proposal.

Under the program, 70 percent of the sum is provided by banks under a state-guaranteed loan, with the remaining 30 percent coming from private investors.

State-controlled Sberbank has been touted as a potential lender.

[The government] rejected the brothers’ request for direct funding at a government meeting late on April 9, suggesting that the would-be entrepreneurs should instead seek funding through Russia’s existing scheme to support small businesses.

Instead we have two politically-connected multi-millionnaires looking for state-financing of their pet project whose major selling point is that it represents the type of crude patriotism that is currently in vogue with the President.  And although they appear to have had their appeal for direct funding rejected our multi-millionnaires, who were able to meet with Putin in person, have been advised to raid the state fund set up to assist small businesses.

I’m wondering how this project represents anything different in Russia, let alone an improvement.