Thursday, March 31, 2016

Welcome to Frugal Airline

Frugal Airline's fare structure is very simple: we charge by the pound/kilo.
Are you tired of shrinking airline seats and aisles, and being charged fees for everything that once was included in the ticket fee? If the answer is yes, you may be ready for a truly no-frills airline: Frugal Airline.

According to its sales brochure, Frugal Airline is licensed and certified in Afghanistan, and flies a variety of international routes on DC-3s and recent-vintage jet aircraft.
Frugal Airline doesn't pull any punches about its fare structure and amenities.Here is an excerpt from the sales brochure:
"Frugal Airline is in the business of transporting cargo. Our fare structure is very simple: we charge by the pound/kilo. So if you want to figure your fare, step on the scales to weigh yourself, weigh your baggage, and multiply the total by our per-pound/kilo cost. Easy!
As far as we are concerned, human beings are self-propelled sacks of liquid; a human passenger is no different from a load of lithium-ion batteries, except the human passengers require costly breathable air and a latrine. So we're actually giving passengers a break by charging them the same rate as we charge for grapes, parcels and whatever else somebody pays us to stuff into the cargo hold.
Some people complain our policy isn't fair because they were born big-boned. We here at Frugal Airline don't deal humanity's genetic or lifestyle cards--we transport cargo, period. We can't help it if somebody else was born small and slim. Our complaints department is a trash can with a slot in the lid. As we keep saying: we transport cargo, period.
We prefer to think of ourselves as a family-friendly airline, because infants will cost you next to nothing, and your rug-rats are much cheaper than full-grown adults.
Here at Frugal Airline, we believe in a flat fee--no extra services, no extra fees.
We have two classes: for our first class, we've bolted down a few old Barca-Loungers in the front of the cabin. The rest of the cabin has straps dangling from the ceiling and handholds welded to the floor; we provide cargo straps for those who want to tie themselves down (something we recommend during takeoff and landing). We provide lightweight cushions for those who prefer to sit on the deck rather than stand; the cabin floor is marked with the aisles and each passenger's designated area.
Each aircraft has a couple of latrines; in older aircraft, this might be rather basic. We provide one can of air freshener per flight.
We can't promise free snacks on every flight, but the ground crew makes a good-faith effort to see what's recently expired or still edible in the local marketplace. This could be anything from fried grasshoppers (crunchy!) to roasted slices of goat (if you're lucky) or expired candy bars.
As for entertainment, we reckon your fellow passengers will provide plenty of distraction if not outright entertainment.
Our beverage policy is that liquids are heavy, so bring your own and pay the freight.
Our flight attendants--well, we don't have any. Our cargo handlers are on hand to manhandle any abusive drunks or settle any disputes between passengers. Just stay in your designated area and the flight will go smoothly.
Just to keep things simple, our fares must be paid in cash, preferably major currencies or gold/silver.
On occasion, one of our older pilots might drift off to sleep and overshoot the destination. Sometimes we change routes to avoid active surface-to-air missile radar or weather hazards, but remember, we don't get paid if our aircraft go down, so we're very careful about maintenance and safety. We guarantee your safe delivery to your destination, but not the arrival time.
If you want to complain, drop your complaint right in the trash can slot. If you want to sue us, send the paperwork to our box in Kabul, where the paper will come in handy to start cooking fires.
Here at Frugal Airline, we like to think that we don't just provide you with the cheapest fares--you get an adventure thrown in for free."
Happy April Fools Day!

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Wednesday, March 30, 2016

Higher Education Is Morally and Financially Bankrupt

A system that piles debt on students in exchange for a marginal or even zero-return on their investment is morally and financially bankrupt.
Every once in a while you run across an insider's narrative of a corrupt, morally bankrupt sector that absolutely nails the sector's terminal rot. Here is that nails-it narrative for higher education: Pass, Fail: An inside look at the retail scam known as the modern university.
Here are excerpts of the article, which was published in Canada but is equally applicable to higher education in the U.S.:
A university degree, after all, is a credential crucial for economic success. At least, that’s what we’re told. But as with all such credentials—those sought for the ends they promise rather than the knowledge they represent—the trick is to get them cheaply, quickly, and with as little effort as possible. My students’ disaffection is the real face of this ambition.
I teach mostly bored youth who find themselves doing something they neither value nor desire—and, in some cases, are simply not equipped for—in order to achieve an outcome they are repeatedly warned is essential to their survival. What a dreadful trap.
One in particular matches perfectly with the type of change I’ve observed on my watch: the eradication of content from the classroom.
All efforts to create the illusion of academic content are acceptable so long as they are entertaining, and successful participation requires no real effort and no real accountability.
Remove your professor hat for a moment and students will speak frankly. They will tell you that they don’t read because they don’t have to. They can get an A without ever opening a book.
But don’t worry—you won’t go bust because of this failure, not in the modern university. So long as your class is popular and fun, you’ll be favoured by the administration and probably receive a teaching award. This, even though your students will leave your class in worse condition than they entered it, because you will have pandered to their basest inclinations while leaving their real intellectual and moral needs unmet.
There is no clearer example of administrators’ contempt for faculty. But there is also no clearer example of their contempt for students.
As money is siphoned from academic programs through attrition, it is channelled into a host of middle-management positions.
From 1979 to 2014, central administration and staff ballooned by three and a half times, while the size of the faculty merely doubled.
Parents, students, and governments keep supplying them with capital, assuming there will be a genuine return on investment. But since the institution no longer produces anything, no such return is forthcoming.
Spending on the student services sector in Canadian universities increased an incredible six-fold between 1979 and 2014.
The student services cabal is no longer there to support faculty in their work of educating students “but to compete with them to define the student experience.”
Insiders are quiet after they read this, because they know it's true.
The financial burden created by the higher education cartel is immense and expanding:
To mask the enormity of the sums squandered on "education" that has little measurable results, the federal government has purchased most of the debt:
No inflation here--just a 137% increase in 15 years:
A system that piles debt on students in exchange for a marginal or even zero-return on their investment is morally and financially bankrupt.
We can do better and must do better, which is the subject of my book The Nearly Free University and the Emerging Economy.

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Tuesday, March 29, 2016

How Many Tech Startups Are Empty Shells?

How many startups are empty shells filled with glitzy PR designed to appeal to VC newbies?
It's widely accepted that most tech startups will fail. Perhaps the core business proposition didn't pan out, or the execution was flawed, or the initial success foundered on poor management, or another startup scaled up fast enough to suck up all the oxygen in the room--there are many reasons a startup with a fair chance at success can fail.
But what if many if not most of the current batch of startups have zero chance of succeeding because they're nothing but empty shells of gaseous public relations? Coder Daniel C. recently shared his experiences interviewing at numerous tech firms, both established firms and startups.
Here are Daniel's observations:
When I first got into the high-tech field, I thought it was the only place that was safe, in other words, I really thought everyone was innovative and cutting edge. But now I am seeing something you probably have already seen being in the S.F. Bay Area, which is that a lot of companies in the high-tech sector are clueless and full of it.
I have recently been on several job interviews with high tech startups and they are the wierdest interviews. They give me a bunch of blather about their company, but they don't ask me any substantial questions about my technical expertise. Then they tell me within 24 hours that I just don't have enough experience as they would like.
Many of these companies reach out to me like I am their buddy, no formal introduction, "hey, dude, can we talk?" Some of them like to use the F word in their outreach, which totally turns me off. I think they have innovative confused with lack of professionalism.
Of the ten-plus job interviews I have been to in the high-tech field, only two actually gave me a coding challenge to prove my skills. I actually have a lot of esteem for those two companies (one of them is in London) because at least they assessed my hard skills via practical application. The rest I have no clue how they are coming to their conclusions based on a unfocused ten-minute talk about nothing.
In fact, I am noticing most of these companies are not even reviewing my portfolio, which is leading me to develop questions for them such as "Which one of my apps did you enjoy most?"
Anyway, I shared this with you because if you have any knowledge of anything similar, I would love to see an article on it. I have a hunch a lot of these companies lack direction and are probably not really drumming up a lot of business. A lot of good public relations, but not necessarily a steady stream of clients.
Thank you, Daniel, for sharing your experiences and for raising a number of key points.
The key metric for startups now is not revenues or paying clients--it's their valuations--as in Unicorn valuations of $1 billion or more.
The number of 'unicorns' in tech is booming (Business Insider, Oct. 2015)
But valuations that aren't based on revenues, paying clients and profits are notoriously prone to collapse. It is far easier to convince a venture-capital wannabe with millions of investor dollars to fund a PR-heavy startup than it is to actually build a business with paying clients, rising revenues and profits.
No wonder we're seeing accounts like this:
Bubbles always seem permanent to those living within them. How many startups are empty shells filled with glitzy PR designed to appeal to VC newbies anxious to find the next Facebook? Perhaps far more than the financial media cares to admit.

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Monday, March 28, 2016

Why the Corporate Media Hates Sanders (and has a Love/Hate Thing with Trump)

Always remember who's selling whom, and who's in charge.
Everyone who isn't willfully blind knows that the Corporate (mainstream) Media doesn't give the same coverage to Bernie Sanders as it does to his opponent, Hillary Clinton. Bernie's rallies go unmentioned, his victories are given short shrift and his personal narrative--practically ideal for media glorification--is mentioned in passing, if at all.
A media professional clued me into why the Corporate Media hates Bernie and will move Heaven and Earth to defeat him: Sanders is the only candidate who is seriously promoting campaign finance reform.
When a Super-PAC raises $100 million for Hillary, Jeb, et al., where does 90% of that money go? To the Corporate Media. Corporate Media gorges on political media buys every two years, and increasingly depends on this feasting on Super-PAC money for its outsized profits.
As more and more advertising dollars flow to digital media (online search, Facebook, etc.), traditional media dominated by a handful of corporate giants needs the massive influx of campaign dollars to offset its stagnating revenue model.
My source notes that there are rarely any discounts for campaign media buys--the super-PACs and candidate's campaigns pay full pop, and typically pay in cash: no 90 days receivables for campaigns.
Political campaign buys are almost pure profit, as there is minimal sales effort required and the campaign/super-PAC is paying full freight.
Real campaign finance reform would gut Corporate Media's profits. No wonder the Corporate Media downplays Sanders' campaign, his personal integrity and his chances to become president.
As for the firewall that supposedly divides editorial from advertising: it's there for show, of course, and everyone in the business solemnly declares it's a Great Wall that is never breached, but the reality is the editorial staff know very well who butters their bread--and it sure isn't the folks getting free media coverage when their competitors are buying tens of millions of dollars in advertising.
Nobody has to openly state that big advertisers are not going to get negative coverage; editorial staff know better than to even propose such a self-destructive notion. Stories are either buried ("this one needs more research") or they are never proposed due to self-censorship by editorial staff worried that their head will roll in the next downsizing.
The Corporate Media has a love/hate thing going with Trump: the editorial side (i.e. the newsroom) loves Trump, because readers /viewers /listeners will tune in just to see what new outrageous, offensive verbiage Trump has blurted in the last 12 hours, but the advert-revenue side hates him with a passion because thanks to his non-stop media coverage, he doesn't need to advertise much in the Corporate Media.
According to this estimate, Trump spent $10 million on advertising and received $1.89 billion in free coverage. Deep State Darling Hillary Clinton spent $28 million (is that all?) on adverts and skimmed $746 million in free coverage; Bernie Sanders also spent $28 million and received less than half of Hillary's free coverage ($321 million)--no bias here, folks, everything is fair and unbiased--and drop-out Jeb Bush spent $82 million and scored $214 million in free coverage.
So the editorial side concerned with attracting eyeballs loves loose-cannon Trump, but the real ruler of the media, the revenue side, hates him most passionately: this skinflint spends almost nothing and gets more free coverage than the rest of the candidates put together.
As you consume the coverage and the advertising this election cycle, always remember that 1) the mainstream media in the U.S. is all corporate-owned, 2) corporations exist to maximize profits, 3) profits flow from advertising, not free coverage, and 4) real campaign finance reform will negatively impact Corporate Media profits.
Always remember who's selling whom, and who's in charge: who is the Deep State selling? Who is the Corporate Media selling? Recall that the the Deep State gives the Corporate Media its marching orders: Hillary regains the momentum (New York Times, et al.)

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Sunday, March 27, 2016

Another Reason Corporate Profits Will Plummet: The Managerial/ Professional Class Is Burning Out

What no financial analyst dares confess is the corporate profits they cheer every quarter have come at a cost that many Americans will soon be unable to bear.
If you work for Corporate America in a managerial or professional capacity, you know all about burnout, because you see it all around you or are experiencing it yourself. Readers describe what they are seeing in the top ranks of S&P 500 corporations, and the stories (anonymous because everyone knows the truth will get them fired/blacklisted) are all about the high personal costs of earning big paychecks by making the numbers--not just revenue but the all-important profits that power the multi-trillion-dollar valuations of U.S. corporations and the stock market that glories in their magnificent and ever-growing profits.
Corporate America depends on this class of workers to reap its stupendous profits: the attorneys, physicians and nurses who churn out the billable work; the CPAs who either cook the books or look the other way when others rig the books to make the company look more profitable than it actually is; the managers who squeeze the line workers to produce more; the software engineers and project managers who are always under deadline and always pressured to use cheaper temps; the Wall Street work-hounds who have to use uppers and other dangerous stimulants to function for 70-80 hours a week, week in and week out; the multitudes addicted to painkillers or other prescription drugs to manage their psychological and physical pain; the working parents whose family life is imploding under the demands of their employers; social workers burdened with ever-larger case loads--the examples are endless.
Even if you don't work in this class, you see burnout all around you: people burned out by crushingly long commutes, by juggling two jobs, or small-business owners resorting to self-exploitation, i.e. working ridiculous hours for little or no pay, just to keep their enterprise (and dream of self-employment) alive.
What no financial analyst dares confess is the corporate profits they cheer every quarter have come at a cost that many Americans will soon be unable to bear. Millions of highly experienced, essential employees of Corporate America, from physicians and nurses to top managers and technologists are either planning to quit, retire, cut their hours or file a workers compensation claim for stress related to their work.
There is a growing body of medical and business-management literature on occupational burnout: Occupational burnout--Maslach Burnout Inventory
A growing body of evidence suggests that burnout is clinically and nosologically similar to depression. In a study that directly compared depressive symptoms in burned out workers and clinically depressed patients, no diagnostically significant differences were found between the two groups; burned out workers reported as many depressive symptoms as clinically depressed patients.
Check out the burnout rate in the most profitable sector of the economy, finance and financial services:
Though no one dares connect rising workloads and corporate profits, isn't it more than coincidence that U.S. corporate profits soared not just when production was offshored and financialization took off, but when workloads increased and "work-life balance" became a buzzword for what was no longer possible?
Many people are lauding corporate efforts to ease stress at the workplace with onsite yoga classes and the like. I call B.S.--what people want is less pressure, more time with their families, and to be treated as human beings rather than interchangeable units of production. Yoga classes and the occasional corporate party don't provide these essentials.
Guess what happens when corporate profits tumble: all the wealthy people at the top of the pyramid lose a lot of money: the executives counting on huge gains from stock options, hedge funds who'd bet the farm on this corporation's "outperformance," and the big institutional owners of the company's stock.
No wonder the pressure on the managerial class is so unremitting and intense: the whole rickety structure of wealth in the U.S. stock market is poised to collapse once profits crater.
There are a couple of ways out for burnouts fleeing Corporate America, but each has its own trade-offs and costs. One is early retirement, another is early retirement plus a low-paying, low-stress part-time job. Another is self-employment in the cash-only economy (One Part of the Economy Is Booming: The Underground/Cash-Only Sector October 9, 2015) or in other sectors open to self-employment.
Financial independence is the American Dream because it gives us the freedom to say Take This Job And Shove It (2:31, Johnny Paycheck).
Unfortunately, the costs of starting and operating a small business are risingdue to junk fees imposed by local government, higher taxes, soaring healthcare insurance costs, etc.:
Many refugees from Corporate America would love to quit tomorrow but as they explore the alternatives, they find that their income will drop from $90,000 or $100,000 to $30,000 or less outside the fortresses of Corporate America and Government.
That means completely reworking the cost structure of one's household: paying off all debt, downsizing expenses not by hundreds of dollars but by thousands, and figuring out ways to develop multiple income streams that the household owns and controls.
It can be done, but it requires a revolution in understanding and financial arrangements. Longtime readers know this is what I have written about for ten years in the blog and in books like Get a Job, Build a Real Career and Defy a Bewildering Economy, which can also be read as a primer for those seeking self-employment.
Of related interest:

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Wednesday, March 23, 2016

What Killed the Middle Class?

If the four structural trends highlighted below don't reverse, the middle class is heading for extinction.
Everyone knows the middle class is fading fast. I've covered this issue in depth for years, for example: Honey, I Shrunk the Middle Class: Perhaps 1/3 of Households Qualify (December 28, 2015) and What Does It Take To Be Middle Class? (December 5, 2013)
This raises an obvious question: what killed the middle class? While many commentators try to identify one killer cause (for example, the U.S. going off the gold standard in 1971), the die-off of the middle class is more akin to the die-off in honey bees, which is the result of the interaction of multiple causes (factors that increase the toxic load dumped on bees and other pollinators by modern agriculture).
Longtime collaborator Gordon T. Long and I discuss the decline of the middle class and other key topics in a new 29-minute video How did that work out for you?
So where do we begin this detective story? With the engine of all real prosperity, productivity. This chart reveals that wages stopped rising with productivity around 1980.
Here's another look at the same phenomenon:
Productivity has been slipping since around 2003: Alan Greenspan:"Productivity is Dead”
Cause #1: declining productivity, which means the pie of real wealth is no longer expanding.
Exhibit #2: middle class wage earners have not received any of the gains.Wages as a percentage of GDP have been falling for decades, with occasional blips up in tech/housing bubbles:
Inflation-adjusted household income has dropped back to levels first reached in the 1980s:
More recently, wages have actually declined, regardless of educational attainment:
Income gains have all flowed to the top 10%, with most of the gains being concentrated in the top 5% and top 1%:
If the middle class didn't receive any of the gains, who did? Corporate profits have soared to unprecedented levels:
Cause #2: all the gains in the economy have flowed to corporations and the top 10% of financiers, managers and technocrats.
But wait a minute--hasn't the rising stock market enriched the middle class?Short answer: no. Middle class household wealth has absolutely cratered since the top of the housing bubble in 2007, and hasn't recovered.
Why? Middle class wealth is based not in stocks but in the family home. The middle class does not own enough financial assets to have participated in the latest stock market bubble, while the majority did not recover the wealth lost in the housing bubble bust. This is the cost of allowing the financial sector to financialize housing and mortgages in the 2000s.
Cause #3: the middle class doesn't own the "right" assets to benefit from systemic financialization and financial speculation.
How about rising costs? The federal agencies tasked with measuring inflation assure us inflation is near-zero. But these measures underweight big-ticket costs like healthcare and higher education, where costs have exploded higher, greatly increasing the burden on the middle class:
Cause #4: soaring costs of big-ticket expenses such as higher education and healthcare. Saving $10 on cheap jeans imported from Asia does not make up for 135% jumps in tuition and college fees, and $100 decline in the cost of a laptop computer does not make up for healthcare insurance and out-of-pocket expenses in the tens of thousands of dollars per household.
Correspondent Kevin K. submitted this article and accompanying note: Colleges with the biggest tuition hikes (my ala mater University of Hawaii-Manoa clocked in with an increase of 137% since 2004.)
"It looks like the article linked above didn't do much research since:
University of California Davis
2004 in-state tuition $5,684
2015 in state tuition $13,951
Percentage increase 145.44 percent"
There is no way middle class households with declining real incomes can pay soaring costs imposed by state-enforced cartels and gain ground financially. If the four structural trends highlighted above don't reverse, the middle class is heading for extinction, the victim of financialization, the glorification of financial speculation via central bank-central state policies, the decline of productivity and rising costs imposed by state-enforced cartels.
Gordon T. Long and I discuss the decline of the middle class and other key topics:

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