Category Archives: Business and Economy

Acquire the bookstore chain to get the digital reading device

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With the recent bankruptcy of Borders (see some reaction here), who knows how long Barnes & Noble might be able to hold on (and the news wasn’t good last August). But at least one businessman thinks B&N would make for a worthwhile purchase:

Barnes & Noble is well-situated to get a piece of the action: the company claims that the Nook already accounts for one-quarter of the e-book market. (Amazon’s rival Kindle product accounts for over 70 percent, although neither company discloses actual sales figures.)

Candidly, the Nook’s success is important, because more competition in the space will help keep prices in check and spur innovation. Sony also has a credible market entrant with its Reader product.

Malone’s company Liberty Media offered $17 per share Thursday — or about $1 billion — for a 70 percent stake in Barnes & Noble, a 20 percent premium over the Thursday closing price. Investors greeted the news warmly, pushing Barnes & Noble shares up over 30 percent — yes that’s higher than Malone’s bid! — in midday market action Friday. As a result, Malone will likely have to sweeten his offer to at least $20 per share.

In a statement announcing the offer, Liberty described Barnes & Noble as being at the “forefront of the transition to digital.”

While there is a lot of talk about how all of this affects bookstores and reading, I would love to see more about what this might mean for all brick-and-mortar businesses. The saving grace for Barnes & Noble is this particular digital reader which is well-positioned in a burgeoning market. In the near future, the B&N stores might disappear even as corporate name goes on through this device.

More broadly, how many other companies are actually creating digital content or devices rather than simply putting a Facebook page together and slapping the Facebook logo on all of their commercials?

Finding community at the office

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In a new economy where workers are “free agents” or “portfolio workers” among a relatively high unemployment landscape (at least in the United States), could workers be missing community life at work as well as the regular paycheck?

In the late 1990s the world of work moved away from security and towards freedom.

A job for life was out. Work became splintered, spliced and diced: contract, sub-contract and casual labour, part-time, sessional and seasonal, project-based, freelance and temp work emerged, as the frequencies and rhythms of work became subject to the vagaries of the economy.

Richard Sennett, a professor of sociology at the London School of Economics, described it as ”new economy” work – the work of flexible capitalism where ”workers are asked to behave nimbly, to be open to change on short notice, to take risks continually”…

The experience of being a highly mobile new economy worker is as Sennett says: being continuously exposed to risk can eat away at your sense of character. You are always ”starting over”. And just like your employment, your witnesses are not long-term. The writer Karen Blixen (better known by her pen name, Isak Dinesen) used this line for one of her characters: ”I was constantly in flight, an exile everywhere.”

Sometimes flight cannot be helped. But community helps stave off the feeling of being exiled, of drift.

Some interesting thoughts here. As I have talked to college students, the new economy jobs are what they want: they want to be able to use their skills, to flourish (which may be different than being happy), and to be able to set their own pace and priorities. Of course, these goals can be difficult for many to obtain in the early years after college. Additionally, many of them do want to find a community to be a part of, a place where they can fit into and still be somewhat autonomous. So perhaps this commentary is really about a larger issue: how do modern people who seek after individualistic goals also find enough community so that they don’t become alienated from society? And are there groups or companies that do this better than others?

This reminds me of what one might hear from college faculty: the job of a professor offers a balance between these two goals. We enjoy our jobs because it offers freedom (to study what we want, to have some say over our own schedules) but also places us within an academic context that runs on a very predictable calendar with regular interaction with others.

The commentary also notes the role technology can play: we can be apart from others but are seemingly connected through devices like cell phones or platforms like Facebook. But these seem less like “true” community and more like community of our own choosing, calling whom we want or making “friends” with whom we want. This is quite different than what might go on in an office:

Yet there can be a joyous, awful, wonderful cacophony when you don’t get to choose – the possibility of a richer, messier, wider community; a mosaic of quirks, histories, personalities. Look around your office – they are all there.

This not getting to choose, however, seems to go against all modern sensibilities: it is one thing to put up with others but it is another to do this without any other options.

The quick reference to television show The Office is intriguing. Throughout the course of the show, there is little indication that the employees want to leave. At the same time, there are very few (if any?) moments where the workers make a conscious decision to stay because they really like the community of people there (versus liking one or two people). It is too bad we don’t see more of these characters given options where they could leave but they choose not to because they realize who they are living behind. Perhaps this is too much to ask: if workers are given brighter opportunities elsewhere (money, benefits, chance for advancement, etc.), perhaps they will always go for that over any community ties.

Lobbynomics v. empirical data

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Ars Technica points to a UK report asserting that “lobbynomics” rather than empirical data drives much of the intellectual property policy debate:

There are three main practical obstacles to using evidence on the economic impacts of IP…[3] Much of the data needed to develop empirical evidence on copyright and designs is privately held. It enters the public domain chiefly in the form of “evidence” supporting the arguments of lobbyists (“lobbynomics”) rather than as independently verified research conclusions.

My own experience in dissecting IP developments supports this view.  It is surprisingly difficult to find “hard data” about copyright piracy, leaving any “debate” to a shouting match between proponents of bald assertions.

We need better data, and we all need to be more circumspect (and humble) before drawing sweeping conclusions from the little that is available.

Righthaven class action?

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Ars Technica is reporting that one Righthaven defendant is “launching a class-action counterclaim against Righthaven”:

BuzzFeed…quickly moves from a defense of its own conduct to an attack on the conduct of Righthaven, and it asks the judge to put every Colorado defendant into a class which can pursue Righthaven for extortion-style behavior.

I’m not sure that Righthaven’s behavior should be turned into some sort of perverse-reverse legal payday for defendants, but I suppose this was an inevitable development.

Federal government looking into redlining practices

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During the economic crisis of recent years, mortgages have been more difficult to obtain for many compared to what was available in the mid 2000s. With these tighter lending practices, the US government is looking deeper into possible redlining practices by lenders:

At the Justice Dept., a new 20-person unit dedicated to fair lending issues received a record number of discrimination referrals from regulators in 2010 and has dozens of open cases, according to a recent agency report. Potential penalties can reach into the millions of dollars. “We are using every tool in our arsenal to combat lending discrimination,” Thomas E. Perez, the assistant attorney general for the Civil Rights Div., told a conference of community development advocates in Washington in April.

To some banks the crackdown has come as a surprise, say consultants and lawyers representing financial institutions in discussions with regulators. Like Midwest BankCentre, some lenders are being cited for failing to operate in minority and low-income census tracts near their branches, even when they have never done business there before. “If you put your branches only in upper-income areas, the regulators are not accepting that anymore,” says Warren W. Traiger, a lawyer at BuckleySandler in New York, which advises banks on fair lending issues.

Mortgage refinancing activity doubled in white neighborhoods but dropped sharply in minority neighborhoods in a sample of major U.S. cities in 2008 and 2009, according to Paying More for the American Dream, an April study by a group of seven community development nonprofits. “The pendulum has swung back too far the other way,” says Kevin Stein, associate director of the California Reinvestment Coalition in San Francisco, one of the report’s authors.

Several things strike me as interesting about this:

1. As the article notes, this oversight goes back to the 1977 Community Reinvestment Act (CRA). I wonder how the HMDA data, data lenders must report every time someone applies for a mortgage (including factors like race), has been a part of these government efforts. With this data, regulators (and others) can get an idea of who lenders approve for loans and who they do not.

2. The Drudge Report headline about this article,  “Obama admin pushing banks to offer subprimes again…,” seems somewhat misleading. There is little to indicate in this article that the government is telling lenders they should make subprime loans. Rather, it sounds like the government is suggesting that lenders need to make their products available to all people. One adaptation to this in order to account for worse credit scores or other factors might be for the lenders to offer subprime loans in order to protect some of their investment. But there is little indication the government is saying that lenders have to offer subprime loans.

3. Access to credit really is an important issue. If it is not widely available or limited to certain groups, the purchasing power of consumers for goods like houses or cars can be severely limited. And this can then have a large impact on the greater economy.

The sociological origin of the term “McJob”

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With McDonald’s hiring 62,000 employees on April 19, a journalist looks at the sociological origins of the term “McJobs“:

The term McJob first appeared in the summer of 1986, when George Washington University sociology professor Amitai Etzioni wrote a column for the Washington Post decrying the “highly routinized” jobs at fast-food restaurants and their effect on American teens.

“By nature, these jobs undermine school attendance and involvement, impart few skills that will be useful in later life, and simultaneously skew the values of teenagers -especially their ideas about the worth of a dollar,” Etzioni wrote.

He went on to criticize the culture and routine of working at McDonald’s and other fast-food companies, noting that the jobs do not provide opportunity for entrepreneurship like the traditional lemonade stand, or the lessons of self-organization, self-discipline and self-reliance like the traditional paper route.

“True, you still have to have the gumption to get yourself over to the hamburger stand, but once you don the prescribed uniform, your task is spelled out in minute detail,” he argued. “There is no room for initiative creativity or even elementary rearrangements. These are breeding grounds for robots working for yesterday’s assembly lines, not tomorrow’s high-tech posts.”

The article then goes on to describe how McDonald’s has tried to fit back against the term, including a 2007 from “the British arm of the company…to get the Oxford English Dictionary definition changed.”

On one hand, such jobs may not be great and this is what Etzioni was getting at: they generally are low-paying and in many places don’t pay enough to be considered a “living wage.” A work like Nickel and Dimed (a review of the theater version here) portrayed such employees as having difficult lifestyles and little hope for the future. More broadly, we could think of these jobs as emblematic of a larger process of McDonaldization, coined by sociologist George Ritzer, that describes the rationalization of the modern world.

On the other hand, we live in a country that really pays attention to job reports with less interest in what kinds of jobs were actually created. The April jobs figures showed good jobs growth but we could inquire about the quality of these jobs: are they well-paying, sustainable jobs that will pay American workers for decades to come? Or, were the majority of jobs middling to lower-skilled jobs that serve American consumers in the service industry?

In the end, we have a society that is quite dependent on such “McJobs.” The term is unlikely to go away though it clearly applies to a lot more corporations and areas than simply McDonald’s. Just as Walmart tends to get singled out as emblematic of big box stores and suburban sprawl because of its revenue (still at the top of the Fortune 500), McDonald’s size and influence draws attention (Super Size Me, anyone?). But as a society, we could have larger and ongoing discussions about what kind of jobs we wish to hold and to promote. In these discussions, we need corporations like McDonald’s, Walmart, Starbucks, Apple, and others involved to think about the American future.

The decline of men in the American workforce

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The Economist examines some recent figures showing that men, particularly less-skilled workers, have lower levels of participation in the labor force:

The decline of the working American man has been most marked among the less educated and blacks. If you adjust official data to include men in prison or the armed forces (who are left out of the raw numbers), around 35% of 25- to 54-year-old men with no high-school diploma have no job, up from around 10% in the 1960s. Of those who finished high school but did not go to college, the fraction without work has climbed from below 5% in the 1960s to almost 25% (see chart 2). Among blacks, more than 30% overall and almost 70% of high-school dropouts have no job…

The main reason why fewer men are working is that sweeping structural changes in rich economies have reduced the demand for all less-skilled workers. Manufacturing has declined as a share of GDP, and productivity growth has enabled factories to produce more with fewer people. Technological advances require higher skills. For the low-skilled, low demand has meant lower wages, both relative and absolute. This in turn reduces the incentive to find a job, especially if disability payments or a working spouse provide an income.

Men have been hit harder than women by these shifts. They are likelier to work in manufacturing; women have been better represented in sectors, such as health care and education, where most job growth has taken place. Women have also done more than men to improve their academic credentials: in most rich countries they are likelier than men to go to university.

There is a lot to think about here. One reason that the article cites for this trend is the numbers of women (compared to men) who are getting college degrees. This has been noted by others (with some interesting data from the White House here) and it really does seem to be a sizable shift in American society.

A few other questions come to mind:

1. Could politicians promote policies that specifically target less-skilled male workers?

2. What are some of the broader consequences of this trend, such as the impact on community life or family life?

3. How could schools, particularly high schools and colleges, tackle this issue?

More appealing measurements of the American economy

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The Economist looks at several ways in which the US federal government calculates certain economic statistics that might make our economic situation look most appealing. Here is their conclusion:

Conspiracy theorists might conclude that the American government is trying to nip and tuck its way to attractiveness. The persistent downward revisions to GDP growth do look suspicious. But in other areas American number-crunchers seem to believe that their measures are better; indeed, history shows that European statistical agencies have often later adopted their methods. The world’s biggest economy is also much less bothered about the international comparability of its numbers than smaller European countries. True, when the statisticians at the IMF or the OECD produce comparative data, they do so on the basis of standardised definitions. The snag comes if investors fail to grasp that official national figures can show the American economy in an overly flattering light.

Complex numbers, such as these, can be difficult to operationalize or calculate but they also need to be interpreted. Economic experts may know about these methodological differences and can account for these but I’m guessing that the average citizen of the US or European countries has less of an idea about what is going on.

Another US figure that has recently attracted methodological attention is unemployment. While the US unemployment rate has undoubtedly risen in the economic crisis of recent years, it has its own quirks. One part that has been discussed in that people have to be actively looking for work in the last 4 weeks and once people move beyond that cut-off point, they are no longer counted as being unemployed. Another area involves those who work less than full-time but want full-time work and could be classified as “underemployed.” (You can see how the Bureau of Labor Statistics calculates unemployment here.)

(It is also interesting in this story that they compare the calculation of these statistics to cosmetic surgery, apparently an important marker of American culture.)

Quick Review: Nickel and Dimed (theater version)

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I recently saw Nickel and Dimed in a local theater production. The text is a staple of Introduction to Sociology classes but I was not aware until recently that the 2001 book had been adapted for the stage. While the New York Times reviewed the play in its 2006 New York City debut, I have a few thoughts about the production I saw:

1. Like the book, the play follows Barbara to her three new professions that pay minimum wage (or a little higher): working as a waitress at Kenny’s, working as a housecleaner for a maids company, and working on the sales floor at Mall-Mart. From what I remember of the book, the basic story is the same: Barbara decides to do this in order to understand the experiences of the American working poor, finds that the work is physically taxing and also takes time to master, and concludes that such a life is quite difficult and unfair.

2. Besides Barbara, the key characters are some of her co-workers. These people are often caught in dead-end jobs that offer little money and few or no benefits. With nowhere else to go, some of the coworkers doggedly follow the rules in order to maintain their jobs, others rebel a bit, while others show Barbara compassion that she was not expecting to need. In the final moments of the play, we hear about some of these workers have fared in the long run even as Barbara has returned to her cushy life.

2a. One of the more interesting scenes from these co-workers comes toward the end of the play when her Mal-Mart manager speaks directly to the audience for a few moments. As a manager, he says “the numbers don’t lie” and suggests that there is little that can be done to improve work for he or his employees as the prices dictate the wages and benefits. Of course, he is suggesting that the problem extends higher up in the company.

3. One of the fun parts of the evening was thinking about how the audience was reacting to these scenes. Barbara plays up some of the class conflict ideas and says some uncomfortable things, particularly to a fairly wealthy, suburban crowd.

4. This particular production included four musical numbers which I don’t believe are part of the typical stage production. While I am not a fan of musicals, I thought these numbers added something to the show. I always find it interesting to hear cheerful-sounding numbers about less-than-cheerful themes such as unjust working conditions.

5. Several of my students saw the show and their comments to me suggested that the play hit an emotional nerve in a way that a lecture on social class in America in my Intro to Sociology course has a hard time doing. In additional conversations, we found that my students and I have worked in some similar jobs but the difference was that we knew that we had better educational and career options down the road.

Overall, I enjoyed thinking about these topics in a new way though the theater. Now that Ehrenreich’s book is 10 years old, is there another book that was recently published or that is in the works that can address some of the same issues while attaining the popularity of Nickel and Dimed? That might be a tall task but such works help keep sociological discussions alive in the public sphere.

(I also found that Ehrenreich’s personal page for the book includes positive reviews from a number of sociologists.)

McMansions and the “inconspicuous consumption” of the 1990s

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One aspect of McMansions that is frequently discussed is the tie between such houses and larger patterns of excessive consumption. Here is a quote from a CEO of a Pennsylvania construction company that does just this:

“The new-home industry will have to respond to the market for smaller lot size and efficient home construction,” Wagman said. “We’re past the building of McMansions. That type of inconspicuous consumption is so ’90s.”

To be honest, I didn’t quite know what this term “inconspicuous term” meant. I know what conspicuous consumption as it is a common sociological term first introduced by Thorstein Veblen in his 1899 work The Theory of the Leisure Class. So I went digging around Google for the meaning of this term and how it relates to Veblen’s term. This piece from The Economist in 2005 argues that conspicuous consumption is now much more complex in wealthy, Western societies and so inconspicuous consumption still shows off wealth but in more subtle ways:

As well as traditional conspicuous consumption and “self-treating”, Ledbury Research identifies two other motives that are driving buying by the rich: connoisseurship and being an “early adopter”. Both are arguably consumption that is conspicuous only to those you really want to impress. Connoisseurs are people whom their friends respect for their deep knowledge of, say, fine wine or handmade Swiss watches. Early adopters are those who are first with a new technology. Silicon Valley millionaires currently impress their friends by buying an amphibian vehicle to avoid the commuter traffic on the Bay Bridge. Several millionaires have already paid $50,000 a go to clone their pet cat.

Who knew that spending lavishing to show off one’s wealth and status had become so difficult? In 2008, Virginia Postrel says something similar:

The shift away from conspicuous consumption—from goods to services and experiences—can also make luxury more exclusive. Anyone with $6,000 can buy a limited-edition Bottega Veneta bag, an elaborately beaded Roberto Cavalli minidress, or a Cartier watch. Or, for the same sum, you can register for the TED conference. That $6,000 ticket entitles you to spend four days in California hearing short talks by brainy innovators, famous (Frank Gehry, Amy Tan, Brian Greene) and not-so-known. You get to mingle with smart, curious people, all of whom have $6,000 to spare. But to go to TED, you need more than cash. The conference directors have to deem you interesting enough to merit one of the 1,450 spots. It’s the intellectual equivalent of a velvet rope.

As for goods, forget showing off. “If you want to live like a billionaire, buy a $12,000 bed,” says a financial-planner friend of mine. You can’t park a mattress in your driveway, but it will last for decades and you can enjoy it every night.

So we’ve moved away from garish displays of spending to more exclusive but somewhat more hidden ways to display wealth.

If we return then to the quote from the construction CEO, what exactly was he getting at? A few thoughts:

1. If he is adhering to a similar definition as The Economist piece or Virginia Postrel, then he is suggesting that McMansions were a more subtle display of wealth. But it seems that a lot of the criticism of McMansions comes from the idea that the owners are trying (desperately) to flaunt their wealth in the form of their large, garish house. So is McMansion buying a conspicuous or inconspicuous act? Might there be different opinions if we talk to the buyers/owners of such homes (after all, people need to live somewhere) versus McMansion critics (but people don’t have to live in mass-produced, poorly designed homes)?

2. He suggests that the inconspicuous consumption of McMansions took place during the 1990s. The late 1990s is where the term McMansion started to take off but the houses themselves seemed to receive the most attention from roughly 2000 to the start of the current economic/housing crisis. Perhaps the 1990s get singled out here because of a good economy in the latter half of the decade but much McMansion building and purchasing was still taking place until recent years.

(3. I wonder if he simply didn’t mean to say “conspicuous consumption” and said “inconspicuous consumption” instead.)

(Amazon also has a 1997 book that uses this term as a title: Inconspicuous Consumption: An Obsessive Look at the Stuff We Take for Granted, from the Everyday to the Obscure. Interestingly, it is written by Paul Lukas, the mind also behind Uni Watch, a blog with the tagline of “The Obsessive Study of Athletics Aesthetics.” It appears Lukas is still writing about the same topics for ESPN.com but I haven’t seen his material featured in years. When it was more prominently featured, I would read his thoughts quite often.)