There's an interesting book called Kellogg's Six Hour Day by Hunnicutt. Here's the synopsis:

"Kellogg's six-hour day was the pinnacle of a hundred-year process that cut working time virtually in half. Kellogg Management, propelled by a vision of Liberation Capitalism, insisted that six hours would revolutionize society by shifting the balance of time from work to leisure--from economic concerns to the challenge of freedom."

The employees grandfathered into the 30-hour week stayed on it until they retired in the 1980s. A 30-hour week gave employees more time for clubs, gardening, sports, family, etc. When you think about how wealthy we are in, say, energetic terms (useful work extracted from an ox vs cubic meter of natural gas), it's amazing how much time and capital we spend on destructive bullshit like sitting in traffic or paying people to do our taxes because the system is too complicated (we're paying a tax on paying taxes ffs). Just unbelievable how needlessly dumb the world is in light of automation, nuclear power, blah, blah, blah.

The ancient Greeks viewed labor as a necessary evil that got in the way of more enlightened pursuits [1]. This is not to say they condoned laziness, but TPS reports, patent lawsuits, and $ModernBullshit are not the highest forms of civilization. Why we focus on metrics like GDP -- which in no way accounts for quality, or whether the "work" should even be done -- is absolutely beyond me. In the end, complex, industrial civilization is still relatively new compared to the species' time on the planet, so we're still trying to figure this out.

[1] = https://www.jstor.org/stable/6...

This is the chief argument against complex regulations, however well-intentioned. The perfect example is Dodd-Frank here in the United States.

Citibank's CEO noted that Dodd-Frank would "widen the moat" -- that is, give them a competitive advantage because Citibank's large enough to pay lawyers and compliance staff without much impact to the bottom line.

Regional banks -- and we need them to thrive because economic centralization is as bad or worse than political centralization -- have to comply with this regulation too, only it's proportionally more costly to them. Here's what the CEO of M&T Bank in Buffalo, NY said about it:

"Rapidly changing technology in combination with the need for continued expenditure on compliance infrastructure is creating a dual challenge for regional banks. ... Traditional banks are increasingly caught in a vise—they cannot afford to shortchange investment in the mobile and online banking technologies that their clients want, as well as in the cybersecurity that will keep their customers’ information and assets safe from global criminals. Yet banks also have to simultaneously bear the higher regulatory and compliance expenses and decreased revenues brought about by legislation and regulation meant to address the ills of the last crisis. The largest banks, on the other hand, are able to take advantage of their massive size to shrug off the impact of compliance costs, fines and penalties, and still have the wherewithal to invest in the latest technologies. As a result, they are increasingly gaining a competitive advantage over these smaller banks."

There's a provocative and interesting book called The Triumph of Conservatism: A Reinterpretation of American History by Kolko, a socialist. His thesis is that the famous "progressive" regulations of the early 1900s benefited large, established corporations -- essentially they used Congress to create favorable regulatory regimes to stifle competition and upstarts.

This is why you should be extremely skeptical of dense "regulations" drafted by lobbyists working for entrenched companies. If you benefit, it's usually by accident.

Why not? The central bank cartel is conjuring money out of thin air and suppressing interest rates, so "investors" have to seek returns *somewhere*. We tried make-believe internet companies, housing, bonds, commodities, so why not this is, too? Let's also turn them into securities, sell them to public pension funds (which face a massive funding gap and thus desperately need returns), and then have the government bail us out when the whole thing explodes, because moral hazard is missing from your original idea. MURICA!

All snark aside, I'm counting on the computer scientists and engineers to save us from the legal carter, which, like banks, exists to serve its members at the expense of productive society. Hence the bloated tax codes, legal codes, etc. Algorithms seem like the best way to beat the useless rent-seeking bastards at their own game.

In the year 2016, a disturbing amount of human activity is run through Excel instead of proper databases.

A similar study from 2009 tested for errors in various operational spreadsheets and concluded, "Our results confirm the general belief among those who have studied spreadsheets that errors are commonplace." The Financial Times commented on the prevalence of spreadsheet errors in business, saying it's probably a function of training and organizational culture.

I've heard from a few salespeople in the software industry that their biggest competitor in the SMB space isn't $BigCRMCorp, but Excel spreadsheets that have acreted over the years.

The central banks of the world are conjuring money out of thin air and using it to buy stocks, which are ownership claims on real businesses with real assets, made of real materials in a universe dominated by the laws of thermodynamics [1]. Think about this absurdity and the implications for holders of fiat currency.

Therefore, the marginal buyer is increasingly a central bank that can create as much money as it wants, consequences be damned. When this ends, I suspect equities, like most other asset classes, will have a long fall back to reality.

Concurrently, interest rates are artificially low, leading to all sorts of chicanery and malinvestments. Shares of dividend-paying blue chips, such as Microsoft, are bid higher and higher as income-seeking investors search for yield wherever they can. However, the price you pay for future cash flows absolutely matters and determines your return; at current valuations, I suspect there will be a lot of tears for equity holders.

Between the third central bank-induced financial bubble in less than 20 years and Trump/Clinton, I'm starting to think I'm on a bizarro Earth 2 or something.

[1] http://www.reuters.com/article...

Lots of people are incapable of thinking like the owner of a business, and are therefore surprised when things happen, despite it being obvious or inevitable from the perspective of a shrewd businessman. As a corollary, employees of public companies should get in the habit of reading financial disclosures and earnings call transcripts -- management often telegraphs what they're going to do, including outsourcing or layoffs. This puts you in the position of being one of the first passengers to learn that the Titanic has struck an iceberg, so make your way to the lifeboats before the rush.

A few months ago, there was an article about how the IT department at a car rental company was outsourced. Not that I'm glad or anything, but someone paying attention should *never* make a career out of working in the back office of a business like that. The car rental business is tough enough as it is, but Uber/Lyft have added additional pressure.

I work in a compliance function, so "infrastructure as code," Docker, and the rest of that shit make my life so much easier since we can automate large chunks of our security controls and audit work. That's progress. As an owner, having fewer admin grunts means more money to reinvest in higher-return activities (which as an employee you can help drive, if you're so inclined) and/or return to shareholders, who, after all, own the damn business and expect something from it.

But this hard-nosed perspective, for some reason, strikes people as cruel, or you're viewed as the villain or whatever. It's just how the world works and you have to adapt accordingly, even if it's annoying and extra work at times.

Yep, the whippersnappers probably don't realize how profitable local newspapers used to be. Indeed, they were one of Buffett's favorite investments in the early days. From a 1977 WSJ article: "Warren likens owning a monopoly or market-dominant newspaper to owning an unregulated toll bridge. You have relative freedom to increase rates when and as much as you want." [1] When the economics are like that, you can afford prestige journalism and professional reporters.

The WSJ article also notes how Buffett made a killing buying the Washington Post Co. at a significant discount to book value; the company's huge investment portfolio wasn't factored into the stock price at the time. Fast forward several decades, and now Bezos owns the actual newspaper and WaPo brand.

While there are legitimate *technology* companies in Silicon Valley, the ad-delivery/social media "it's 1999 all over again!" outfits for some reason get all the attention. Looking at some of the large employers in the area, you realize a huge number of people earn a paycheck from firms that sell ads, make CRM software, and run social media services (in the red quarter after quarter). It's sort of like the West Coast Wall Street: too many overpaid assholes doing stuff of no useful value to human civilization. (And both groups are enabled by the torrent of easy money from the central banks, which makes all sorts of bullshit possible.)

[1] http://www.rationalwalk.com/wp...

Retail is a brutal industry. Just look at retailers in the U.S. over the last century -- it's like the rise and fall of great empires. Again and again, dominant incumbents are unable or unwilling to innovate and stay ahead...or they blow money on expensive but useless projects like the Sears Tower.

While I don't follow Walmart closely, a few business sources I read summarized the company's recent strategy as cost-cutting and aggressive inventory management (keep fewer items in-store) to generate more free cash for share repurchases.

Share repurchases can absolutely be a productive use of free cash relative to other options, but Walmart needed to aggressively pursue ecommerce and other innovations *years* ago. Some ideas: improved self-checkout, better in-store navigation, easy way to order shit automatically and have it ready for pickup in-store, RFID tags, etc. Creating a hassle-free and brutally efficient way for customers to buy boring shit at good prices -- and defending that position against Amazon and the like -- seems like a better use of shareholder dollars than share repurchases, or Johnny-come-lately-oh-shit-let's-overpay-to-get-something-going acquisitions like Jet.com. At least they're trying something.

Walmart already has the hard parts in place: stores, logistics, leverage over suppliers. But they couldn't handle the pile of front-end code and in-store operations? (And by operations I mean designing stores for order pickup. Reflecting on my visits to Walmart, there's nothing that screams, "Hey, you can order shit online and go to this clearly-marked area in the front of the store for pickup!")

The strategy of aggressive share repurchases seems like slow capitulation in an industry like retail, especially when cost-cutting creates shitty in-store experiences for customers. I used to shop at Walmart, but in recent years the lines have ballooned and there's a non-trivial chance an item I want won't be on the shelf. WHAT'S THE POINT OF B&M STORES IF YOU DON'T KEEP SHIT ON-HAND? Simply put, any dollar savings I get from shopping there are wiped out by the cost in sanity and time.

Exactly. The current SaaS/social media/bullshit.ly bubble is apparent when you examine these companies. In one ear you hear about how "cloud" makes IT operations cheaper. But then a glorified ad delivery platform like Twitter still burns through cash at alarming rates. The business has no moat -- it's a fad at best -- and I think everyone from Google to Twitter will be stung once the impact of widespread adblocking is fully priced into ad rates.

(My gut tells me a correction in the spyware/ad tracking/clickbait ecosystem/cesspool is overdue. This could be recency bias, though: I helped two of my older relatives install uBlock Origin last week. Google has the brains and balance sheet to weather a correction -- Twitter doesn't. Outside of ads, Twitter's only other source of revenue is "analytics," i.e., selling your data to others. But even if the "adblocking effect" doesn't materialize, Twitter probably couldn't survive a drop in ad spend during a recession. My guess is scarce ad dollars are more productively deployed outside of Twitter; as Warren Buffett says, when the tide rolls out we see who's been swimming naked.)

An enterprise is value-destructive to owners if all the sales, R&D, G&A, etc. never amounts to free cash for profitable reinvestment in the business or disbursement to owners in the form of dividends and/or share buybacks. Add to that continued dilution of shareholders and IMHO you're looking at one poorly-run enterprise.

That being said, if an acquirer can bolt the Twitter service onto its existing sales and ops teams, it can probably generate real free cash. Working at Twitter as a peon seems like standing on thin ice -- an acquirer thinking about turning Twitter into a cash flow engine will probably fire 2/3 of the employees, consolidate data centers, etc.

Root cause analysis: central banks and their terrible monetary policies make money too cheap and easy, which leads to grotesque misallocation of resources, bubbles, and painful implosions. Instead letting the market constantly course correct, we effectively subsidize bullshit for a few years, feel good about it, but then have everything explode catastrophically.

Can someone explain to this ol' fogey why anyone wants to own Twitter at $18/share?

A cursory look at the company's recent financials shows it's still losing money. The number of shares outstanding is also increasing, so even if the company manages to generate (real) free cash at some point, you're entitled to a smaller share of it. The entire thing is bizarre -- it's not like Twitter's in a capital-intensive business like aluminum or shipbuilding.

I wouldn't be surprised if Twitter is sold in the not-too-distant future. I suspect a grown-up management team could probably make Twitter profitably generate cash.

Public companies, like republics, end up with the leaders they deserve.

I think the more interesting question is, "Why do boards of directors hire and overpay mediocre CEOs who actively destroy shareholder value?" And why do the shareholders elect board members who do this?

A strong antidote is to a) pay board members minimal cash compensation for their duties and b) ensure board members have a significant portion of their net worth invested in the company they oversee. This rather simply aligns board members’ interests with that of other shareholders. Sitting on a board should not be a cushy job -- it should be a privilege to oversee the management team responsible for making you richer and richer. If enough board members own chunks of the company, then bring in "outsiders" for their perspectives, but always make sure the board collectively has enough skin in the game.

With respect to compensation, I frequently see executive pay associated with bullshitty metrics that are not tied to owners’ total returns or increasing the enterprise’s per-share intrinsic value. When executives are compensated with stock, the cost to owners (share dilution) is frequently obfuscated in the financial reports, or considered income through the use of legal but creative accounting. (Adobe and others were notorious for this chicanery before the dot-com bubble imploded.)

When I consider purchasing shares, I always look at "corporate governance," CEO attitude, and board composition as important qualitative indicators of quality. Frankly I’m shocked by the number of publicly traded enterprises that retain significant earnings, and then piss the money away on failed acquisitions, ostentatious headquarters or skyscrapers, or, in the case of Bethlehem Steel before the bottom fell out of the industry, three separate corporate golf courses -- one for management, middle management, and employees.

This is one of the reasons I’m fond of dividends: I don’t trust many CEOs to smartly allocate capital to generate satisfactory rates of return. It takes a special sort of person to either sit on cash for extended periods until a truly outstanding opportunity presents itself, or just admit that the enterprise has exhausted sensible options for capital redeployment, so time to bust out the dividends and share repurchases.

The topic of corporate governance seems to be in vogue at the moment. Just last week, several CEOs and asset management firms released an open letter advocating for public companies to adopt "commonsense" governance principles [1]. And the large asset management firms like Vanguard are starting to become more vocal about how the companies they own are managed, if this letter is any indication [2]. Vanguard and other "passive" asset management firms have enough weight (literally trillions of dollars under management) to force change, and boards know it.

[1] https://corpgov.law.harvard.ed...
[2] https://corpgov.law.harvard.ed...

Right, but how do we reverse the trend of consolidating and increasing power in D.C., at the expense of the people and the states?

It seems no one (outside a small minority) cares about limited government, enumerated powers, the Tenth Amendment, or why we're in a state of perpetual war without a declaration from Congress.

Since I don't see a Cincinnatus or Washington on the horizon, I suspect economic disaster, coupled with a deeply unpopular president (say Clinton or Trump), could force the people to finally act, either through state nullification, calls for a second constitutional convention, or even secession movements. In the meantime, liberty-minded Americans should continue to question the legitimacy of federal programs and initiatives like the "drug war" -- the USSR collapsed, in part, because it lost legitimacy with the people.

The federal government is primarily a mechanism for redistributing wealth on a vast scale, and so in effect all Americans are bribed to turn the other way. (Look at the number of states who accept federal dollars and in exchange surrender part of their sovereignty, e.g. highway funds and the drinking age.) Then you have an entire class -- in the millions -- who receive paychecks directly from the feds, or work for a federal contractor. Don't expect members of this American "Outer Party" to lead the charge for limited government [1].

[1] Last year, I was at a network security training and in attendance were some paper CISSP "cyber warrior" types. You would be horrified if you heard their thoughts on the Fourth Amendment, compelled disclosure, and the secret federal kangaroo courts. The irony is that, like the president, these civil servants take an oath to uphold the Constitution. Your tax dollars at work, folks.

This is what Madison meant when he referred to "parchment barriers." The people of the United States are humiliating themselves and their ancestors by prostrating before the Christ-like executive who will deliver them jobs, hope, free college degrees, and ponies, too! A republic and its constitution are only as strong as the citizens who uphold it.

In a way, it's appropriate that the republic's come to this, as the very monolithic institutions that the "Progressives" and liberals built throughout the 20th century could very well be turned on them if Trump is elected president. Hence Hayek's quote: "We shall never prevent the abuse of power if we are not prepared to limit power in a way which occasionally may prevent its use for desirable purposes."

Congress, though, shares much of the blame for executive overreach. Congress' cowardly (though politically expedient) abdication of its constitutional responsibilities has led to a permanent state of war and emboldened executive.

Though Senator Clinton was not alone in her sentiment, her vote to "authorize" the president to go to war with Iraq, a sovereign nation that did not attack the United States or provide an immediate, existential threat to the republic, is an instructive example of how these people think. From her floor speech:

"...it is a vote that puts awesome responsibility in the hands of our President and we say to him - use these powers wisely and as a last resort."

The Constitution clearly states that Congress is to declare war. There's nothing about giving the president that choice. Instead, Congress punts like political hacks, and refuses to issue a proper declaration of war with their names attached to it.

And in case you think I'm focusing too much on a vote from last decade, remember that the men who founded this republic effectively told the King of Great Britain to fuck himself, signed their lives, fortunes, and sacred honor to the document declaring as much, and then mailed a copy to his office. And the charlatans in Congress can't even follow the constitution when it matters most? And we're considering electing one of them as president?

If nothing else, the disaster that is Trump vs. Clinton might spur a conversation about truly downsizing the federal government and returning more power to the states -- where it belongs and where it was intended to belong.

Thank you for sharing your experiences. Where do you think we go from here? At what point does the whole system collapse? I sometimes think it it will take a prolonged macroeconomic disaster to force a total revamp.

Know who else has that "problem"? Warren Buffett and Berkshire Hathaway. Something like $3 billion in cash arrives in Omaha every month for redeployment. But as a master capital allocator, Buffett is happy to sit on cash until something attractive crosses his desk, i.e., no overvalued "tech" companies.

Unfortunately, the macro pattern over the last few decades has been boom-bust as easy money leads to stupid, short-sighted exuberance for shares of mediocre businesses with owner-unfriendly management (hence the non-GAAP bullshit and stock-based compensation that's somehow not an expense).

The adults in the room endure the pain of sitting on cash -- QE and the central bankers certainly make it hard -- before the the bubble de jour implodes and the markets crash back to reality. But after the party is over, patience is rewarded with bargains for shares of businesses with real, enduring, high-quality profits. Think of it as time and personality arbitrage.