luni, 18 noiembrie 2013

Seth's Blog : Extinguishing the tantrum cycle

 

Extinguishing the tantrum cycle

Tantrums are frightening. Whether it's an employee, a customer or a dog out of control, tantrum behavior is so visceral, self-defeating and unpredictable, rational participants want nothing more than to make it go away.

And so the customer service rep or boss works to placate the tantrum thrower, which does nothing but reinforce the behavior, setting the stage for ever more tantrums.

Consider three ideas:

  • Listen to the person, not the tantrum
  • Tantrums want to deal with tantrums
  • Create systems to avoid it in the first place

When an employee calls you up, furious, in mid-tantrum, it's tempting to placate or to argue back. That's the tantrum pressing your buttons. Instead, ask him to write down every thing that's bothering him, along with what he hopes you'll do, and then call you back. Or even better, meet with you tomorrow.

Email tantrums are similar. If someone sends you an email tantrum, don't respond, point by point, proving that you are correct. Instead, consider ways to de-escalate, not by giving in to the argument, but by refusing to have the argument.

Engaging in the middle of a tantrum does two things: it rewards the tantrum by giving it your attention, and it makes it likely that you'll get caught up, and say or do something that, in the mind of the tantrum-thrower, justifies the tantrum. That's the fuel the tantrum is looking for--we throw tantrums, hoping people will throw them back.

When you have valuable employees or customers (or kids) who throw tantrums, that might be a sign that there's something wrong with your systems. The most basic way to decrease tantrums is to find the trigger moments and catch the tantrum before it starts. By creating a way for people to raise their hand, send a note, light a signal flare or otherwise highlight the problem (internal or external) before it leads to a tantrum, you can shortcircuit the meltdown without rewarding it.

If your dog is going crazy, straining at the leash and barking, it turns out that yelling, "sit," is going to do no good at all, no matter how loudly you yell. No, the secret is to not take your dog to this park, not at this time of day, at least not until you figure out how to create more positive cycles for him. Eliminate the trigger, you start to eliminate the tantrum.

Unfortunately, just about all big customer service organizations do this precisely backward. They don't escalate to a supervisor or roll out the kindness carpet until after someone has gone to Defcon 4. They decide that it's too expensive to be flexible, to listen or to treat people fairly, and they wait until the costs to both sides are really high, and then they give an empowered person a chance to solve the problem. There's huge waste here, as the problem costs more to solve at this point, and the unseen challenge is that they've established a cycle in which umbrage is the rewarded behavior.

And the last (but essential) thing to keep in mind is this: tantrums are really expensive, and if you can't extinguish the ongoing problem, fire it. Fire the customer, fire the employee. Establish a standard that says that people around here don't act like that. Expose the tantrum for what it is, and if necessary, do it in front of the tantrum-thrower's peers. It will free up your resources for those that are able to earn them.

When the cost of throwing a tantrum is high and when the systems are in place to eliminate the triggers, tantrum behavior goes down.

       

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duminică, 17 noiembrie 2013

Mish's Global Economic Trend Analysis

Mish's Global Economic Trend Analysis


France Tax Revenues €5.5 Billion Lower than Expected; Poll Shows 92% Do Not Believe Hollande's Tax Promises

Posted: 17 Nov 2013 03:07 PM PST

In spite of massive hikes in taxes on the wealthy and an increase in the VAT and other taxes revenue estimates missed their targets badly. Reader Lionel writes ...
Hi Mish,

As you were expecting, France did not manage to get as much tax revenue as expected by the government. Total revenues were €5.5 billion less than expected, split as follow:

€500 million less in income tax
€1 billion less in VAT
€4 billion less in business tax (tax on business profits).

Moreover, if you compare it to the initial forecast, it's €11 billion less than expected! And of course expenses have increased €3 billion.

It reminds me your past articles about Spain.

Lionel
Let's take a look at some of the links Lionel sent.

Budget Minister Admits Revenue Shortfall

Via translation, Budget Minister Admits Revenue Shortfall of €5.5 Billion
The Minister for the Budget Bernard Cazeneuve admitted Sunday that the revenue of the State in 2013 would be lower than expected, the order of € 5.5 billion, due to the poor economy, he said.

"According to our calculations, there is a shift to VAT of about one billion, and corporate tax of about four billion," said Cazeneuve.

The income tax shortfall was around 500 million euros.
Spending Up €3.3 Billion

Translation from Le Figaro shows 3 billion in additional spending for 2013.
In these times of fiscal discontent and protests by Brussels, the expected improvement of public accounts in France in 2014 and 2015, the government had to be reassuring about the traditional collective fiscal year-end synopsis presented on Wednesday.

Forecasts deemed "plausible" by the High Council of Public Finance, however warned of "a significant gap" between the structural deficit in 2013 (excluding cyclical effects) to 2.6% of GDP, higher than the 1.6% estimate anticipated at the end of 2012.

Overspending give rise to 3.2 billion in new funding, including $ 2.1 billion for the general budget and the balance for the EU budget.

Five days after the downgrade of France by Standard & Poor's, a ministerial meeting was called to control of public expenditure from 2015 to 2017. After an effort of 15 billion compared to the upward trend in spending in 2014, "the next year budget will extend this action," said Matignon. To target deficits of 3.6% of GDP in 2014 and 2.8% in 2015, without increasing the tax burden, government must cut expenses by 16 billion.
Brussels Does Not Believe Budget Promises

Unsurprisingly, Brussels does not believe the promises made by Hollande.
While Paris was planning to back below 3% in two years (2.9% to be exact), Brussels predicts it ... 3.7%! Only slightly less than the year before.

The European Commission reasoning "constant policy" (that is to say without further corrective action), so she informed the French government has no chance of meeting its target back below 3% in 2015 without implementing further structural reforms.
French Do Not Believe Spending Cut Promises, Tax Promises, Growth Promises

Brussels does not believe Hollande, and neither do French citizens. Via translation from Le Fiagra, please consider Budget 2014: the French do not believe.
SURVEY The survey Way Opinion for Le Figaro Magazine are clear: the French want to reduce public spending, but do not believe in the government's promises to do so.

In September, the economy minister, Pierre Moscovici , had referred to the "ras-le-bol tax" of French and Hollande himself had spoken of the need for a "tax break" in 2014. Wham, just two months later, came the environmental tax, taxes on saving products like ELP or PEA 15.5%, and a new tax on their gross operating profits of corporation.

These examples illustrate the discrepancy between government speech and deeds! So much so that today, the French do not trust their government. This is what emerges from the study conducted by Opinion for Le Figaro Magazine: 92% of French people do not trust the government to lower taxes, 82% do not believe government will lower spending and 80% do not believe growth targets!
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

Seth's Blog : Belief is more powerful than proof

 

Belief is more powerful than proof

In fact, the only use of proof is to have a shot at creating belief.

It's not the only way, though, and it's not always the best one either.

       

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sâmbătă, 16 noiembrie 2013

Mish's Global Economic Trend Analysis

Mish's Global Economic Trend Analysis


U.S. Crushes 6 Tons of Ivory, Some of it Exquisitely Carved, to "Send Message" to Poachers; Does This Make Sense?

Posted: 16 Nov 2013 03:10 PM PST

Here's an interesting video of the US taking 6 tons of confiscated ivory to Africa to crush it. The purpose was to "send a message" to poachers.

The entire worldwide elephant population is 500,000. They are vanishing at a rate of 50,000 per year, just for their ivory.

A couple of people sent me this video, Reader Michael was first.



Link if video does not play: U.S. crushes 6 tons of confiscated ivory to send message to poachers
Africa's elephants are being slaughtered at a record pace by poachers who hope to get rich by selling their ivory tusks.

The U.S. has been trying to stop it. And today the feds sent a powerful message -- by gathering all the ivory they have seized in the past quarter-century and bringing it to a wildlife refuge in Colorado.

Where millions once roamed free across Africa, the numbers of elephants have plummeted because of poaching to about 500,000.

Poaching was the source of six tons of illegal ivory confiscated by U.S. officials, from raw tusks to exquisitely carved statues.

Robert Ruggiero, who runs the U.S. Fish and Wildlife Service's anti-poaching effort in Africa, says the poachers will stop at nothing to get the ivory tusks. "Even poachers who are killed are readily replaced. There's an endless supply of people willing to take those risks," Ruggiero said.

The soaring demand comes mostly from newly rich Chinese, who see ivory as a status symbol. A pound of ivory now sells for more than $1,000 on the streets of Beijing.

The Math

1 ton = 2,000 pounds
6 tons destroyed
Street price = $1,000 pound
6 * 2,000 * $1,000 = $12,000,000

$12 million dollars is not a lot to the U.S. But it is a lot to Kenya.

Carved Ivory



Carved ivory is surely worth a lot more than raw ivory. 10 times more? I don't know.

Unfortunately there was no breakdown of how much carved ivory was crushed, but the video showed rooms of it being boxed for destruction. For the sake of argument, let's just assume the entire lot could have fetched $50 million at auction.

I have a simple question: What if instead of crushing that ivory, the US auctioned the ivory with all proceeds going to African nations for anti-poaching efforts?

How many people could Kenya have hired for $50 million? Wouldn't that have done more for the elephants than crushing it?

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

Taking Control of America’s Energy Future

Here's What's Happening Here at the White House
 
 
 
 
 
 
  Featured 

Weekly Address: Taking Control of America’s Energy Future

In his weekly address, President Obama discusses progress in American energy and highlights that we are now producing more oil at home than we buy from other countries for the first time in nearly two decades. We reached this milestone in part not only because we’re producing more energy, but because we’re wasting less energy, and as a result, we are also reducing our carbon emissions while growing the economy.

Click here to watch this week's Weekly Address.

Watch: President Obama's Weekly Address

 

 
 
  Top Stories

 

Honoring our Military: On Veterans Day, the President honored those who have served, or are currently serving, our country. The President hosted a breakfast that morning for veterans and their families before heading off to Arlington Cemetery with the Vice President, the First Lady, and Dr. Biden. The President participated in a wreath-laying ceremony and spoke to the crowd about the devotion and commitment of those who don our nation’s uniform.

In the life of our nation, across every generation, there are those who stand apart. They step up, they raise their hands, they take that oath. They put on the uniform and they put their lives on the line. They do this so that the rest of us might live in a country and a world that is safer, freer, and more just.

The President also reminded Americans that we need to support troops after they have come home. “This is how we’ll be judged.  Not just by how well we care for our troops in battle, but how we treat them when they come home,” the President said. Check out the President’s remarks here.

In honor of Veteran’s Day, First Lady Michelle Obama and Dr. Jill Biden wrote an op-ed about Joining Forces that appeared in military news websites, highlighting their commitment to employment, wellness, and education for veterans, service members, and their families.

Continuing his work with members of the military later that week, the President welcomed senior civilian defense and military leaders to an annual meeting and dinner, where those present discussed a wide range of issues.

Affordable Care Act: President Obama made a statement in the James S. Brady Press Briefing Room on Thursday, announcing new steps to help those Americans that are receiving insurance cancellation notices. The President stated that insurers can offer customers who have been notified about canceled plans the option to renew their 2013 plan in 2014.

“It took 100 years for us to even get to the point where we could start talking about and implementing a law to make sure everybody has got health insurance,” the President said. “And my pledge to the American people is, is that we’re going to solve the problems that are there, we’re going to get it right, and the Affordable Care Act is going to work for the American people.”

Manufacturing in Ohio: The President spoke at a steel factory in Cleveland, Ohio on Thursday, highlighting the plant’s comeback after nearly 1,200 steelworkers were furloughed when the auto industry was on the brink of collapse. Today, ArcelorMittal, is the largest supplier of steel in the auto industry and is a global leader in producing advanced high-strength steel for fuel efficient cars. “The story of this plant is the story of America over the last five years,” President Obama said. “We haven’t just been recovering from a crisis. What we’ve been trying to do is rebuild a new foundation for growth and prosperity to protect ourselves from future crises.”

Tribal Nations Conference: On Thursday, the White House hosted the fifth White House Tribal Nationals Conference, which welcomed leaders from all 566 federally recognized tribes. The President spoke to conference attendees, highlighting the need for strengthening justice and tribal sovereignty, expanding opportunities for Native Americans, and protecting tribal lands. Read the President’s full remarks here.

Protecting kids with asthma and allergies: President Obama signed into law the School Access to Emergency Epinephrine Act on Wednesday, which encourages schools to plan for severe asthma attacks and allergic reactions. Approximately 9.5 percent of American children suffer from asthma, and between 4 and 6 percent of children have food allergies. By updating and upgrading school’s response capacity for asthma and food allergies, this law will help relieve the anxiety of millions of parents.

First Lady Talks Education: First Lady Michelle Obama and Secretary of Education Arne Duncan visited Bell Multicultural High School in Washington, D.C. to discuss the importance of youth empowerment and education. The First Lady shared her personal academic experiences to a group of sophomores, telling them that she pushed herself to have a strong academic and extracurricular record. “And when I encountered doubters…when people told me that I wasn’t going to cut it… I didn’t let that stop me," she said. 

 

 

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Seth's Blog : Salmagundi on offer is not the shortcut it appears to be

 

Salmagundi on offer is not the shortcut it appears to be

If you could eat the kitchen sink, that's what you'd get when you order Salmagundi. "Salmagundi is a salad dish, originating in the early 17th century in England, comprising cooked meats, seafood, vegetables, fruit, leaves, nuts and flowers and dressed with oil, vinegar and spices."

Here's the thing: there are very few people willing to cross the street, spread the word or pay extra for "all of the above."

Better to pick just one thing you can be proud of, rather than offering just about everything in an attempt to please just about everyone (and thus no one).

       

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vineri, 15 noiembrie 2013

Mish's Global Economic Trend Analysis

Mish's Global Economic Trend Analysis


Eight Choices for "Generation Wait"; Percentage of Young Adults Moving Hits 50-Year Low

Posted: 15 Nov 2013 02:16 PM PST

When you do not have a job (or have a low paying job), and are stuck with education costs that you cannot possibly pay back, what do you do?

Eight Unfortunate Choices

  1. You stay in school accumulating debt
  2. You go back to school accumulating debt
  3. You move back home
  4. You share an apartment with others
  5. You delay marriage
  6. You delay having kids
  7. You delay buying a house
  8. You wish and hope and pray for better times
Those choices are not mutually exclusive. In general you wait, hoping for something good to happen.

Generation Wait

Please consider 'Generation Wait': Share of young adults who move hits 50-year low
U.S. mobility for young adults has fallen to the lowest level in more than 50 years as cash-strapped 20-somethings shun home-buying and refrain from major moves in a weak job market.

Among adults ages 25-29, just 4.9 million, or 23.3 percent, moved in the 12 months ending March 2013. That's down from 24.6 percent in the same period the year before. It was the lowest level since at least 1963. The peak of 36.7 percent came in 1965, during the nation's youth counterculture movement.

Demographers say the delays in traditional markers of adulthood — full-time careers and homeownership — may prove to be longer-lasting. Roughly 1 in 5 young adults ages 25 to 34 is now disconnected from work and school.

The overall decline in migration among young adults is being driven largely by a drop in local moves within a county, which fell to the lowest level on record. 

While homeownership across all age groups fell by 3 percentage points to 65 percent from 2007 to 2012, the drop-off among adults 25-29 was much larger — more than 6 percentage points, from 40.6 percent to 34.3 percent.
More Young Adults Stay Put

Yahoo!Finance has an interesting chart that shows More Young Adults Stay Put.



Structural Issue

Unlike what Bernanke thinks, this is a structural problem. And I have been talking about it for years. Here are a few examples.

Percentage Employment

Here is a chart courtesy of Tim Wallace from the last link above.



In 1990 close to 60 percent of those 16-19 were working. Now it's under 30%. In the 20-24 age group the percentage fell from 75% in 1988 to under 65% now. Why?

Structural Demographics Poor

This is what I said in my May 2008 post Demographics of Jobless Claims.
Structural demographic effects imply that prospects in the full-time labor market will be poor for those over age 50-55 and workers under age 30. Teen and college-age employment could suffer a great deal from (1) a dramatic slowdown in discretionary spending and (2) part-time Boomer reentrants into the low-paying service sector; workers who will be competing with younger workers.

Ironically, older part-time workers remaining in or reentering the labor force will be cheaper to hire in many cases than younger workers. The reason is Boomers 65 and older will be covered by Medicare (as long as it lasts) and will not require as many benefits as will younger workers, especially those with families.

In effect, Boomers will be competing with their children and grandchildren for jobs that in many cases do not pay living wages.
And here we are. Any Mish readers surprised?

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

Promises, Promises; Public Union Pensions NOT Sacrosanct; Mish Template for Fair Public Union Pension Settlement

Posted: 15 Nov 2013 11:28 AM PST

Numerous cities have filed for bankruptcy in recent years, and many more cities are on the brink. The reason is untenable union wages, and more importantly untenable pension promises.

Sampling of Bankruptcy News


What Went Wrong?

Those are not isolated incidents. I have written about Oakland, Houston, Baltimore, Harrisburg, and numerous other cities. Unions are behind the demise of every one of those cities.

Union coercion (public and private), vote buying, and inept city management in settling wage and pension disputes ruined every one of the above cities. Dozens more cities are on deck.

Detroit was obviously bankrupt ten years ago, and would be far better off had it declared bankruptcy ten years ago, but just did so in July of 2013.

Promises, Promises

Unions keep promoting their head in the sand belief that pensions and wage contracts are sacrosanct. Well they aren't. Take a look at actual events.

  • In 2009, a federal bankruptcy court ruled that Vallejo could cut pensions.
  • In Central Falls, Rhode Island, in actual practice, pensions were slashed 50% across the board following bankruptcy.
  • In October, the Federal judge overseeing the Detroit bankruptcy came flat out and stated Protecting Detroit pensions may violate bankruptcy code

In an exchange with an attorney representing Detroit's two pension funds, U.S. Bankruptcy Judge Steven Rhodes said U.S. Bankruptcy Code would not afford special protection to pensions because, "It gives a priority to one unsecured creditor or one group of unsecured creditors, over all the others."

Read that ruling over and over again until it sinks in. There is only one inescapable conclusion: Public Union Pensions are NOT Sacrosanct, regardless of what state constitutions stipulate.

Taxpayers can all be thankful that US bankruptcy laws overrule ridiculous state guarantees.

Vallejo Case Study

Vallejo, California is an interesting case study. The bankruptcy judge let the city cut pensions. It didn't. And now (just as I predicted in 2010), Vallejo is headed for bankruptcy again.

The lesson for cities is simple, slash pensions when you have the chance (or you will be back in bankruptcy court again).

What Constitutes Fair?

A friend of mine pinged me with these thoughts regarding the Chicago pension mess.
The City of Chicago did a dumb thing 20 years ago, but is it really fair to take away a pension from someone who worked 20 years for less money than he could have made in the private sector to get the pension?  This is a tricky issue.  In the private sector employers default all the time, but the PBGC guarantees a high percentage of benefits. PBGC does not guarantee municipalities.

Second, to the extent that the retirements result in a reduction of force, it could save the City money.  Retirement benefits are generally not at full pay and certainly are not subject to upward adjustment for promotions.  Early retirement is how the private sector gets rid of deadwood.
My response follows...

Template for Fairness

  1. Most of the time public employees do not get less money than private sector. They actually get more.
  2. I suspect 58 is retirement age with full benefits. Most police and fire departments are setup that way, with some minimum number of years of service. Regardless, with retirement at age 58 (55 for some police and fire workers) given pension spike rules, many pensioners will make more in retirement than they ever did working. Is that fair, or ridiculous?
  3. So. is it fair to cut benefits? Yes.
  4. Cities will careen towards bankruptcy without massive tax hikes, and probably even with them, over benefits.
  5. Untenable benefits are partly a result of coercions and threats by unions, and partly a result of sweetheart deals by politicians buying votes.

It certainly is not fair to ask taxpayers to pick up the tab, given the threats, coercion, vote buying, and backroom deals under which politicians rewarded their friends and themselves jobs with ridiculous pensions.

Fairness Test Needed 

In bankruptcy court, some judge (as happened in Rhode Island and will happen in Detroit), is going to slash benefits by 50%, perhaps even more.

There will be no fairness test. Pension reductions will happen, and they will be across the board. Yet, some high-roller pensioners will collect over $150k per year in benefits (even with the reduction), while others with a $25,000 pension will see it cut to $12,000.

That's fair to the taxpayer, but arguably not fair to those on the bottom rung. And that is the likely result in absence of a negotiated settlement.

Negotiated Settlements

The fairest possible thing to do is sit down at the table and negotiate a settlement.

I suggest, those with the least pension benefits get the smallest cuts, and those with the most benefits get the biggest cuts.

Indeed, if unions were smart, the majority could come to negotiated terms with a starting point along the lines of

  • No cuts in benefits for the bottom 30%
  • Small cuts in benefits for the next 30%
  • Big cuts in benefits for the top 40%, on a sliding scale

Such a negotiated settlement would be the fairest thing for everyone, pensioners and taxpayers alike.

However, my starting point may not be possible. When pension plans are exceptionally low-funded, even those on the bottom rung may need to take some hit.

The next fairest thing is bankruptcy. And although bankruptcy is fair to the taxpayer (assuming no tax hikes), bankruptcy is not likely to be very fair to those on the bottom rung.

Pension Obligation Realities

As part of the negotiation process, the city and the unions must agree on how underfunded the plan really is. One of the factors that determines funding levels is assumed rates-of-return.

The 8% rate-of-return assumption that many plans now have is ridiculously optimistic. Thus extreme caution is warranted so cities do not end up back in bankruptcy. This necessitates several additional restrictions on the bankruptcy negotiation process.

  1. Estimated rates-of-return should be conservative. I propose the yield on the 30-year bond. That yield is is currently 3.8%. Unions will howl, but so be it. Let them scream at Bernanke and Yellen. 
  2. Unions could assume slightly higher rates of return, provided that unions, not taxpayers are on the hook for shortfalls. 
  3. What happens in the event of future shortfalls must be stipulated in the bankruptcy settlement agreement, and taxpayers cannot be put at risk.
  4. In the event of shortfalls, the negotiated plan will kick in.

Five Immediate Action Items

  1. Defined benefit pension plans for public employees need to be halted right now, across the board, everywhere.
  2. Pension negotiations for cities in stress need to start now.
  3. Scrap Davis-Bacon and all prevailing wage laws at federal and state level immediately.
  4. Collective bargaining for all public unions should cease to exist.
  5. National right-to-work legislation is needed.

Will Unions See the Light?

If unions don't negotiate pensions, bankruptcy will result, and unions will then have only themselves to blame.

Hopefully, a few across-the-board pension cuts exceeding 50% or more, especially in Detroit, will get unions to see the light.

The Light

My plan offers a fair template for city officials, taxpayers, and unions. If unions disagree, they can take their losing case to bankruptcy court with likely results as depicted above: multiple bankruptcy filings and across the board cuts applied indiscriminately.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com