The Service-less Service Economy

Here’s my worry, that the lesson big businesses are learning from surviving the Recession is that it’s possible to not only survive but to profit by getting rid of even more workers and cutting back on more services.

We’re experiencing a jobless recovery right now.  That’s a problem.  But my fear is that we’re on our way to a jobless economy.

We’ve been trending this way for decades.  The first giant warning sign was when big publically traded companies discovered that the surest and quickest way to increase their stock prices was to lay off large fractions of their workforce.

It’s a rare company executive these days who is loyal to the company because of the product it manufactures or the service it provides.  It’s a good bet that company execs rarely think of their companies as making something or doing something special at all.  All big businesses are in the business of selling stock.  Everybody’s job is to sell the stock at the highest possible price.  The stock exists to be sold by the people who buy it at the highest possible price or at the most profit---selling short can make you a bundle under the right circumstances and with the right accountancy and tax measures taken, to the detriment of the company that sold the stock to begin with.  But that’s ok.  Few investors care about the companies they invest in.  The executives at those companies have already pocketed their bonuses.  The business has been successful even as it appears to fail because it did the business the executives and investors needed it to do at the moment.

The stock price falls but it can be driven back up again.  All the company needs to do is show investors it’s serious about making money not by increasing market share but by containing costs.  Lay off a few hundred more workers, cut back on services, decrease inventory, which means that customers have fewer choices when they come in, but that’s not a worry, because where else are they going to go?  And even if they find somewhere else to spend their money, what does it matter, because money spent on a product does not go into the pockets of the executives and the stockholders in the way money made from selling stocks does.  Too many middlemen. 

Eliminating the middleman is always a good.  It cuts costs and it’s a sign of increased efficiency.  But who are the middlemen?  Owners of other businesses that employ people to load and unload trucks and stock shelves and help customers find the best product.  In agribusiness another word for middleman is “farmer.”  In other types of business it’s “store owner.”

It’s been a long time since big business has had to even pretend to think of its employees as “human resources.”  The suits in the corner offices have another word for “human resources”---overhead. 

Customers they see as resources, but in the same sense of the word as coal companies use it when they look at mountain tops in West Virginia. Customer exist to be gouged.  Other than that, they are almost as much trouble as employees.  Employees expect to be paid.  They’re an obvious cost to control.  But customers expect to be served.  They want what they want and they want it at prices they can afford.  They take up time and space.  They make noise when they don’t get what they want for what they are willing to pay.  They come onto your sales floor, wherever that is, in a store, in a warehouse, in your office, on your computer screen, and they expect to be treated politely and with respect.  They want the place to be neat and clean, well-stocked, and easy to navigate.  They expect things to be convenient.  Not for you.  For them.  And they get prickly when you try to explain to them that what’s convenient for you is convenient for them in the long term if only they’d look at things the right way, which is your way.

The nearly ideal customers are the beaten down and resigned middle-aged office workers waiting on long lines to buy a sack of potatoes in the old Soviet Union.  The ideal customer is like the ideal employee, a robot.

The ideal customer expects nothing but what you offer them at the price you deign to offer it under the conditions you impose.  The ideal customer is a money-dispensing device interacting with the ideal employee, a money-accepting device.

By the way, this is why I boycott the automatic check-out at the supermarket even when I’m buying a single loaf of bread.  The robot cashiers don’t put two people out of work, a human cashier and a human bagger, they put one human to work doing the jobs of two---me.  They make me an unpaid cashier and bagger.  They make me a component in a system of robotic money dispensing and accepting.

President Obama and his economic advisers have been hard at work trying to save the system.  They’ve pretty much succeeded.  The problem is that they think the system exists to provide goods and services and jobs.  I’ll bet even Larry Summers thinks this.

The system exists to sell stocks, and if this could be done without providing any goods, services, or jobs at all, the people who run the system would do it.  The fact that the Dow has topped 10,000 while tens and tens and tens of thousands of people are losing their jobs, while millions have given up hope of ever finding another one, while most of the rest of us accept cuts in hours, pay, benefits, and hopes and dreams, in a devil’s bargain to hold onto the jobs we have, suggests that it might be do-able.

Oh well.  If we’re all going to be replaced by robots doing business with robots, I'm looking forward to the day when the stock market and the investment banking industry are taken over by robots too.  And now that I’m thinking about it, why hasn’t it been?  Surely by now there are algorithms that can manage the buying and selling of stocks and the moving of money more efficiently, more intelligently, and more profitably than fat faced former frat boys screaming at each other on the trading floor and even than the lean and mean MBAs snarling into their BlueTooths.

And the best thing about robots is that they can be programmed to have a conscience.

Comments

[Cleveland Bob]

Spot on, Lance.

You've inspired me to stop using the self checkout. Also, there is a method to avoid the screaming frat boys...E*Trade. In my opinion, brokers and floor traders are going the way of the dinosaur and soon.

Lastly, check that last sentence for a missing "be".

[actor212]

I'm of a similar mind, Lance

By the way, Google "Professor Richard Wolff". He has some faascinating insights into the past thirty years.

[KevinHayden]

Huzzah! Best econ class you've held in awhile, Lance. The supermarket self-checkout is a perfect example. That's why I still favor Oregon's refusal to permit self-serve gas pumps (not to mention the enviro reasons it also makes sense). It wasn't too long ago that they were called 'service stations' because they offered services.

Taking it even further, the claim that everyone can do their own home remodeling led to Home Depot. And stagnating wages in the building trades. And poorer remodel outcomes way too often.

And the economic disruptions harm families and communities, but maybe not the private estates and gated communities of the 'haves'. And for the cheapest cheapskates of the lot, the gratuity has to be added to the bill or the remaining service class would get only the ever-declining minimum wage.

I look forward to the conscience of the bots. It was a design flaw to leave one out of our business leaders.

[Linkmeister]

Is this a good place to remind readers of Asimov's Three Laws of Robotics?

Number One seems applicable: "A robot may not injure a human being or, through inaction, allow a human being to come to harm." If you stretch it to include financial harm, anyway.

[mac macgillicuddy]

I avoid the self check out lanes for the same reasons, Lance. But for another one, too. I appear to be a check-out jinx! Every time I've tried it, there has been some problem with the machine; the light starts flashing, and then I'm left wondering if I should just make a break for it.

I decided way back when they first introduced those lanes that there are still many services best left to experts.

[Jaquandor]

I don't like self-checkout either, although it's fun to use it at Home Depot when I'm buying just a few small packs of screws, because these don't weigh enough to trip the sensor in the thing that detects that you've "placed the item in the bag" and move on to the next item! So then the thing bogs down and an actual employee has to come over and assist. Good times.

[actor212]

Number One seems applicable: "A robot may not injure a human being or, through inaction, allow a human being to come to harm." If you stretch it to include financial harm, anyway.

I saw "I,Robot"! You can't fool me! Eventually, VIKI comes to the conclusion that money IS the root of all evil and so steals it all.

[daniel reilly]

i agree! Here's an example that happened to me at Bank of America. Went up to teller (live person teller), made deposit at 3:37 Fri afternoon. Learned that the deposit will not post to my account till Tuesday. They explained to me if I used their same ATM for the deposit up till 8:pm Fri that my deposit would be in my acct Next day for me to access my money. I explained that they were putting people out of a job. "just Friday's" with a smile. Next is " just Thursdays and Fridays etc...."

[Rana]

I often think about this when I'm forced to navigate some ridiculous telephone answering tree - inevitably, my problem is one that would take seconds to fix if I could talk to a person (like my birthdate being one digit off) but which becomes huge and frustrating when I try to figure out how to get to the help I need. This is a not insignificant reason of why I seek out smaller and more local companies for my business - why would I want to fight with Comcast's automated system, when I can call our local cable company, talk to one of the founders, and get help immediately? Why would I want Verizon to handle my internet, when I can leave a message with my mail server company and they will call me - yes, call ME, long-distance and free of charge - within half an hour?

The same goes for local grocers, farmers' markets, small mom-and-pop shops, and on and on.

[actor212]

Daniel,

That one I can extrapolate upon.

Tellers have to reconcile their drawers at five o'clock each day, so most states and banks have a 3PM deadline (this goes back to the days when tellers did this stuff with an abacus) for transactions.

Bank floors remain open after that time now as a courtesy to customers, but really, there ought to be a big friendly sign (some banks have them) reminding people about the 3PM deadline.

Not defending it, because clearly this artifact is intended to give the banks one more day's float on your money, but that's what happened.

[daniel reilly]

actor, what burns me up is my business deposit made a minute earlier had one of my personal checks in it as a payment to my company, cleared out of my account next day. Very one sided business dealings. If the teller had told me about the early deposit rather than asking if i would like a hot apple pie with that. i would have used the ATM. They seem to be selling credit cards and new accounts when they could have done a service of telling me about the early cut off.

[Geoduck]

I was sorta under the impression that the big Wall Street trades -are- already done by robots/computers...

[actor212]

I've had that happen as well, Daniel. Made a deposit and floated a check against it. The check hit overnight (inside the bank) but the deposit, also within the same bank, cleared two days later.

I was able to argue the NSF fee but I was forced to pay the late fee and NSF fee to my credit card.

[mark]

Somebody put time and labor into designing that auto-checkout machine. You'd prefer to put him out of business?

Oh you're missing the point, you say. No, I think you are. Everything has value. While employees like to think their value is more than just what is on their paycheck, the reality may not be that far off. I'm getting paid a wage lower than what I can afford next year and was recently made to take over extra duties on top of it. But I don't blame my boss — its his company. He owns it and has to do his best to keep it efficient in a rough spot. I can find another job or find another line of work or find a way to make my job more worthwhile...