Employment, Robbery, and Sacrificial Koolaid

The assumption of employment is all around us. I’m not knocking employment. Quite the contrary:

Rule of Work: Your work is not the venue. Whether your work is best conducted as an employee, contractor, entrepreneur, or volunteer, pursue the venue where you can derive from your work all the meaning you are intended to have.

But it’s sort of like my friend who has a Doctorate of Philosophy in Patristics from Oxford. He used to get asked, as a professor, by prospective employers in the U.S. for his transcript. He was typically met with blank, inflexible stares when he informed them that Oxford is an 800-year old university – it doesn’t issue transcripts. 75% of the doctoral candidates fail – if you make it, at all, that is the transcript. The assumption was that education is everywhere and always has been mass education, and rather than having to write books to graduate, you need to prove yourself by appealing to grades. Oxford is pass fail – for the degree, not for classes. For those interested in this topic,  you don’t even have to attend lectures (classes) at Oxford. You can sit under a tree all week and read, if you like, or just stay drunk all the time. What they require is that you read everything in your field, and take a final exam at the end that lasts about a week and is 100% written (essay form), and that you defend your thesis (which is what your book is arguing – your dissertation). That’s it. Read everything, write for a solid week intelligently discussing everything, and defend your own original idea expressed as a book which takes into account your knowledge of everything, and you get your degree. No transcript. Is it accredited? No, it’s 800 years old… etc. It’s like pulling teeth getting past assumptions.

The assumption of employment, though, is similar. It’s already been elsewhere observed that employees can get a home loan lickety split with two paychecks under their belts, or one paycheck and a letter from their employer. A self-employed person has to show a history of substantial profits on past years’ tax returns. That’s how the mortgage system assumes employment as the standard. Conversely, the tax system rewards self-employed people only if they show the least possible profit and claim the maximum possible deductions. That conflicts with the mortgage industry assumption and leaves lots of self-employed people without access to a mortgage, while showing up for a job for a month results in a home loan. The system is geared toward assuming employment is the norm. What do all the forms say – government forms, bank forms, even forms at the gym? Employer. What do employment applications ask for? Past employer. Sure, you write in your own company, but most people don’t seem to be aware that the relationship you have to your own company, as an entrepreneur might actually not be that of employee. Corporate structures are varied, and you might get shares, not paychecks. You might contract for your company, etc. You might be a “member”, a “partner”, and so on.

A pronounced example I encountered was when the market ate half of my 401K, because I foolishly listened to the “stay the course” crowd (i.e. Vanguard and the traditional investor braniacs who couldn’t acknowledge reality, only throw out doctrine, and tell the rest of us not to be “immature” investors who pull out our funds too soon and don’t stay in for the long haul. In other words – the people who told us it’s better to go broke than to question the received wisdom.) Honestly, the amateur hour stuff was not smelling the brimstone in the Judgment Day that was coming down all around them. Little devils kept saying, “Nah, this is just a “fluctuation” in the economic climate.  Let’s say I had $9000 invested, and I lost half, so $4500. My employer had matched at least half of my contribution, so someone actually said to me, “Well then you didn’t lose $4500. You basically lost nothing, because you still have what you put into it.” Now THAT, my friends, is a blind, dogmatic assumption of employment as the norm. But wait, it’s worse than that. A person who sees his services as valuable, something he ‘sells’ an employer, at best, knows that the matching contribution is part of his COMPENSATION. It’s part of the package of remuneration for his work.

In other words, if your employer cuts health care, you’re getting a pay cut. If your employer assigns you added responsibilities without added pay, you’re getting a pay cut (or at least getting snowed). I like that phrase they foist off on people young enough and inexperienced enough to believe it (or just craven enough to pretend they do) – “you’re investing in your marketability in the company” . Ha. The only thing you’re investing in is your reputation for price cutting – selling premium quantities and qualities of work for the lowest possible compensation. You’re the Walmart of employees. Or there’s the similar one, “because you care about the company”. Hey, caring is a two-way street – it’s like a marriage. Would you ask your spouse to do 100% of the housework and keep a full time job, because the spouse “cares about the family”? Not bloody likely.

But this isn’t even a pay cut. My example is one of robbery. The abject, and outright robbery of the system by (well you know who is responsible, if you’re paying attention – sure it’s AIG, but it’s more widespread than that – it’s an entire sector of society stealing from the other sector) – robbery that resulted in a LOT of us losing half or more of our retirement funds. Losing all of it, for those who left their money in until it hit zero. What they stole is the same as if they stole my paycheck. That money wasn’t legitimately lost to the “fluctuations of the market” – it was robbed by the looting and devastation and plundering and pillaging of the market. I know pretty much where it is. It’s driving around the Eastern seaboard with European leather and a blonde trophy wife in the passenger seat. It’s stopping to refuel on the way to a resort and spa where I can’t afford to eat the moisturizing cream it took a bushel of rain forest plants and a dozen children making a penny a day to produce for 3000% markup and some penthouse-dweller’s name on it. And on top of that, someone has the audacity to say, “but it wasn’t really your money.” “You didn’t really lose anything.” “Your employer *contributed* it to you. Like a gift. You can’t get upset over a stolen gift, now can you?

Well, it’s not a freaking gift. It’s one of the types of paychecks. It’s part of the compensation, part of the deal. Keep in mind, it’s taxable. Now or later, but it’s taxable.

The assumption is so strong that employment is the norm, that one easily forgets that the lingo you hear around the office isn’t real. A contribution isn’t really a gift. Caring isn’t really caring, it’s working for free. Marketability means gullibility. And ‘market fluctuations’, if you happen to work in the financial services sector, means causing a blackout, then coming to your house and stealing your TV set, then kicking you out of your house and taking that too (we don’t have an ARM, don’t worry), selling your home, and then offering you a credit card with a mafia-like interest rate so you can “rebuild” your “good standing” with the financial services industry. Oh, and lastly, telling you that none of what you lost was ever really yours in the first place. Equity meets late fees and cost of foreclosure. Finally, you blame it on an act of God, vibrations, hiccups, tremors, and “fluctuations” that no one could have prevented. So now you can’t even go to Church and pray about it without looking at your priest suspiciously, and he’s thinking “What did I do?” Good thing he lost his house too, but you’re all going to be moving into his apartment because you just lost your job, and your 401K is so devastated that pulling it out should just about cover the government “penalty” for pulling it out. Prison is starting to look good, but your Priest doesn’t like that idea, and they just told prisoners they have to pay for their own healthcare. You take your unemployment check to the bank, but they won’t open an account anymore without pulling your credit, and you know where that leads, so you give a chunk of that to the check cashing place, fill up with gas at double the price when this started, and drive home to watch TV shows about people living “successful” lives (as though nothing happened in the TV universe), and you figure all those guys work for AIG or had stock in munitions. And you fall asleep hoping you’ll get that temp job you applied for, where they “try on” employees, one after another, without having to give you healthcare or retirement benefits. And your only hope is starting your own Youtube reality show, except that everyone else is in the same boat and what, ordinarily might be fascinating, is now just banal and taken for granted.

Ahem. Yes. Well, the point is this:

Rule of Work: Nothing is true if it confuses an exchange of value for value with a gift given to either party. See Ayn Rand. Corollary rule: If you got something as a result of honest work, taking it away from you without a fair exchange is always theft – calling it something else turns wages into slavery.

Yes, the assumption of employment as the normative form of work relationship prevails, but some of what comes with that assumption isn’t employment, it’s at best what the old South used to call “wage slavery” and, at worst, is just plain robbery, snake oil, machination, and exploitation. There’s nothing wrong with employment, if it’s honest, if both parties are exchanging fair value for fair value with their eyes open, in a transparent environment. But treating employment as a privilege, as though one should aspire to it independently of compensation, accept it as normal without reference to the entitlements governing every other form of trade (rhetoric venerating “the market” aside), is an additional set of assumptions that amounts to drinking the sacrificial Koolaid.

It’s bad enough to assume that life, ‘legitimate’ life, revolves around punching a timeclock or getting a salary, in contrast with the work itself. It’s unacceptable, though, to swallow down the notion that it’s really all about the love, and what’s in the contract is just Christmas gravy. Dunno about you, but I can get a turkey anywhere – I’m up for the gravy.

ROW Spotlight: Kiva – You Can Microlend

Have you heard about Kiva? Kiva is a free web site that lets you provide micro-loans (in amounts of $25) to impoverished entrepreneurs needing investment to make their businesses thrive. The entire loan amount goes to the entrepreneur and is facilitated through Kiva’s partnership with local micro-lending organziations in each country. The micro-lending organization collects interest and you are repaid the principle on the loan. You can voluntarily donate a couple of dollars to the Kiva site to keep it going, when you check out. These loans go to people with demonstrated entrepreneurial success, but who are so poor that they lack the means to get anything but an exploitative loan to invest in supplies, materials, or equipment, were it not for Kiva and you. When your money is paid back, you can re-lend it. We have a number of these loans in play and have been paid back many times and re-loaned again to new entrepreneurs. It’s a simple check-out cart system.

Example: Kossi in Togo needs $1200 for a new taxi (his old one is on its last leg). With this money, he’ll be able to feed his family for some time. He’s not looking for a hand out; he’s just asking to borrow a little and repay, because in his country the cost of a new taxi is pretty hard to come up with all at once. If he can keep working, because of you, me, and Kiva, he’ll be able to pay it back as he continues to earn income. (Update: The loan was issued, and Kossi is now at 92% repayment on this loan). You loan $25, and over the next week or so many Kiva lenders also put in $25. The total is reached very quickly, and the microlending organization is funded to provide and administer the loan. over the next 6months, year, or whatever the loan terms indicate (the terms of Kossi’s loan were 26months), the borrower pays it back, you receive the $25 back, and you can either withdraw it then or re-lend to a new entrepreneur. You can fund a loan with your paypal account, credit card, or other means.

Example: Surayo in Tajikistan makes women’s wear out of her home. As a contractor, her business has been growing, and she needs a loan of $700 to buy special material to increase her line. She plans to eventually open her own company producing and selling clothing, and she needs the material to make her own stock of clothes to move in that direction. You loan her $25. I loan her $25, and a lot of other people do as well. These are pooled into one microloan, which she gets as one sum, expands her business, and is able, with this kind of help, to get farther from poverty and closer to creating income that can not only sustain her but possibly employ others, while it contributes to her economy. Update: Surayo’s loan was issued and it’s 100% repaid now. She’s wonderful!

We’ve been lending through Kiva for a few years. It works, it’s honorable and straightforward, and if money is tight, you can lend with confidence, because the loan default rates are slim – most lenders repay, because they really are trying to build their business. What’s more they are building a business that’s thriving and in demand in their economies – they’re savvy, smart people who know what their clients are demanding, and just need some funds to be able to deliver it at the rate of demand. They don’t do unwise things like open a coffee shop in a farming community that already has two of them. At most, you risk $25 at a time (though you may want to fund several small entrepreneurs – it’s easy to fall in love with these people – they’re family), and you can make a dent in poverty by helping people get a handhold on something real – their work. Visit www.kiva.org and you’ll see what I mean. We’re committed participants.

No Mortgage for Freelancers?

Your local NPR or public radio station  “The Take Away” is running talk about how freelancers are treated unreasonably (I’d say prejudicially) for mortgage loan applications vs. job holders. Got an offer letter or a couple of pay stubs from a job? You’re on the fast track for refinance or a new mortgage. Freelancer? They want two years of tax return documentation indicating a high net. And freelancers are highly motivated to reduce net as much as possible, for tax purposes, by showing expenses.

So freelancers are faced with two horns – you either get taxed to death (don’t forget the extra self-employment tax) or you don’t get to own a home. The current society is structured to reward job holders and punish freelancers.

I hate this too. But it’s not going to stop me. Society is always in tension with the individual – I already figure society is not out to help me. I consider it a given, so I’m never suprised by injustice, shortsightedness, or the general bias if not downright persecution of the individualist. Sure, if you’re a large corp, you get a lot of breaks. As a sole proprietor or small LLC, they’re going to stick it in you as often and as far as they can. I take it for granted.

But if you didn’t catch our recent article on home ownership (and other fallacies) – Mount Olympus is Dead – you might want to, if this concerns you personally. I’m not so sure I *want* to be handed anything. I’m not so sure that what a lot of people call home “ownership” isn’t just a fairytale we tell ourselves while sleeping in homes that are 90% bank-owned, if they’re average. The notion that homeownership is the prize of success is still, in my book, a load of crumbcake. Especially if we live there by having our heads so far up our corporate boss’s butt that the job feels extra-secure. We’ve learned a lot about both homes and jobs lately.

That aside, effectively preventing a lot of self-employed from having home loans is a raw freaking deal. It’s retarded. It’s stupid. It’s shortsighted. And… <drumroll>… the good news is that it’s going to change. Don’t believe me? I’ll be here for the next few years, so I’ll be prepared to eat my words if I’m wrong. But I don’t think I’ll have to do that. It’s going to change, because structurally, the way in which work is conducted is going to change. Is already changing. I won’t beat that drum all over again here – we’ve said it in lots of other articles. But one line: Companies, if and when they come out of the economic disaster we prefer to call, euphemistically, “recession”, will include those that make the same stupid mistakes again, and those who have already irreversibly adapted to the new order – a more transactional relationship with workers – one that is contract-based, temporary (most jobs are destined to “become” temporary – they always were – we just pretended they were “permanent”), and one that requires individuals to take increased responsibility for negotiation and for securing needed benefits.

And, kids and kiddoes, the mortgage lending industry will respond to the changes. Perhaps slowly. Perhaps belatedly. Perhaps stubbornly (major finance companies have had their heads up their own arses over refinancing troubled mortgages and have elected to take losses rather than question their own morality and superiority – shooting themselves in the foot and homeowners in the head – we will remember this about them – we will remember it a long time). But they will, ultimately, respond – because it’s not up to them. The sheer pressure of the massive growth in more transactional workers along with the surplus of homes and overextended building will mean that if anyone does not yield, someone will simply start or create a business out of catering to the facts – financial elitism be damned.

In the short term, it may be a darned inconvenience. But so what? It’s part of the deal. It will be, regardless of whether you and I like it. And in the end, the world will have changed. I’m ready for some of that. The day we see the self-righteous lenders who denied refinancing to all those souls who could pay a reasonable rate, and kicked them out into the street, so the lender could take a stupid loss on the home because “they’re wrong – they’re bad – we shouldn’t have to refinance them – they shouldn’t be rewarded for not sticking to the deal we made with them” (yeah, those guys have publicly said all of that) – the day we see them hat in hand offering loans to woo them back, or their children back, without the traditional securities that didn’t mean a tinker’s damn anyway (their job and their car), some of us will be laughing. And we’ll know that, with the same negotiating power that those folks will have with income sources as the transactionally employed – contractors, freelancers, entrepreneurs – they’re better off and more in control of their live.

There are foolish people who will make foolish deals. There are predators who will prey on weaker understandings. That will go on, too. But it’s not going to be the whole story. I’m interested to hear how “The Take Away” topic plays out. But one thing I’m even more interested in – how it plays out in the culture of work.

Mount Olympus is No More

When I was a kid, it was very clear what my parents and parents’ parents expected of me. Acquisition. After WWII, words like “security”, “stability”, and “financial independence” seemed so important. But then, you had to give up your financial independence for a mortgage, stake your stability on a job, and trust your security to an insurance company, a retirement fund, and lots of men in uniforms.

And what has happened to that world? Not only have housing prices relative to income soared, but the mortgage has turned out to be a curse in many cases. Your 401K or your mutual fund may be worth a negative (you won’t be making that money back that way), and health insurance is so obscenely priced that if your employer didn’t pay most of it, you couldn’t afford it on a “middle class” income. And finally, the security once gambled on individual employers is gone. It was gone before this bust (it was perception, not reality), and it’ll have been long gone afterward. No one retires anymore at 50-65 with a gold watch and a pension. If you aren’t already an executive, you can forget it.

The wisdom, in other words, of the generation predicated on a world war and a cold war, has become a disproved religion, a mantra for those who prefer to live in old movies. None of us can afford, any more, to live in the world we inherited – we have to live in the world around us. The old, tried and ture system has become the ponzi scheme of contemporary economy. So what’s changing for us?

In a brilliant article, recently, wisebread detailed the fallacies of home ownership as an investment. It’s not diversifying your investments. A mortgage, they argue, is a foolish form of renting -  like putting a car on a credit card. Most of your money is lost to interest, and the growth barely exceeds inflation – most decent investment funds can do much better. The return at sale from appreciation doesn’t even touch the the costs of upkeep, improvements, insurance and taxes, and that’s with the tax deduction figured in.  If you broke even at sale, in reality, looking at all the math, that would be amazing. And we have tons of historical data on the performance of housing, when applying the same rules as other investments. The money saved from renting, invested in something else, is likely to make you more financially independent than a home owner with a mortgage – says one economist, “You’re supposed to diversify as much as possible — put your money into stocks, bonds, many different geographies — and then use the income to rent whatever you like.” There might have been an argument against this 40 years ago. There isn’t, anymore. You use the money saved on upkeep, insurance, and taxes to pay your rent.

The traditional job, too, we’ve said is a dinosaur. Working for one company isn’t diversifying sources of income. It’s putting all your eggs in one basket, and look where that’s got us. The future of smart investment, for your work (and if  you’re not treating your work as an investment, why not?) is contracting. Whether as a free agent or someone who’s self-employed. If you were running a business, would you want just one client? “But that could make you rich,” you hear all the time, “if you could just get Walmart to buy in”. There are just as many broke, bankrupt souls who will correct that misguided notion who went down highway 71 to Bentonville (or went down because of it). Those stories needn’t be recounted here – you can find them anywhere. So if you wouldn’t want all your income dependent on one source as a business owner, why as an employee? A century of history with the company store, that takes care of everything, has taught us that eventually it doesn’t, and certainly it’s not the most stable investment, when looked at as an investment, fairly – like any other. Have you looked at how much you’re giving away by being an employee vs. a contractor? And if not, why not? If not, your security is more likely in the mythology of joining, and not demonstrably mathematical security at all.

But the world is changing with or without us. Not only is loyalty not rewarded, it’s punished. Even for those staying in a traditional job, if you stay too long, you hit a ceiling at which confidence in your ability wains, and you find contractors or outside candidates taking your next step. And you won’t be getting that gold pen, either. We’ve already talked about how contracting is widely replacing traditional employment – from the employer’s point of view. The sound investment is in yourself – not just as a feel-good mantra, but in actuality, in genuine economics. Right now, there are still people saying “but I’m scared, and it’s more comforting being a… whatever” – they’re saying that now, but it’s about to get scarier being a whatever than at least having other irons in the fire. It will be gradual, yes. But gradual economics is not like gradual geology. It will be in your generation, and mine. Even small employers will be preferring contractors to employees.

What we will tell our kids, if we’re looking ahead, with vision, is that financial independence is not summed up in a mortgage and two cars with payments in the driveway. Security is not in a fund your employer picked out for you, and you’d better open a savings account, because insurance, unless the current government succeeds, will belong to the rich. Unless you’re starting out rich, start saving. And lastly, stability is not rooted in placing all your faith in the company, the organization, the corporation that is quickly distancing itself from what it was and still is portrayed as in popular culture. Stability is in a preponderance of investment in your multiple talents in multiple venues with multiple sources of income – not one. Whether work, or bonds, stocks, funds, or whatever. The internet geeks that have been telling us, amidst the scorn of their elders, to cut the traditional ties and live free, be mobile, be flexible, be responsive, be in more than one place, ditch the land line, the permanent address, and ditch keeping your life in file cabinets – be able, at least, to travel the world – those bratty, brash, bravado-mongers – those are simply the ones that realized, before you and I did, that the myth was just that. A Mount Olympus from someone else’s dreams. And it’s not bleak to discover this – it’s immensely freeing and empowering. It’s as if the answers come into your head at last, and the world is one of science – it begins to make sense.

Love your and honor the bygone generation, but don’t live in their story. It’s far more interesting to see past Olympus to the other side.

Blog vs. Debt

One of the things I like seeing about this economy is the spirit of resistance and, often enough, of triumph that is coming in response. You can see it in the blogosphere. There’s a lot of BS out there, about how it’s going to be ‘over’ in a few months. I don’t think so. We’re never really going back, folks. It doesn’t matter what people will say when they feel it’s safe to go back into the water of gratuitous waste, dishonest lending, foolish borrowing and general overextension of everything. It won’t be ‘over’ – it won’t be ‘recovered’ – it’ll be different. And I believe different is already here and here to stay.

One blog I found recently really turns me on: Man vs. Debt. It’s written by an amateur and that’s one of the things I like about it. Not every post is a winner, any more than it is here. Some are stellar. It’s real. My favorite is the one on how he decided to sell anything in his house that wasn’t nailed down – from diaper pins to soap dispensers – on ebay and in garage sales. A family member told him that surrendering their possessions would feel like “going backwards”, but he said that being in debt is being backwards – getting out of debt is moving forward, and they can always buy the things they really want again with cash once that happens. What a radical break that is with most of society in the West!

Aside: I live in a part of the United States where the value system is to get as big a house as you can (almost everything centers on the acquisition of a house), on the most land you can own, and then spend the rest of your life shopping at Pier One Imports or Walmart to fill it with as many things as you can (no empty space – it’s not allowed), and then die and give it all to your kids, so they can have an estate sale, and use the money to rinse and repeat.

It’s Noah’s Ark syndrome. Build or acquire a really big structure and fill it with your own copy of everything – two of each. You need a dining room table, and a little kitchen table too. You need two cars. You need at least two TVs. Two telephones. And so it was that all the Noahs signed mortgages, as if theirs were the true ship into which two of every kind of possession must go, and they filled it with two of everything, and closed the hatch. And one day they died in there, and I bought their TV at an estate sale for $20, watched it for a year, and then sold it for $10 in a garage sale.

I don’t think the rain is coming to wash away all our possessions. I don’t think we’ll never see furniture again, if we don’t acquire more of it. And what I like is neither do people that write blogs like that. They’re busy casting things out of the Ark! Swim! Swim, you useless curios and pieces of fiberboard crap! Swim back into the stream and be gobbled up by people who are building arks for the end of the sale!

Another example of some amateurs going at it is the spunky, youthful Five Girls Ditching Debt. Might as well be Spice Girls in my book. Ooo la la! No sooner do you click on these babes’ site than you see pledge #1 – follow David Ramsey’s Baby Steps. Darned straight. Those rules got me out of credit card debt. Think of it like an exercise journal where  you maintain the will to victory by the sheer chutzpah of posting your goals and your progress on a public wall for all the world to see. It’s like talking trash to yourself. Yeah, I’m going to kick debt’s arse! You hear me debt? Watch me! You got something you want to say? Yeah, I’m telling the whole world how I’m going to take you down after school. You’re mine, debt. What, is that a tear in your eye?

No, these girls aren’t bullies. Bullies are just pussy cats who can’t deal with their inner softness. These girls are gym-kata fighters with the foo of debt erasure. They’re roller derby debt erasers. I wouldn’t bet against them. The five are keeping it real. Gutsy gals, all of them.

I love what people are doing to revamp their lives, hack society’s assumptions, and rethink the world of excess. It’s a revival of sorts, folks. And you can see the little conversions, the little salvific acts appearing all over the place. There’s a revolution goin’ on. I’d like to see Thomas Friedman shocked one morning to wake up and have to amend his friggin 37-CD set on the “Flat World” by saying that the US is starting to outdistance Japan as a nation of savers and investors. Not because I’ve got a flag up my butt and I’m waving in the patriotic wind, but because it’s good for us, man. The times they are a changing.

The new wind is get up and liberate yourself from the bondage to debt. Paul Simon should make a new version of his song – call it “50 Ways to Leave Your Banker” – “Just drop off the key, Lee, and get yourself free.” These guys (and at least five girls) are the drop outs from the economy of economic serfdom – the burn your credit card  anti-debt protesters of the new economy (today the draft card is your credit card – it sends you off to Sam’s Club for a three year stint facing down the enemy of interest). These are the radicals. Don’t underestimate their potency. Hear them roar.