In the last installment of this series, Egalitarius’ management instituted several aggressive cost-cutting measures to offset the cost of more expensive unionized labor, and Meritocratus’ management moved its production facilities offshore.
This scenario starts before Egalitarius’ strike begins.
As both companies fought for market share, the global economy was hit by a crippling recession. Most industry analysts projected widget demand to drop across the industry by 10% in 2012.
In the last four installments of this series, the Widget Worker’s Union (WWU) brought Egalitarius to its knees with a strike that ultimately forced the company to declare bankruptcy. Before the WWU strike, Egalitarius’ management instituted several aggressive cost-cutting measures to offset the cost of more expensive unionized labor. This scenario starts at this point, long before the strike begins.
This time the focus is on Meritocratus.
While Egalitarius’ management balanced shareholder interests with society’s well-being, Meritocratus ruthlessly pursued maximizing its bottom line. Continue reading
Source: WordPress, Reflections of a Rational Republican
In my first few months of blogging, over 50% of my traffic came from search engines. That said, I suspect that my other sources of traffic will increase over time.
A little over 30% of my traffic was from what I consider online communities. In the chart above, online communities include blogs, forums, email, and social networking sites.
Social networking sites have generated most of my traffic from online communities thus far. Email, not so much.
However, over time I suspect that other blogs and forums will grow as an overall share of my traffic, social networking sites will remain constant, and email will likely shrink.
Given this dynamic, building a robust online community seems to be a necessity for sustaining a successful, long-term blog.
Below are several ways to build a sustainable online community: Continue reading
After Egalitarius’ management launched its cost-cutting program in response to worker unionization, the Widget Workers’s Union (WWU) called for a strike. The union contended that Egalitarius’ cuts constituted unfair retaliation against the workforce’s unionization. It is also complained that the inferior materials Egalitarius now used were hazardous to the workers.
As a consequence, the union demanded that Egalitarius provide workers with more overtime hours, and that the company revert back to using higher quality materials.
With its back now against the wall, Egalitarius’ management has no choice but to call the union’s bluff.
Unfortunately. the union was not bluffing. Continue reading
After encouraging its workforce to unionize, Egalitarius’ management saw a precipitous decline of 80% in its share price.
With an eye on saving the company and the executive team’s jobs, Egalitarius’ management implemented aggressive cost-cutting measures. Continue reading
©2011 Reflections of a Rational Republican
Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy is Matthew Simmons’ thoroughly researched and well-documented account of Saudi Arabia’s aging oil fields and what it means for the global economy. In the book, Simmons argues that Saudi Arabia’s years of plenty may soon be behind it. The focus on Saudi Arabia is critical since the Kingdom supplies about 70% of the world’s spare oil capacity. Even the smallest decline in the Kingdom’s oil output could wreak financial havoc on the industrialized world. Continue reading
In the first installment of this series, we introduced two widget producers called Egalitarius and Meritocratus.
Egalitarius’ management encourages its workers to unionize, because it wants to ensure that the company treats them fairly.
With high ambitions to rectify Egalitarius’ “unfair” labor practices, the Widget Worker’s Union (WWU) organizes Egalitarius’ workforce.
Its first order of business is to demand a 20% pay increase.
Egalitarius immediately concedes.
Since labor constitutes 50% of a widget’s cost, Egalitarius’ cost of $0.70 per widget increases by 7 cents.
Additional WWU demands overwhelm Egalitarius’ legal department. As such, Egalitarius hires more lawyers to handle union complaints. This hiring raises the company’s overhead costs (SG&A) by 10%.
Once upon a time, there were two firms, Meritocratus and Egalitarius. Both firms operated in the $10 billion widget industry, and each had 50% market share.
Widgets were not a commodity. Purchasers were sometimes willing to pay a premium for a superior product.
By the end of 2011, both Meritocratus and Egalitarius had identical products. The only thing separating them were their operating philosophies. Continue reading
Hearing this old Billy Joel song from the early eighties made me feel somewhat nostalgic about my childhood in Delaware and Pennsylvania.
It is also seems to me to be a bit melancholy. The closing of a factory town. The passing of the torch from generation to generation. The bitterness and pain of change.
It made me wonder: will my generation do better than the last?
I ask this question not as a challenge, but as an honest effort to hear from others about their hopes and fears of the future.
“Do better” can mean whatever you want it to mean. It could mean that my generation will be wealthier than the last, or more or less responsible, etc.
I am just interested in opening up a dialogue and hearing different viewpoints, particularly from members of the current and last generation.
According to The New York Times, New Jersey’s Assembly passed a bill 46 to 32 today that would “sharply increase what state and local workers must contribute for their health insurance and pensions, suspend cost-of-living increases to retirees’ pension checks, raise retirement ages and curb the unions’ contract bargaining rights.”
New Jersey’s government estimates the bill will save $132 billion over the next 30 years.
This legislation could not have come sooner for New Jersey. The state’s pension funds’ future liabilities currently exceed their assets by $54 billion.
Governor Christie continues to do what Washington cannot — reduce the bloated size of government and rein in union entitlements.
It is a shame that he is not running for President.
Ross Douthat Charles Krauthammer
Reflections of a Rational Republican 