Don't ignore inefficiencies in private sector, either

There is a great deal of truth in the increasingly popular sentiment that the compensation levels for government employees have become distorted, more so during this Great Recession. But such distortions are prevalent in the private sector too.

I do not mean to deny the problem in the public sector. My graduate school professor, who has semi-retired now, often joked that he became a libertarian because of his experiences when working as a student intern with the Los Angeles County government — and this was 40-some summers ago.

In my own experience as a student intern and later as a full-timer with different government agencies in California, I did encounter employees who did not seem to be delivering service that was equivalent to their high salaries. In the decade since I returned to academia, one of my former employers has practically doubled the number of people on its payroll.

But such issues are not only a characteristic of the public sector; they plague the private sector as well. When it is a small business, like the one my neighbor owns, it is quite easy to maximize efficiency. But as organizations get larger (much to our displeasure as consumers and taxpayers), wastes do arise. Various forms of economic inefficiencies, of which compensation levels are one, are characteristic of large organizations — private, public and even nonprofits.

Academics and management experts have been studying these issues for a long time. A fellow graduate student — also from India — did his doctorate in "organizational behavior" and focused on such inefficiencies. The interesting irony was that until we met in Los Angeles as new graduate students, we didn't know that we had worked for the same employer in India, Indian Oxygen Limited, after which, naturally, we shared many jokes about the wasteful practices at the firm.

Perhaps it is easy to go after public sector compensation because it is the metaphorical fruit lying on the ground. But, while bending down to pick these up, are we overlooking far plumper fruits in the private sector?

A typical argument for ignoring the inefficiencies in the private sector is that options exist for us consumers, while as taxpayers we have no alternative but the government, which is a monopoly; i.e., if we do not like, for instance, a multinational company's wasteful approaches, then we can stop patronizing that business and move to somebody else. However, as we find with the oil companies, there is rarely a difference between large firms, which means that there isn't really a choice for us consumers — it is tweedledum or tweedledee.

Finally, looking at inefficient resource allocations within my own world of higher education, I would rather that we target first the ever-increasing expensive spending for athletics. It is not even news anymore that often college coaches earn far more than corporate CEOs.

But this is a losing battle. After all, even my left-leaning faculty colleagues love sports to the extent of organizing betting pools during "March Madness." I suppose we are stuck with inefficiencies that we don't like!

Published in the Statesman Journal, August 14, 2010

Update: In addition to the comments in the newspaper's page itself, the following is a verbatim copy/paste from a university email (I have "x"ed out the name) in response to my op-ed:

Dear Colleagues:  I invite you to read the latest editorical by Sriram Khe which appeared in the Statesman-Journal on Saturday (8/14/10).  It is in the Mid-Valley section as part of the regular editorial page.  It is about "inefficiencies" in the public and private sectors, although the term is never defined.  He refers to the inefficiencies in higher education particularly manifest in collegiate athletics.  Now we all know about excesses and corruption in intercollegiate sports, especially at the Division I level.  But the editorial gets better and the author makes an interesting claim.  Khe asserts that his "left-wing colleagues" who run "betting pools during March Madness" are somehow part of the inevitability of inefficiencies in higher education.  I presume that this means that if his colleagues are college basketball fans and participate in a division betting pool, then we either support or are oblivious to inefficiences in higher education.  There are many possible responses to this preposterous assertion.  Let me suggest just one.  My "left-wing" colleagues and I are all serious and at times even severe critics of excess and corruption in all levels of sports.  Most of this occurs at Division I and involves the intrusion of commercial capital, particularly in the form of television contracts.  This has nothing to do with intercollegiate sports at WOU, a Division II program.  At WOU, intercollegiate sports is used to recruit student-athletes and train teacher-coaches for mostly public school systems.  Does this sound inefficient to you?  Most student-athletes at WOU are not on scholarship and participate for the love of sport and as part of their future educational goals.  Does this sound inefficient to you?  So where is the "inefficiency" connection between sports at WOU and left-wing faculty participating in a ritual of March Madness??  You probably know that President Obama is also a college basketball fan and also participated in a "betting pool."  I wonder if Fox Television (Glenn Beck!?) will follow Khe and accuse President Obama of fostering inefficiences because he is like the "left-wing" faculty in Social Science. 

All the best, Comrade Bxxx  

Cubicles and "monolithic insanity"

Dilbert was a wonderful antidote to my cubicle angst, back in the day when I used to inhabit one for forty hours every week. As a cubicle dweller, I had very few things. One day a colleague asked me whether it is because of my religious beliefs that I did not have any photo of my family in my cubicle. I tell you, there is a formula for being a cubicle worker--a photo or two of the family/pets, a small bowl of candies, kleenex, maybe a pretentious book, .... I was almost ready to respond that I have no religious belief, and that I do not believe in any god. Now, but I held myself back because that would have made me even more of non-conformist in that colleague's eye!

There is at least one good thing being a tenured faculty member in a university--we get our own office spaces, with a door and windows 8-) Not that I do anything in my office for which I need any enclosed, private space. Neither do I really need an office to display my book collection (I do not have one, anyway!).

So, where did this idea of cubicle originate? Over to the Scientific American:

[Open-plan] offices and cubicles were invented by architects and designers who were trying to make the world a better place—who thought that to break down the social walls that divide people, you had to break down the real walls, too.
In the early 20th century modernist architects such as Frank Lloyd Wright saw walls and rooms as downright fascist. The spaciousness and flexibility of an open plan, they thought, would liberate homeowners and office dwellers from the confines of boxes. But companies took up their idea less out of a democratic ideology than a desire to pack in as many workers as they could.

Ah, yes, democracy in the work place. Let us see. In my last job/career before returning to academia, we proles were in cubes, with offices with doors for senior staff. Well, with reorganization, one office became vacant, and two of us proles expressed interest to our director. Guess what he did? He did not want to make one happy and the other unhappy--so, neither got the office. I left for academia a couple of months after that--no, not because I did not get that office! And the other person left for another job. Yes, office life was crazy, as much as life in the ivory tower is crazy.

Anyway, the cubes were all modular, which meant that we could get larger cubes too! But, the dull boring modular cubes were apparently not what Herman Miller had in mind:

In 1968 Herman Miller began to sell its system as modular components, with the unfortunate consequence of letting companies cherry-pick the space-saving aspects of these designs and leave out the humanizing touches. As corporations began to shift all their employees, not only clerks, into open-plan offices, Herman Miller designer Robert Propst disavowed what he had spawned, calling it “monolithic insanity.”

Lovely phrase: monolithic insanity. The same phrase will describe Dick Cheney also really well. muahahaha

More on the (bad) high speed rail idea

I worked as a transportation planner in what seems like eons ago. One of my assignments was to be involved with California's plans for high speed rail. The agency that I worked for even commissioned a study to identify potential sites for high speed rail stations in the Bakersfield area. Consultants love these kinds of projects--easy money, with no liability arising from their conclusions because everybody knows that the project will never come to fruition anyway!

I am glad I got an opportunity to exit this agency and return to academia where I did not have to hide my analyses and ideas behind facades--thanks the intellectual freedom we have. (Or so I thought until I found out otherwise; but, who cares for my sob stories, right?)
Anyway, one reason why I was convinced that high speed rail will never be economically feasible without extensive--I mean extensive--public subsidies was a simple back of the envelope calculation. The calculation was about the out of pocket expenses that a family of three would incur if they drove from their home, say in Bakersfield, to the destination in Los Angeles, compared to the expenses involved with completing the same journey on a high speed train.

To take the train, there are the following explicit cost factors in addition to the fare for each passenger:
transport to the station of origin
transport from the destination station
and then the transport costs to move around in the destination city.

You add these expenses to the fares for the family of three, and it turns out to be way, way, more than the out of pocket expenses if that family had simply gotten into their car and driven. And then, add to this the need to stick to the train schedule as opposed to leaving from home, well, whenever.

Anyway, that is all water under the bridge. That is what I thought, until the recent rah-rah for high speed rail in the US. I suppose such policy ideas are like mythical monsters that never die!

It was not a surprise to me that my graduate school professor, Peter Gordon, has blogged about it--he has a long track record voicing his opposition. It was, however, interesting to note that the UK too is planning on big time expansion of high speed rail. As Johnny Carson would say, "I did not know that!"I liked this comment about the the UK discussions:

Obsessing about high-speed rail also misses the point that every form of transport has its strengths and weaknesses. There are all sorts of factors that people take into account when choosing if and how to travel, like cost, convenience, speed, comfort and flexibility. If you want to travel from city centre to city centre, trains are great for journeys of up to three hours. No check-in, no driving, just turn up and let the ‘train take the strain’. For longer journeys, the hassle of air travel is off-set by the speed (and, given the stupendous prices charged on Britain’s railways, flying is usually cheaper, too). For trips to less popular destinations, or where you need transport at the other end, the car is often the best choice.

So, to make Britain a truly mobile society, we need trains, planes and cars, and the best possible infrastructure for all three. And we need a government that is committed to the idea that mobility is a good thing rather than one that puts the brakes on our transport future.

Yes, sir!