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Banbury Cross

a pillow for lost thoughts...

Archives for: April 2013

The fruits of our labor

It's tax time again, and with it comes the annual opportunity to reflect on how we - as a society - distribute the fruits of our collective labor. Since most of the products of modern era involve some form of collaboration of people, the problem of sharing the resulting revenues naturally arises. If you think that such task is trivial and hardly worthy of any neural activity, consider this simple example.

Let's say that Joe inherited a farm implement called "plum picker" from his grandfather and, as you might imagine, he wants to pick some plums with it. But he needs two associates to help him - perhaps he needs to stand on their shoulders while operating the devise. So he calls two of his friends and offers each 30% of the plum proceeds. Once they reach the orchard, however, Joe starts having second thoughts about his generous salary offer, and he downgrades it to only 10%. His friends gracefully decline and Joe has to find new partners. Fortunately, the village is full of people looking for work and eventually he finds two guys who will do that for 15% and that's the end of that.

In this case Joe has the decisive say, because he is the sole owner of the "means of production", so he determines who gets what. This may not always be in the best interest of the larger society or even fair. Joe may decide that he has enough money for now and let the plum harvest rot on the trees - leaving the villagers completely plumless. Also, the two helpers may work harder towards the final outcome and face significant risks, yet their negotiating position is hamstrung by the abundance of cheap labor in the village. If this simple example can produce uncertainty in the profit sharing conundrum, imagine the Gordian knot we'd have to untangle in cases where the individual contributions and ownership stakes are much less clear. Leaving the final distribution in hands of those who control the very last link of the production may be short sighted and simplistic.

For instance, consider a large semi-conductor company. The firm just designed a new production line, whose technology was inspired by recent theoretical breakthroughs in particle physics. They set up a semi-automated circuit etching plant and before you could say "chip", the upper management is making tons of money, some of which they reluctantly share with their underlings. Now let's take a look at two possible problems in the corresponding "fruit distribution" scheme.

First and obvious problem rests in the price the management paid to engineers who devised and constructed the production lines. Did they pay the engineers enough? Or did they short change them (in the obvious profit maximization effort), knowing all too well that if these engineers wouldn't assemble the machines, some other group would. This is essentially the same dilemma as with the plum pickers. At the end of the day, it is the top dog who holds the carving knife.

The second problem is more subtle: Did the management share their profits with all the parties involved in the product development? This is where the tracking of shares gets pretty murky. You can't really produce a complex object like say integrated circuit without contributions from a whole host of people, some of whom may be long dead. There were engineers who tried similar designs in the past and their failures paved the way for the eventual success. Did they get paid? There were physicists whose basic research in the field of quantum mechanics enabled the emergence of semi-conductors. Did all the researchers and scientists who worked towards that goal get paid? And we can go even further. Quantum mechanics as we know it would not exist without a rather esoteric mathematical discipline called complex analysis. There were mathematicians who worked out its rules in the 19th century unaware that 100 years later someone would use the fruits of their labor for practical application. Should their heirs be remunerated too?

Economy is a complex discipline and one of its more difficult tasks is to figure out not only how much to pay those who help in the production - the workers - but also how much to give back to the society whose treasure trove of knowledge enabled it. And something should definitely be given back. Otherwise those who elbow their way closer to the feeding troughs will have ever increasing advantage. To help quantify the attendant income disparity problem, we can take a look at the quantity called CEO-to-worker pay (the ratio between the CEO compensation and median worker wages). It used to be around 20:1 in the 1950s, then 42:1 in 1980s, 120:1 in 2000s and nowadays it is about 200:1. Amazing, isn't it? Sure running business is more complex these days, but the management apparatus which helps making the right decisions is more complex too.

Unfortunately, rather than starting a debate on what is the optimal range for this ratio, we hope against hope that the incarcerated market (sorry, but contemporary "market" is no longer free) will figure it out for us. But it won't. All it will do is further enrich the thin top layer of the society who figured out how to monetize something that grew out of our own long term endeavors (in the previous example the knowledge of complex analysis and quantum mechanics for instance). To be sure, I am not advocating egalitarianism. The entrepreneurs do deserve a huge chunk of the pie for their courage, talent and organizing skills, but whether their needs should be the only factor dictating the shares of the common pie I am less certain of. In my opinion, more of the spoils should come back to the community and help fund public infrastructure, education and basic research, even if it takes another 100 years for it to bear fruits.

As long as production was simple, like collecting plums, capitalism handled the necessary logistics quite well. But with globalization and automation on the move, the network of interrelationships is so intricate that a narrow group of directors, mostly focused on immediate profits, can hardly comprehend all its ramifications and social implications. However, relying on heavy taxation by central governments may become counterproductive, as bureaucrats do not have stellar reputation for efficiency. Perhaps some form of rotating collective ownership will usher the third way. That is the $64,000 dollar question teasing our generation's best economists.

Blue Geysers

Beauty likes to be seen. It likes to roll down the glitzy runway, slaloming between the camera flashes and absorbing the idolizing looks of the audiences like a starving attention sponge. That's why publicists, groupies, paparazzis, and admirers of any kind are in close tow whenever it rears its pretty head. But every now and then - if you are lucky - you can catch the beauty in its secret chamber behind the oak door, far from the limelight and far from the fawning crowds, resting and restive at the same time, sipping on a broccoli shake and not worried at all about the make up.

As I was walking through downtown LA this past Easter, cutting across the Hope Street on my way from the LA Cathedral to the Walt Disney Hall, I noticed a blueish glow coming from a distant and completely unlit part of the surrounding area. When I came closer I found out that the ethereal light emanated from four fountains dancing out an unlisted nightly soliloquy in a flat pool behind the John Ferraro Building, not far from the northwestern tip of the Grand Park.

Downtown LA has a number of fountains, all resourcefully illuminated, and greatly enjoyed by tourists and locals alike. But these were different. There was not a soul in sight, let alone a recording device. Yet they did not seem to mind. The four fountains were bursting their little jets off and streaming their Rhapsody in Blue across the dark water surface regardless of the complete lack of an applauding entourage. So while the night quietly rotated its socks, I sat down on a concrete walkway and pondered the gravity defying sorties and the ease with which the spouting cavalry purged their spectacle of any hints of ostentation. What was left was pure style.

If you ever are in the neighborhood and want to have a private moment with the beauty, go for it. It is just a few blocks from the Civic Center station and the chances are that the four blue geysers will still be there, performing their solitary routine and geysing tirelessly for your eyes only.



Frank Lloyd Wright once said: "Tip the world over on its side and everything loose will land in Los Angeles." And the city of angels lives up to this reputation. Only a major galactic dump could conjure up such eclectic mixture of profound and mundane. Just reach underneath its pillow and marvel.

...trinkets and churros at santa monica pier, a knotted maze of freeways, a former magician smitten by a can of cold beer, non-stop fountains dreadlocked in the grand park, native indians showing off their plumes in front of the union station, scarlet bricks and deep green lawns at ucla, concrete riverbeds gaping their off-season yawn, people who kiss with an accent, tempest of colors in a flowerpot, lactose intolerant pet iguanas, clinical trials of your favorite comedy skit, eternal quest for being one with probiotic yoghurt, human carnivores on a steak stakeout, the cult of concentric circles, colorful lines at universal studios, a glimpse of a movie star, a load bearing planetarium, the metallic scream of the walt disney concert hall, twelve shades of never, pirates and fairies on the corner of hollywood and highland, a voodoo parlor next to a muffler shop, hungry microphones on a prowl, a feminine axe and a bottle of innocent flies, scorched mountains overlooking the malibu beaches, a bonsai crouching behind the buddhist temple in little tokyo, a rolling hangover at 4am, the ubiquitous presence of mexico, speedy cars...

Socio-economically, it comes down to about the same. Los Angeles is a desert of poverty generously dotted with oases of opulence, but if you tip it over on its side, it gets all intermingled in one giant lump kind of...well...LA.

Joshua Tree National Park

This Winter has been like a marathon runner. It hasn't displayed any spectacular bursts of freezing and snowing grandeur, like so many winters before it, but it kept chugging on at a steady if modest pace. By the time it got past its equinox expiration date, it grew blithely oblivious to any hints the calendar may have been trying to throw at it and, without losing its cool for a single second, ground on and on and on and on, one chilly morning at a time, straining the patience of Spring seekers with a constant barrage of low forties. Its suffocating grip around Washington, DC was so unrelenting that the famous Cherry Tree festival (obviously dependent on blooming cherries) had to be postponed twice.

Since I was struggling with a lingering cold for most of March this year, I decided to seek a temporary thermal asylum in the Los Angeles area. But neither Santa Monica nor Long Beach provided the needed blast of heat that would scare away the virus colony that went camping in my throat. In fact, the cold Pacific breeze was quite beneficial to their well-being and I had to wait until a trip to the Joshua Tree National Park to finally fry to death all the unwanted microorganisms that I brought from DC.

Joshua Tree is one of the lesser known parks ensconced between two mountain ranges on the Southern end of the Mojave desert. It enjoys a broiling subclimate and is about 20 degrees warmer than LA. It derives its name from a peculiar plant which looks half like a palm and half like a tree and from a good distance might be mistaken for a limb of a calcified spider. The spotty presence of this tree gives the park the appearance of a green oasis in an environment of pervasive dryness. Trekking into its heart may feel a bit like hiking on Venus, but it is an endeavor worth taking.

Desert has its peculiar bittersweet charm - a fierce commitment to suffering if you will. This is where the rebellious Sun dances out its orgiastic etudes, this is where air tickles the vibrating tentacles of your imagination, and this is where the defiant life secretly sips from an elixir of warmth. Long live the vainglorious oven! You can paddle down the rivers of sand and discover your inner Dali among the well rounded boulders streaking by the roadside. Or you can try and tame the parched spirits of thirst that are floating past your senses just a few feet above the whitened gravel. You can even swim with the cactuses in the prickly sea of the Cholla Garden.

And most importantly, you can blow all your bacteria out of water for good.


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