Wednesday, April 27, 2011

Good Business Decisions

I spent some time this week discussing the subject of  "Good Business Decisions" on the internet.  A more accurate description would be, "How to Justify Running Out on Your Debts".  In reality, well-run businesses don't do this, but that's not the point.

Three years ago, the U. S. created a housing "bubble", through speculation, lack of regulation, and easy credit.  When the  economic downturn occurred, many found that they could no longer afford their mortgage payments, and their lenders foreclosed. The surplus of houses on the market and the changed outlook drove  prices down.  Many others found that the market value of their home had fallen below the amount still owing on their mortgage.  Their home equity had disappeared or gone "negative".

While many were forced out of their homes, others adopted a plan of  "strategic default", by which they walked away from their home and mortgage obligations, because they no longer saw it as a good investment. This practice they suggested was a "Good Business Decision".

Maybe yes and maybe no.  If you default on your mortgage, you may it difficult to get financing in the future.  If you leave at the bottom of the market, you may not be participating in an eventual market recovery.  Housing markets have corrected in the past (notably in the 1980's), and then recovered substantially.

More than a response to market conditions, I wonder about the attitude being expressed.  If it serves my interest, regardless of the impact on others, then it is a "Good Business Decision".  That I entered into an agreement to pay is unimportant, if the agreement is no longer beneficial to me.  After all, I had expected the property to increase in value, not decline.

One woman was particularly incensed that her friend had purchased property in 1996, sold it in 2005, "tripling" his investment, and was later able to pay cash for a new home, while her home had fallen in value, leaving her "underwater".  Considering how unfair all this was, she was contemplating a default.  However,  I imagine her attitude would have been different, if she had followed her friend's course and enriched herself.   

What I heard from others was that the banks had caused the problem (forget that the buyers had sought the financing), were responsible for their loss, and therefore they were morally justified to default.  And wise to be making "A Good Business Decision".  On the other hand, I was branded one of  "you people", "brainwashed by bank propaganda", for saying that I  "give credit" to those who honor their agreements.

The reality is that we live in a market economy, not always well-regulated, where prices are determined by supply and demand, psychology, fear, and greed.  A lot of people participate in creating the fluctuations.  A lot feel that they are just swept along by them.  The rationale that we use to justify our response is frequently self-serving.  Regardless of our original motivation, it may become, "the bad guys have done this to me".

Tuesday, April 12, 2011

War of the Rebellion

150 years ago today, southern rebels attacked Fort Sumter, Charleston Harbor, South Carolina, and began the American War of the Rebellion (known more often today as the Civil War).  It lasted four years and was the greatest tragedy in American history.

President Lincoln, who had sworn to "preserve, protect, and defend the Constitution of the United States", did just that, and the rebels were eventually suppressed.  My ancestors, living in border states, where the loyalties were most divided, struggled through the period.

William Lee Rhodes
Three of my Mother's ggrandfathers, Lewis Igo (1832-1918), William Woods (1833-1914), and  Robert White (1844-1938), served the Union side, either in the Missouri Militia or the Volunteer Cavalry.  My Dad's grandfather, William Lee Rhodes (1840-1902) from Maryland, served the southern Army of Northern Virginia, under General Early (and Robert E. Lee).  His father, George Rhodes, was held briefly as a political prisoner at Fort McHenry, Maryland, in the fall of 1862.

 Robert  Macklin White
My gggrandmother, Nancy Powers White, whose father had been a Missouri State Senator and quite prosperous, saw her farm destroyed by Union forces, and was left  destitute with her sisters (her parents having died shortly before the War).  Her uncle,  Justus Franklin Powers, a doctor and former state legislator, was imprisoned  for assisting southern soldiers.  Her second cousin, Union Lieutenant Colonel Melzar  "Fighting Melz" Richards, was fatally wounded at Amelia Springs, Virginia, on April  5, 1865 (four days before the end of the War) and died at the Union hospital at  Citypoint, Virginia, on April 13.

Snowden Morris, a first cousin of my gggrandmother, Susan Tevis Igo, brought his  family north to Cooper County, Missouri, at the start of the War, and spent 3 1/2  years serving the rebel cause, before finally surrendering May 26, 1865, (being paroled June 7).

After the War, some of the families continued on their farms; others relocated.  The 13th Amendment, in effect December 18, 1865, made slavery, the other major issue along with the preservation of the Union,  illegal.  (Lincoln's Emancipation Proclamation issued January 1, 1863, had declared slaves in the rebelling territory free, but did not include slaves in territory not in rebellion, such as the border states, West Virginia, Tennessee, parts of Louisiana, and Texas.)

Tuesday, April 5, 2011

Women's Work; Men's Work

Because of their labour practices, I don't shop at Wal-Mart, although their prices are probably the lowest. They currently have a class action wage/gender discrimination suit pending against them in the U. S and are strongly anti-union.   This has made me think about practices at other stores at which I shop.

I do my grocery shopping at Save-On-Foods, which is convenient, customer-oriented, and unionized.  However, the work tends to be organized by gender.  The cashiers are almost all female, as are the price checkers; the produce, packaged products, and frozen food/dairy/bread clerks are male; managers and assistant managers are male.  Only the bakery and meat departments seem equally divided.

Some of the work, such as stocking canned goods, may involve a bit more strength. Boxes of produce are heavy, but usually they are put on carts and rolled around.  The division seems to be cultural.

Many of the cashiers are either part-time or have very flexible hours.  I suspect the first, which would keep Save-On from paying benefits.  Some of the cashiers during the week are full-time.  The busiest time is on the weekends, but very few of the weekend staff work during the week, and must be all part-time.

I'd be curious to know the difference in rates between the cashiers and stock clerks.  The cashiers should be paid more, because they have to handle customers (some can be rude), process cash, recognize all products, learn new prices, bag groceries, load carts, and, of course, keep moving.  Those who find this too stressing don't last. Stocking shelves is far more relaxed.

I asked Tyler, who bags groceries when the lines start to get long, why they didn't let him cashier.  He said it was because of the classification.  I've occasionally seen young women being trained as cashiers.  It takes a few days to become knowledgeable and comfortable with the customers.  There is a customer-friendly patter that they are expected to follow: "How are you, today?"; "Did you find everything?"; "Have a nice day."  It seems like men could master this as well as women.

Whether the practices are economic (reduced wages and benefits for part-timers); or cultural (women's work; men's work); or both, I'm not sure.  It seems that there are still a lot of gender barriers to break down.