I began my company, Nimonik, in 2008. Since then I have learned a great deal about management, people, challenges and issues. There are already thousands of books on management and I recommend some on my Recommendations page. Whenever I think of management I think of the television show The Office (US Version). The main character in the show is a bumbling office manager with a big heard and a bit of a slow mind. Despite his gaps in competence and sometimes questionable judgment he turns out to be the best manager at the office. In one episode, he reveals that he is working on his very own management book. He has titled the book, “Somehow I Manage” and all the pages are blank. This is the best explanation of management I have ever heard.
In all seriousness, the few management principles that I have learned (the hard way) are as follows. This list is likely to change over time…
- Hire motivated people and do not demotivate them.
- You cannot manage people, you can only manage performance. Hold people to performance standards and ignore almost everything else.
- Different people want very different things in life. Figure out what the person wants (just ask them) and then give them that if you can.
- Hire people for the skill you need. Ignore all their other merits and defaults (up to a certain limit). Do not hire people for their overall skillset – hire them for JUST skill you need.
- Do not promote people who do not want to be promoted.
- Establish a pay scale that is clear and transparent for all. We have a scale with technical and management points that combine to determine your pay scale.
- If someone is creating negative energy in a work environment, remove that person or get them to stop creating negative energy.
- If you are a boss, do not try to be friends with your staff (this varies based on levels of seniority). If you are a business owner, do not try to be friends with your staff. Leave your staff space to have fun without you.
- Set the example.
This list will surely grow over time and these ideas and tips come from various people, experiences and books I have had the pleasure of meeting. I never took a management class in my life, except the class recommended by the great Michael Scott- the school of life!Published on March 20, 2021
On Tesla, Electric Cars and Sustainability
The planet is in an ecological crisis. Global warming, pollution, plastic in the wild, wildlife extinction and many other environmental issues are the symptoms of a society that is living beyond its means. Generally speaking there are three main ways we can tackle this existential crisis. I would generally say that most people fit into three categories with regards to our environmental issues. The largest and most important set mostly ignores the crisis and keeps on living. Eventually something will break and civilization will no longer be able to maintain its current level of quality of life, but until then all is honkey dorey. The second and perhaps most vocal set of people are the degrowthers. This group believes that the solution is to consume less goods and services, live in smaller homes, eat organic and even have less children. This group is small as a percentage of the population but they often get the most media attention and draw the most ridicule from the first group of people. The third set are the technologists or high modernists who believe that technology can solve our problems. This set points to our transition away from whale oil, coal heating other outdated technologies to show that yes, we can make a transition to clean and efficient technology. This last group is probably the smallest, but has the most power to move society forward.
People are change averse. For a variety of biological and societal reasons most people lean towards conservative policies. I do not mean right wing policies, though the two can be conflated, but rather maintenance of the current system. The vast majority of the population looks at the way things were, the way things are and can extrapolate a bit – but they cannot see very far past a short term change. We have only to look at all the industries that have been upended in the last 20 years – digital cameras, music (iPod), retail stores (Amazon), cars (Tesla), movies (Netflix), to see that despite clear signs of potential applications of technology – most people and companies did not see these radical changes coming.
Not not only do people resist change, some people actively resist it. In the case of Tesla and electric cars it has completely blown my mind the levels of active resistance to electric vehicles. I have followed Tesla very closely since its inception in 2006. The resistance to Tesla, especially between 2006 – 2017, was ENORMOUS. I cannot stress this enough. Tesla was undercut by the media in a famous article in the NY Times as well as on the popular car television show Top Gear. These two articles (and others like it) were hit jobs on Tesla and aimed to destroy the credibility of Tesla and more generally, electric cars. I do not think they were in cahoots with the oil industry, but the authors certainly demonstrated active resistance and a desire to destroy an idea. In many ways, this hit job was reminiscent of what the media, public and government did to the first mass market electric car, the GM EV1. The death of that electric project was well documented in the film, “Who killed the electric car?“.
While the media was attacking Tesla an even greater foe tried to kill it. The finance industry took unprecedented short positions against Tesla. They sold Tesla stock without owning it in an attempt to crush it. I ask, what is more evil than crushing a sustainable future for our children using your financial power? I had numerous arguments with short sellers including friends and family who all bet and hoped that Tesla and electric cars would fail. It drove me completely insane. Who is against progress you ask? The culprits start with financial interests but extend to a more general conservative public. This aversion to change and lack of imagination is the primary force that has held up most of human progress.
To overcome these massive obstacles there were two options – government support and building a dramatically superior product with impeccable strategy. The only country that has taken an aggressive pro-EV position has been China. Many countries have offered a variety of tax credits,loans and subsidies to the electric car industry, but no country has done as much as China. Today, China has millions of EVs on its road and number is growing very fast. Their policy forces companies to produce and import EVs and local governments have strong incentives to deploy electric buses. In general, the EVs in China have not been of the quality of a Tesla, but they have produced much more – from scooters to articulated buses. That being said, companies such as Nio and BYD are fast catching up to Tesla. Tesla’s strategy was outlined very clearly in Elon’s ten year plan (original (2006), part 2 (2016)). Their plan to build high performance electric cars that were sexy and that had fast recharging stations has worked, but it is only just a start. The larger effect of Tesla is that it forced the biggest producer to commit to EV (Volkswagon) and has pushed others (GM, Ford, Hyundai) to head in that direction too. Tesla also encouraged a series of startup car companies with great promise (Rivian, Nio, and others). In short, China and Tesla are responsible for converting all transportation to electric vehicles. I believe that most new cars will be electric by 2035 and thank god/Elon/XiJiping for that.
Electric cars alone cannot save the planet (they will likely reduce greenhouse gas emissions by 14% and improve smog and respiratory issues in cities dramatically), but they are a key driver. We also need to switch energy production to clean energy (mostly solar + batteries) and improve conservation of wild spaces and wild life. We also need to make our food chain more sustainable (less meat) and convert our homes to the Passiv high energy efficiency standard. The broader point is that we need to develop technology to allow all humans to live sustainably with high quality of life.
Beyond greenhouse gas benefits, a shift to clean transport and energy would dramatically improve air quality and reduce respiratory illness. The World Health Organization estimates 7 million people die of air pollution related disease every year and millions more suffer respiratory illness – especially children. Despite the obvious benefits of switching transport and energy production to clean energy, it is has been remarkably difficult for the public to grasp this benefit. The battle to remove lead from gasoline was a agonizing fight by a small group of scientists. Lead causes brain damage in children. Despite overwhelming evidence that lead was being emitted on a massive scale by cars, the car manufacturers and oil industry and the government did not want to remove lead from gasoline. Only after a massive fight was this important environmental and human health milestone accomplished. It still boggles my mind how many obstructive cranks there are in positions of power (maybe it shouldn’t be a surprise).
The other proposed solution to our environmental problem is to reduce consumption and return to the earth. While we could do this – almost no one wants to. Civilization is cool. I personally enjoy the benefits of modern medicine, air travel, large well heated homes and all the other benefits of civilization. The hard truth is that humans want an continuously improving quality of life and any philosophy that goes against this will never take off with the general public. It is perhaps for this reason that the fight against climate change has struggled to take off – it is too often conflated with a reduction in our quality of life. Authors such as George Monbiot and Naomi Klein do not help. They highlight the problems and propose solutions such as population reduction, vegetarian diets and no air travel. That ain’t going to fly. The most poignant example of the lack of viability of such a strategy is the famous implosion of Jimmy Carter’s presidency when he implored Americans to put on a sweater during the Oil Crisis of the 1970. Instead of putting on a sweater, they massively voted him out.
The battle for human progress is long and painful. Tesla shows that is is possible to change one of the largest industries in the world – but it takes superhuman effort and a certain alignment of the stars. If Tesla did it for cars (and solar roofs and backup battery systems), then we can do it for the other areas that need to be made sustainable. To me at least, this is a deeply emotional challenge – we are genuinely talking about the future of humanity on planet Earth!Published on March 14, 2021
False Positive PCR COVID-19 Test in Montreal, Quebec, Canada
I just wanted to share a small story of a false positive PCR Covid-19 test in the hopes it helps others understand what is possible. To be clear, I have no medical background and am not trying to make any comment on the accuracy of COVID-19 tests, which I believe to be highly accurate.
On December 9th, we were advised that there had been an outbreak of COVID-19 at our son’s daycare. Our son is 16 months old and his daycare has 10 children per group, with two instructors per group. At least one of the instructors was diagnosed with COVID-19 at that initial date. The groups were isolated (in theory) from the other children. There are a total of about 80 children at the daycare spread out over 6 groups or so. In general, the daycare seems very well run and attempts to meet all health recommendations with limitations on parents inside the daycare, hand washing and social distancing at all times.
On December 15th, the daycare was informed of other cases of COVID-19 in our son’s group and they closed our group and kept the rest of the daycare opened. The Quebec health authorities requested that my wife, son and I get tested. We kept our son at home and did not see anyone with the exception of some visits to grocery stores and essential services. We got tested for COVID-19th on December 18th at 16h. We received three negative results on December 21st at 8:30 AM. In Quebec, they administer the PCR test which is recognized as highly accurate.
On December 22nd at 5:30 PM we were advised by the daycare that there had been 7 adults related to the daycare and 1 child in our son’s group had tested positive for COVID-19. As such, we were asked by the health authorities to get another COVID-19 test and to stay isolated until we received test results. I was working on December 23rd, so my wife and son got tested the morning of December 23rd. We had planned to spend Christmas with my mother-in-law, who lives by herself. We kept with that plan as we had all tested negative and had no symptoms related to COVID-19.
On December 25th at 4PM we received a call from the health authorities that my wife had tested positive for COVID-19, but my son had tested negative. This greatly surprised us as we had no symptoms and my wife had obviously been in contact with my son. After a bit of discussion, I suspected a false positive and the article in the Lancet (PDF and another article) indicated false positives could be around 5% of PCR Tests. We decided to get retested. My mother-in-law (67 years old), my wife (32 years old) and I (37 years old) got retested on December 25th at 5:45 PM. A nice Christmas present!
On December 27th at 5PM we all received negative test results.
One interesting side note to this roller coaster was that we all found we had corona-virus related symptoms after the positive results. I had a mild headache and was tired, my mother-in-law had a headache and a runny nose, and my wife felt out of breath and a tight chest. Of course, this was just a case of projecting symptoms and imagining things. The human brain is a powerful organ. As soon as we got the negative results, we all suddenly felt fine!
As indicated above, I have faith and trust in the medical system and believe our healthcare workers are doing their best possible job. Mistakes happen in testing large samples and this is likely an outlying case. Throughout the process we endeavoured to respect the health guideline sand minimize our contacts and risks. As of December 28th, we all feel fine and are enjoying the remainder of our holidays!Published on December 28, 2020
Modern Monetary Theory and China
There is no greater example of the progress human society can make than China. Most of us are familiar with the ascent of China and their accomplishments. The short version is that China has lifted hundreds of millions of people out of poverty and increased GDP per capita from about $250 to nearly $10,000.
There is a vast literature on how this was accomplished, but I wanted to highlight three key elements that reinforce the power of large scale government spending that targets productivity. The role of government is ultimately two-fold : provide security to citizens and increase productivity and wealth of the country. In this regard, China has done a amazing job.
To increase productivity in a sustainable and self reinforcing way is extremely challenging. You must do this in the face of political, economic and historical challenges. China did many things, but let me highlight three.
Iron Rice Bowl
At its inception, the Chinese Communist Party created numerous state owned enterprises that offered guaranteed jobs to hundreds of millions. Though low paid and often unproductive, these jobs created economic activity and circulated money through the economy while producing goods and services. In short everyone could have a job if they wanted one. This initiative helped China achieve 6% annual GDP growth under Mao Zedong. Though Mao is known for the disasters of the Cultural Revolution and The Great Leap forward, he did lead China out of the depths of abject poverty with a Federal Jobs Guarantee.
After Mao, Deng Xiaoping reformed many of these state owned enterprises and reduced the guarantees around jobs. Yet, even in 2006 when I worked in China we sill saw the reality of state owned enterprise job creation. A steel mill that I visited in 2006 employed over 7,000 workers while producing 6 million tonnes of steel a year. A similar plant in France where I also worked employed about 2,000 people to produce the same amount of steel at higher grades. This job creation program was critical to China’s growth and it still exists to varying degrees today.
Issuance of Capital
Thomas Picketty argues that the main problem with inequality is not so much inequality of income, but rather inequality of capital. Owning capital is the critical element to success in society. Without it you are subject to the labour market and economic growth. In his latest book, “Capital and Ideology” he advocates for the issuance of substantial capital to all adults. He proposes something along the lines of 150,000 Euros per person.
China never went quite that far, but they did issue capital in massive amounts. One of the first industries China tried to reform and make profit driven was the textile industry. To do this, Deng Xiaoping issued large amounts of capital to a variety of state, semi-state and private enterprises that allowed them to buy looms and machinery from overseas. He also pushed for these companies to make synthetic textiles as cotton was not produced in China at the time and they did not have the capital to import sufficient foreign cotton. The issuance of large amounts of capital or the printing of money allowed for the build up of productive capacity and the generation of profits that could be invested in further industrialization.
The second massive capital allocation to private individuals was the transfer of residential property from the state to the individual. This is well outlined by China Skinny (a weekly newsletter on economic trends in China)
China’s 2019 GDP per capita of $10,098 pales in comparison to the $65,111 in the US. Similarly, its average 2018 urban wages of around $12,000 are just a fraction of the $63,093 earned a year in the States. So why are so many brands banking on China’s structurally low GDP per capita and poorly-paid consumers to lead the global recovery? If we look under the hood, the economic metrics and drivers in China are unlike those in the West, and only paint part of the picture.
For the average consumer in China, the wages one earns influences spending less than it that it does in most other countries, simply because they have more wealth behind them. In fact, China’s median urban household net worth stood at $198,330 at the end of 2019, versus an estimated $104,000 in the US.
Many readers are likely to be scratching their heads wondering how they can be wealthier based on the GDP and income fundamentals above. Chinese may be known as strong savers (although the youth have been taking on consumer debt like no tomorrow over the past few years), but how could saving that relatively low income create a level of wealth double that of half of American households?
The main reason is property wealth. When China’s housing stock was privatised in the late 1990s, most Chinese families were able to buy their homes and apartments at rates that are a fraction of what they are today. As a result, 96% of urban Chinese own property versus just 64% in the US. Having bought their property for such a low price, their indebtedness is also much lower. 57% of Chinese households ‘officially’ have debt, versus 77% of American households. And Chinese ‘official’ debts account for just 16% of their assets, versus 36% in the US.
A whopping 31% of Chinese households own two apartments and 11% have three or more. When the average apartment costs over $1 million in many districts in Shanghai, for example, it means that there are a large number of very wealthy people in China who are fuelling everything from the global luxury market, to cosmetics, to cars, to milk.
Although consumers are not yet skipping through the shopping isles filling their carts with glee, the overall return to normalcy continues to track well based on spending trajectories. Chinese remain fundamentally wealthy. Parents continue to support their millennial offspring’s consumption habits in and many categories are seeing solid growth. With China’s $205 billion post-COVID fiscal spending focused on economy-building new industries such as technology, mass transport and power infrastructure, the wealth of the country as a whole is likely to continue to grow strongly over the long run, and with it, its importance as a consumer market.
Your perspective on the future is very different when you own capital or own your home (a form of capital). Though the Chinese government sold these state assets to citizens, they did so at a reduced rate with no attempt to profit or even make it financially sustainable for the government. However, the consequences of creating a capital owning class vastly outweighed the costs. No economy can be solely based on physical property and this is why China is putting all of its efforts behind the creation of growth engines based on technology. Put in another way, their efforts are focused entirely on creating higher levels of productivity on the back of a capital foundation with a certain amount of guaranteed jobs. This is modern monetary theory at work.Published on October 25, 2020
Modern Monetary Theory – or why infinite (government) debt can move society forward
The new book by Stephanie Kelton, The Deficit Myth is shaking up the establishment. In the book, the author argues that governments who issue debt in their own currency can create infinite debt under two conditions. First, the debt needs to be put to productive use – add value to the economy and to people’s lives. If we create debt to spend on gigantic statues of our leaders then we are in trouble (for a few reasons). The second condition is that the debt cannot lead to high inflation. If inflation starts to creep up then government needs to pull back on money printing. The actual amount of debt itself does not matter. This idea is not new, but the book does offer a compelling narrative to deploy with policy makers.
A number of years ago I read the magistral essay by the late David Graeber, The long history of Debt , which led to his book, Debt. In his anthropological work Graeber outlines a key difference in our perception of money. Most of us think (and are taught) that money is a medium of exchange and must be linked to some hard value (i.e. Gold). We think that money was invented to allow people to trade. He argues that this is not the case and there is no evidence for it. In fact, money is just debt and credit. Anthropologically money was created by Sumerian temples to count what farmers had produced and what taxes were owed. Money is a ledger of credit and debt.
Kelton builds on this key difference and as the London School of Economics professor outlines in his book review,
“First, the shortcoming. Kelton’s argument is based on modern monetary theory (MMT), which hinges on a critique of the orthodox view of money. The orthodox view of money asserts that the value of money is based historically on its link to precious metals and especially on its function as a medium of exchange. MMT contends the value of (modern) money derives from its link to credit (and debt) and underscores the important role the state plays regarding the ontology of money. George Knapp (1924) called this ‘the state theory of money’, J.M. Keynes further developed it in The Treatise on Money (1930), and it has been most recently promoted by L. Randall Wray (1998) and Warren Mosler (1993).”
The concept that government debt is not that important and what is important is the productive capacity of society is not new. The Social Credit Theory and the corresponding political movement of the 19th and 20th century argued that money should be printed to compensate for the depreciation of assets on balance sheets and for the difference between return on capital and wages paid for labour. The argument is that the government has a duty to print and distribute money to people to compensate for errors in our accounting system. Basically, capital holders have a number of accounting benefits that non-capital holders do not have. Therefore, government should print money to correct those errors.
Why have we not done this in the past you might ask? I would argue that the main reason we pull back on government spending is three fold.
First, government spending can be poorly managed. It can easily be spent on non-productive things that do not deliver value to people. Like a company that builds products that no one wants, a government that spends money on stupid projects that do not deliver value will lose the favour of the electors people (arms and force can keep the people down for quite a while).
The second element is inflation. Governments that issue too much debt and spend too much can create out of control inflation. The list of countries who have done this is long and often cited as examples of what could happen if we let our politicians spend too much. However, many of these out of control inflationary items were due to factors that were context specific and linked to how the money was spent in the first place.
The third and perhaps most critical element is resistance from capital holders. It is said that human history can be summarized as, “The capitalists (capital holders/rich) want as much labour as they can for as little as they can, the workers want to work for as much money as they can for as little time as possible”. This is the basis of class conflict, which is very real. If the government were to print money and distribute it in the form of a basic income to everyone, the weight of capital would decrease in society and capital holders would lose power and wealth. The overall society will be much happier and healthier and as long as the money is spent of productive things – education, factories, innovation,… – then things should work out in the long term.
When we take a step back and seriously question what money is, we realize that money is a creation by man and does not need to obey any cosmic law. We can and should print money to move society forward. As with any use of our collective power we must doe this wisely and judiciously. However, we must educate and explain to everyone that the only thing holding us back from success is ourselves. If we want to prioritize the health of the elderly or put a person on Mars – we can. If we want to shift all vehicles to electric and all power production to renewable – we can.
As long as we do not break the laws of physics we can do whatever we want. Money is an accounting tool to help us move forward, do not let people tell you it is some immutable force. Money has been co-opted by capital holders and it should be taken back by our democracy.
P.S. In many ways, this is what China has done (but that is for another blog post).Published on September 23, 2020