Financialism leads to agony for GE and Sears

The internet has been buzzing with the news that General Electric lost its standing on the Dow Jones Industrial Average (DJIA) this week. That does not mean General Electric will no longer be traded, as some posts seem to claim. It means that General Electric is no longer one of the 30 firms that economists measure to calculate the Dow average.

Walgreens will replace GE on the DJIA, making this a bitter blow to the prestige of General Electric and signaling the increasing wealth and prominence of insurance related companies.

David Blitzer of Dow Jones had this to say about the current business environment:

“General Electric was an original member of the DJIA in 1896 and a member continuously since 1907. Since then the U.S. economy has changed: Consumer, finance, health care and technology companies are more prominent today and the relative importance of industrial companies is less.”

Only a few years ago General Electric was the most valuable publicly traded company. General Electric joined the DOW in 1907 and gained fame as an innovative company aggressive snaring the best engineers and scientists and making remarkable contributions to the industrial economy in the 20th century. General Electric built its fortunes on invention manufacture and sale of consumer electronics in the early 20th century and later moved onto big ticket industrial goods..

Robert J Gordon has written an explosive book offering a convincing argument for what has happened to our economy. In The Rise and Fall of American Growth Gordon argues that the century spanning 1870 to 1970 was an era in which “Great Inventions” powered by electricity and gasoline disrupted the economy and created great wealth. Since 1970 or so, the economy has moved ahead by the slow evolution of improvements to the inventions of the previous era.

A good metaphor might be the Interstate Highway System. The federally funded, high speed, all weather highway system replaced the interlocking network of two lane state funded highways.

Constructing the Interstate Highway Stems was costly, but created many jobs and funded many businesses and industries everywhere the system was built. Once built, however it became a static part of the economy and transportation systems. Incremental improvements were made over the years, but there was no opportunity for additional disruptive change that might create great wealth.

Here is how Gordon puts it:

Progress after 1970 continued but focused more narrowly on entertainment, communication, and information technology, in which areas progress did not arrive with a great and sudden burst as had the by-products of the Great Inventions. Instead, changes have been evolutionary and continuous. (Gordon, 2016, p. 23).

After 1970, the business climate became more competitive. Corporation began to look for new niches for expansion. At about the same time Wall Street “arbitrage artists” realized that many industrial companies were worth more for their assets than their future value. They constructed complex deals using borrowed money to buy old name American companies like US Steel and Rubbermaid, tear out anything of value and sell it to emerging economies in Asia, Africa and South America.

Called “hostile takeovers” these deals caused a great deal of emotional consternation. Most Americans did not understand the cold economics of “creative destruction” – the natural evolution of business – and the arbitrage artists became villains of Wall Street.

The best personification of these Wall Street entrepreneurs is the amoral corporate raider Gordon Gekko, played by Michael Douglas in the drama Wall Street, for which Douglas won the Academy Award for Best Actor and uttered the catchphrase, heard even today, “Greed is Good”.

The threat of financial creativity was not lost on large corporations in the last quarter of the 20th centuries. Although General Electric had established GE Capital in the 1932 to manage the new consumer product of credit, purchasing it now expanded into many other areas of consumer and corporate finance.

Rana Foroohar details General Electric decent into financialism in her excellent book, Makers and Takers.

When Jack Welch became CEO of GE in 1981 and immediately shifted from sales of jet engines, nuclear reactors and mining equipment to buying and selling other companies and even its own divisions in order to increase its stock price.

Acquiring debt was a large part of this shift, and GE Capital became the largest issuer of commercial paper – short-term loans to large corporations – in the world. GE Capital became a major profit center for General Electric and the company began to focus on “Not making, but taking, across every possible era of finance from equipment leasing to leveraged buyouts and even subprime mortgages”, (Foroohar, 2016, p. 154).

When the industrial economy finally crashed in 2008, General Electric’s new CEO, Jeffery Immelt, was forced to make a personal visit to Warren Buffet asking for $3 billion to save the company. Six years later in April 2015 Immelt announced that GE would be leaving the finance sector and the company would return to its original mission of invention and manufacture.

Another big name traditional American company, Sears, has been moving down a similar path.

If you have been following business news for the last couple of years, you know that Sears has been struggling to maintain its place in consumer sales. Its retail operations have been shedding cash for years and it has been running on borrowed money to survive. Sears has been selling its real estate – its stores – to offset the cost of borrowing essential to its survival. The details make for interesting reading.

For example, in 2015 Sears bundled 235 of its stores into a Real Estate Investment Trust (REIT), then leased the same stores back to itself. Its retail divisions, already losing money at an astonishing rate, now has the added burden of lease payments to Sears Holdings Corporation.

Sears borrows its money from ESL Investments, a hedge fund owned by Sears Holding CEO Eddie Lampert. (Yes, Lampert is CEO of both companies.) Every time Lampert injects money or lays off employees, Sears stock price increases a bit, and every time he closes another store, ESL gains another property.

There is a perverse secret to making money in real estate – debt financing. Most of us think of debt as something to avoid because there is no real upside. That isn’t true for big players, though. There are huge tax advantages to debt financing. Money a company borrows can be written off as businesses expenses and at the same time, an REIT is generating cash through the leases on property. It’s a win-win.

This is just one small example of how the economy has changed at a very basic level. The idea that debt can be an advantage to a company is difficult for most of us to accept, and that illustrates a larger issue – nobody is quite sure how to measure and manage this new economy.

In The Only Game in Town, Mohamed El-Erians’ interesting and very readable book on modern economics, quotes William Dudley, New York Federal Reserve President on the state of knowledge of our financial leaders in this era of financialism:

“We still don’t have well developed macro-models that incorporate a realistic financial sector”, (El-Erian, 2017, p. 33).

In other words, the Federal Reserve doesn’t really know how to measure economic consequences of large companies moving away from traditional trade and towards debt financing.



These books re referenced in this article:

El-Erian, M. A. (2017). The only game in town: Central banks, instability, and avoiding the next collapse. New York: Random House.

Foroohar, R. (2016). Makers and takers: The rise of finance and the fall of American business (First edition. ed.). New York: Crown Business.

Gordon, R. J. (2016). The rise and fall of American growth: The U.S. standard of living since the Civil War. Princeton: Princeton University Press.




If your kids are obnoxious little demons in public, try this

I see it all the time. Misbehaving children, parents either embarrassed or unconcerned, onlookers uncomfortably pretending to ignore the spectacle.

Parents don’t seem to know what to do. In a department store, I saw a father gazing at a display of jeans while his daughter, about four or five years old, dangled by his hand, writhing on the filthy floor screaming at the top if her lungs. She wasn’t crying. She was laughing, delighted with the looks she was getting form other customers. Dad was oblivious.

I refuse to be held hostage to these children. When I find myself irritated by screaming misbehaving children in a public place I leave.

Then I call or email the owner or manager of the business and tell them.

Nothing confrontational or even a complaint. Just the facts. “I was in your store a while ago and a kid was squalling so loudly that I got uncomfortable and left.” That’s it. When owners or managers hear that more than once they begin to intervene when kids are out of control in their store.

At the risk of appearing arrogant, I’m going to offer some help to parents of children who misbehave in public.

I want to offer two related interventions that will solve the problem you have with your misbehaving kids. You have probably heard of them, but have never heard them explained correctly.

Time Out and Negative Reinforcement.

Neither involves punishment and both are pleasant experiences that relieve stress and offer an opportunity for learning new behaviors more appropriate than the ones they replace.

First, Negative Reinforcement.

A reinforcement is anything that increases the chances of a particular behavior occurring in the future. Positive reinforcement means giving something that results in a behavior occurring and negative reinforcement means removing something that results in a particular behavior occurring.

For example, I’ve been going to economics sem

inars hosted by Voices on the Economy, (VOTE) for the last couple of years. I’ll spend a Saturday locked in a room with a bunch of other teachers and listen to lectures comparing and contrasting different economic theories on specific issues, like international trade, health care, or taxation.

Admittedly, I’m kind of a nerd and I enjoy these lectures. At least at first. We usually go for two or three hours at a stretch, and by the time a break comes, I’m ready to get up and move. As soon as the door opens, I’m off like a jet. While everyone else socializes and takes advantage of the snacks provided, I’m taking a brisk walk outside.

Where is the negative reinforcement you might ask?

One minute I’m sitting in a crowded room on a hard chair at a table. My butt hurts, the air is stale, people are too close, and I’m a tad claustrophobic. Suddenly the door is opened, I walk away, and I’m relieved of all those discomforts. The fact that those discomforts go away when I leave the room increases the chances that I will leave the room and take a brisk walk the next time I’m getting antsy and a break comes.

Here’s another example.

I’m at a fast food outlet, standing in line waiting to order. Someone comes in with an obnoxious misbehaving child. I wonder how long I can put up with the caterwauling little irritant and decide to make my order to go. The line isn’t moving. The kid is just warming up and now adds shrieking and yodeling to the repertoire.

I walk out the door and…blessed peace!

I’m not stuck immobile in a line! Freedom of movement! Birds are singing! The air smells good!

Again, all those discomforts are suddenly gone, and the chance of repeating my “leaving behavior” in the future increases. That’s negative reinforcement.

On to Time Out.

Actually, the full title is Time Out From Reinforcement. That’s important, because it captures what the intervention is really all about.

I can’t tell you how badly I feel when I hear parents or teachers threaten a kid with time out.

“One more time and I’m putting you in time out!”

It is a threat of pain and coercion. It teaches abuse of power and that adults can have their way with people who are smaller and weaker. Its intention is to intimidate through fear. It produces petty tyrants and adolescent bullies.

The threat of time out means an adult intend to physically drag the kid to the door of a small room, throw the child in, and keep them there as punishment. Just like those child abuse stories of parents throwing kinds into closets or bathrooms and locking the door.

That is not time out.

The legal term is false imprisonment. It is child abuse and it’s illegal.

When I hear those kinds of threats, I take a photo with my cell phone or note identifying details and call the police or child protective services. Really.

Here is how Time Out From Reinforcement really works.

First, you have to understand that Time Out From Reinforcement is a teaching method. Several skills are being taught simultaneously.

The first is agency.

Social psychologists use the word agency to mean that we have free will, can make decisions, and that our behavior results from autonomous decision-making. Self-direction, and independence might be synonyms.

Note that we are not teaching obedience or compliance. Those things are meaningless without agency. Also, obedience and compliance are fine as long as there is something to comply with or be obedient to. Our fundamental goal is the help the learner learn to act independently in unpredictable situations. That is, to make decisions on the fly and behave in ways that advances their interests, rather than result in social disapproval.

Next, we want to teach coping skills, or behaviors that have to help this particular learner overcome internal stress, like frustration, anger, boredom, or excitability.

Here is an example:

Imagine a third grade classroom. Forty kids, one teacher and one or two aids. It’s time for art, a relatively unstructured time when the students are allowed some independence and self-direction. As you might expect things get a little loud and chaotic.

The teacher notices one special needs child who seems to be on the verge of losing control. His attention darts from one thing to another in the bustle of activity all around him and his movements are getting more and more frenetic and animated.

The teacher says, “Jonny I notice you are on the verge of vibrating,” (a word chosen by the learner describing the frenetic behavior), “why don’t you go in the office and practice your deep breathing?”

That’s it. Time Out From Reinforcement.

In this case, the reinforcement is the chaos and lack of structure in the classroom causing the learner to show behaviors – called “vibrating” by the learner — typically present right before a major outburst. In the case of this child, that means a tantrum, involving throwing, and breaking things.

Before getting to this point, of course, the learner has already mastered deep breathing exercises as a way to calm down, and they have been found to be effective. He has also already gone to the office. Now the idea is to simply practice recognizing a behavioral precursor – the vibrating – and respond to it by engaging in the coping mechanism – removing himself form the classroom chaos and going into the office to calm down with deep breathing.

That’s time out.

What if the child does not go into the time out room and practice his relaxation exercises?

Chances are he will decompensate, have a tantrum, and throw things about. He might end up physically restrained, and will certainly have to clean up the mess he makes. These things will probably have an audience of classmates, adding social disapproval to the mix. There are all sorts of disagreeable outcomes and the parent or teacher did not have to make any of them happen.

They were all the result of the learner’s behavior. Social psychologists call them logical and natural consequences because they are not imposed by the parent or teacher.

Go in the timeout room and relax, and good things happen; act like a chimp in a zoo and bad things happen. Best of all, the learner can blame no one but herself. They are the one in control of their behavior.

How might this work in the real world?

Imagine this.

Mom walks into the grocery store with her five your old in hand. Immediately the child begins to cry or scream. Mom might say something like, “We don’t scream in stores, honey,” and goes about her business, avoiding giving undue attention to the child after an inappropriate behavior.

The child notices other people looking at her. She like the attention and feels an odd surge of power. She can get mommy in trouble! She begins to wail.

Mom might say helpfully, “If you don’t want to be here we can go back to the car,” and again goes about her business. No threats, no abuse of power, just making the choices clear and allowing the child to make a decision.

Now the child plops onto the floor, still clutching moms hand and puts out a full volume tune up scream. Now mom says, “We can’t stay here if you are screaming, you are disturbing other people. Let’s go out to the car and calm down.”

Mom abandons her cart in the middle of the aisle, picks the screaming child up, and goes to the car where she helps her child practice appropriate behaviors, then returns to the grocery store with the child for a second try.

That’s Time Out From Reinforcement. No threats, arguing, or punishment. Moreover, no surprises. Both learner and teacher know what happens when inappropriate behaviors are repeated.

I can hear it now. “But I don’t have time for that!”

I disagree. You do have time. When you have a child, you stop living for yourself and start living for your child. Your primary duty is to raise your kid, not go grocery shopping. As long as the child is with you, they are your primary responsibility. Everything else is secondary.

“But I have buy groceries so the rest of the family can eat dinner.”

Make sure you have some good, but uninteresting food on standby. If your kid prevents you from buying dinner warm up the leftovers, or macaroni and cheese, or whatever you have on standby, tell the rest of the family that your child was so unruly that you could not buy dinner. Peer disapproval is a powerful motivator.

Jordan Peterson talks about parental responsibility at length in chapter five of his excellent new book, 12 Rules for Life. You can raise a self-centered little bully who will rule your home when he is 12, or you can raise a decent young

man or woman. Raising decent young people is easy. Raising disrespectful hellions is hard, not because takes no effort, but because of the embarrassment and humiliations your kid puts you through, and the consequences of your own angry or passive-aggressive behaviors you have in private.

This isn’t “tough love” or any other pop psych trending fad. It’s common sense with a little structure thrown in.

Try it.

Second Thoughts on The Wall

I love Tucson and living in Southern Arizona. Everyone knows about our fabulous weather and cowboy history, but we also have an incredible culture. There is a Anglo/Hispanic/Native blend in which nobody is really dominant. There is no majority race or culture; no race/gender combination can claim more than 50% of the population.

And best of all we pretty much get along. There is very little racial or cultural animosity here.

I think that is one of the reasons there is so little support for a wall on the border. There just isn’t much point to it.

If the intent is to stop smugglers, a wall just isn’t the right tool. Smugglers move very expensive illegal goods across international borders. It is dangerous work, but that is why it pays so much.

Think about it.

Smuggling drugs is so profitable that it’s easy to afford to go over, under or around a wall.

Drug cartels buy custom-made submersible boats that go around the wall. The cost of digging tunnels under the wall and buying airplanes to go over it is small change for them. And remember, these expensive tunnels, submarines and aircraft are often used only once. Drug smuggling is so lucrative that cartel accountants write these losses off as operating expenses.

Walls do one thing exceeding well – they keep large numbers of people at bay.

And that is why I’m giving a wall a second thought.

Mexico is approaching its next election on July 2. So far, there have been over 113 assassinations of candidates running for office. You might find this surprising if you have been following the success of the anti-cartel police operations in Mexico. Government efforts have had some unanticipated results.

First, every time a drug kingpin goes down a violent competition ensues to fill the void. These are not old-fashioned gangsters with guns – although they are plenty of them, too. Many times, they are government officials working with criminal organizations.

For example, in 2014 police in Iguala seized 43 students who were protesting the local mayor. It is thought that the police turned the students over to a local criminal gang with which the police were affiliated. That group murdered and disposed of the bodies. Iguala Mayor Jose Luis Abarca and his wife, Maria de los Angeles Pineda were eventually arrested for ordering the killings.

Violent drug cartels are undermining the legitimacy of the Mexican government. The presidential election will be held on July 1, and so far, 113 candidates running for a range of offices have been killed and 300 injured. Hundreds more have backed out of their races, leaving only Cartel approved line-ups. Although police escorts are available, many candidates decline them because local law enforcement are often allies of criminal groups.

The drug cartels are competing for the political reins of power. That is something to worry about.

These illegal organizations are challenging the legitimacy of the Mexican government. Once the legitimacy of a government comes into question in the eyes of its people wide, spread social collapse becomes a real possibility in the face a crisis.

But something far more disturbing with the potential for international chaos is also emerging.

Political instability is common across Latin and South America.

Brazilian construction firm Odebrecht is in the center of an international corruption scandal spreading to high officials across South America. Peru’s president now sits in jail on charges of illegal campaign contributions, the son of the Chilean president is facing unrelated corruption charges, the economies of Argentina and Venezuela are in such ruin that even the International Monetary Fund, (IMF), and World Bank want nothing to do with them. Conditions in Venezuela are so bad that neighboring Columbia fears a flood of refugees if Venezuela descends into anarchy.

Why am I having second thoughts about a wall on our southern border?

Consider this…

So many South American countries are facing economic calamity and loss of faith in their political systems that the fall of one could trigger crises in neighboring countries. If that economic and political unrest spreads to Mexico, it is conceivable the government could collapse. In that event, we could see thousands or tens of thousands of displaced people massing at our southern border, just 60 miles south of Tucson.

You have to remember these people have relatives here in Southern Arizona, and it’s completely understandable they would look to them for refuge.

At that point, there are no good alternatives. We’ve seen the results of panicked mobs crossing borders in other countries, just as we’ve seen the tragedy of refugee camps and soldiers guarding borders from behind walls. If there were a solution to these tragedies, they would not be happening.

The only answer is to prevent these things from happening in the first place.

Instead of going to the other side of the world on nation building missions, maybe we should look a little closer to home.

President Trump makes no secret of his negotiating skills, and to be fair he has met with some success. Why not underwrite modest deals with the IMF and World Bank to bring economic stability to the southern hemisphere?

I’m not suggesting throwing money at these countries, but creating opportunities for American business to serve the needs of these struggling economies.

Or consider this…

There is currently a global shipping crisis – cargo ships sit at anchor all over the world because the global economy is barely perking along. While the media hyper focuses on China the United States and the EU, the rest of the world is in a logistical crisis.

What better time to invest in port infrastructure needed to accommodate the new super container ships with an eye to redistribute cargo to South America?

I’m not an international trade expert, a financier or an economist, but if I can come up with idea, certainly people who know what they are talking about could do the same.

There is a solution to this issue, and we have the people who can find it.

We could do that, and maybe bring peace, tranquility and propriety to the entire South American continent.

Or we could build a wall.

NOGALES, AZ – JUNE 02: A fence separates the cities of Nogales, Arizona (L) and Nogales, Sonora Mexico, a frequent crossing point for people entering the United States illegally, June 2, 2010 in Nogales, Arizona. During the 2009 fiscal year 540,865 undocumented immigrants were apprehended entering the United States illegally along the Mexican border, 241,000 of those were captured in the 262 mile stretch of the border known as the Tucson Sector. (Photo by Scott Olson/Getty Images) 

Elizabeth Warren: How greedy political parties corrupts our best hopes.

I was rummaging around in the depths of my file system today and found this old video of Elizabeth Warren’s presentation to the UC Berkeley Graduate Council explaining changes in the economy leading up to the collapse of the Industrial Economy in 2008.

At about the same time that she gave this lecture she she was interviewed on “Conversations with History”, an interview series presented by University of California Television (UCTV). In it, she talks about her childhood on a Nebraska farm and her unlikely journey to the upper crust of American business elite.

She tells the story of what life in a typically modest rural family living frugally, until Dad suffers a heart attack. Suddenly everything turns upside down and mom goes to work at the age of fifty to keep the house out of foreclosure. Years later, during the run up to the Great Recession, Warren has an epiphany: the experience of her family is the same as the families she is helping Wall Street bankers to foreclose upon.

There are lessons in both videos.

One of the most powerful is that Warren was still an academic when sharing her research on consumer spending. There are no strident indictments against republicans, or emotionally laden rhetoric about the evils of business. She just explains her findings in a casual and interesting way.

Looking back over the last three-decade or so, Warren shows us where increases in the cost of consumer goods are concentrated. It’s not that we are buying designer clothes, or suffering through inflated food prices or paying exorbitant prices for huge SUVs. Those are not what has become more expensive. Home prices, taxes, health insurance — none of which we can control simply by cutting back on routine expenses — are what has made us poor.

The point Warren is really driving home, however, is how these expenses have gone up so suddenly that the two-income households come precariously close to bankruptcy if one of those incomes is lost or delayed.

She does an excellent job explaining how our consumer economy is an unsustainable house of cards. At the time she gives this talk in 2007, the economy was in the beginning stages of a slow motion train wreck. The consumer economy of the last third of the 20th century created very wealthy industries in education, housing, mortgage lending and health insurance.

These industries enjoyed great wealth but suffered greatly during the Great Recession.

Now are now working hard to attach themselves like barnacles to our new emerging economy.

But there is another issue.

Contrast Warren’s demeanor in that 2007 lecture her 2016 reaction to Donald Trump’s election in a presentation to the AFL-CIO. She no longer explains how she calculated the statistics she presents. In fact she presents few objective facts at all, and gives an emotional speech on the unfairness of our public polices a greed of bankers and others.

Not that I disagree with her. If I were to lose control of myself and surrender to the strident 13 year old we all hold subdued in our inner psyche I’s probably sound the same. But, that is not how reasoned and articulate intellectual presentation are created.

Think about this for a minute and it leads to some sobering insights.

Why would Elizabeth Warren — probably our most informed politician on matters of economics and finance – make such a dramatic change in her delivery? One would think that if she wanted to inform us about complex issues she would do it in the most effective time tested way – like a scholarly lecturer.

But she doesn’t.

I think it is because she is no longer focusing on helping others in an objective search for truth. Now she is in the political arena, where money and power intertwine to provide a pulpit and a price, and demands a price for the privilege of speaking from it. As much as one might resist “selling out” the temptation to do so is very great. You either go along with everyone else and are trusted with the keys to a national podium or go back to a lecture hall talking to a few hundred people.

Lindsay Mark Lewis pulls the covers off how politics corrupts good people in his excellent book Political Mercenaries: The Inside Story of How Fundraisers Allowed Billionaires to Take Over Politics

Lewis was a fundraiser for the Democratic Party, raising millions from incredibly wealthy donors running some of the biggest corporations and social welfare conglomerates that have ever existed. He also worked with the machinery that distributes those funds – the Republican and Democratic National Committees. He tells us how party fund raising machinery coerces our representatives into supporting their party caucuses to the tune of tens of thousands per month.

It’s not pretty and there is nothing to be proud of in his story. Like Warren, Lewis had an epiphany also, but his led him to turn away from a lucrative gig as an industrial/political bagman and live a more respectable life.


Check it out and tell me what you think:

Elizabeth Warren: UC Berkeley Graduate Council Lecture

Elizabeth Warren: Conversations with History Interview

Political Mercenaries: The Inside Story of How Fundraisers Allowed Billionaires to Take Over Politics, Lindsay, Mark Lewis

The Two-Income Trap: Why Middle-Class Parents Are (Still) Going Broke, Elizabeth Warren







How are we going to manage the growing and invisible gig labor market?

The Industrial Economy finally sputtered out in 2008, but the chaos of a faltering international banking system on the verge of collapse obscured the consequences of that historic event.

In case you don’t remember or are too young to recall that agonizing slow motion train wreck, here is how Mohamed El-erian characterized those days in his fascinating examination The Only Game in Town:

“In the last three years plus, central banks have had little choice but to do the unsustainable in order to sustain the unsustainable until others could do the sustainable in order to restore sustainability.”

We now live in a new economy, one in which the old rules and way of doing things no longer work as they once did. The way we measure economic output and activities no longer works like it once did. I recently wrote about this in a blog article, Why the Fed is playing with fire when it increases interest rates.

The same challenge is happening in management, and recruiting.

(See this recent LinkedIn post from a forward thinking recruiter for new ways to address this problem.)

One of the most prominent examples of the move from the past to the future is happening in the education industry. Colleges and universities are replacing traditional full time faculties with part time adjuncts. The trend is not included in strategic planning, but seems to be a gradual piecemeal move towards an all-adjunct faculty. The Chronicle of Higher Education recently published a good overview here.

At the community college where I teach, adjuncts outnumber full time instructors by about 3 to 1, and teach the majority of courses and carry the majority of credit hours offered by the school. The college pays us about one-third the hourly rate of full time professors, but we are limited to about two thirds of the hours. Like most gig work, this is not produce a living wage, has no benefits and offers no job security.

That is typical of higher education and other occupations as well.

How do recruiters include these people in their networks? Is it even realistic to think gig workers might ever hold a traditional full time job?

Probably not, but I hope recruiters address the issue.

If all this seems like it is a relatively minor problem – that 3.8% unemployment number misleads many people – look to the current news on suicide trends. It’s not just fashion designers and celebrity chiefs taking their own lives.

According to CDC statistics, the highest increase in successful suicides over the last fifteen years – roughly spanning the time the economy has been in upheaval – is among men 45 to 64 years old. This is the generation whose most lucrative working years happened to coincide with the collapse of the Industrial Economy and the nightmare of the Great Recession. Those numbers represent the ongoing struggles of people left behind even by the gig economy.

Jessica Bruder chronicles the lives of older people living a life right out of Grapes of Wrath in her book, Nomadland. (Click here for the C-SPAN interview.)

From this perspective, gig workers in the education industry aren’t doing so badly. Questions remain, however.

These highly educated gig workers will likely never afford to pay their student loans; consequently, taxpayers will increasingly foot the current $1.5 trillion student loan bill. This debt is from students to the government, but the government has already transferred this amount to the educating industry. Taxpayers are now reimbursing the government.

(The University of Arizona here in Tucson is a very nice campus.)

How big is the gig economy? How many people are shifting into this labor market?

The short answer is that we don’t know. A 2015 Government Accounting Office (GAO) report estimated about 40% of people classified as employed by the Bureau of Labor Statistics (BLS) as employed were actually gig or “contingent workers”.

A 2018 report from the Federal Reserve Board of Governors puts the number at 31%. Other estimates are from about 10% to 15%.

The confusion stems from the same measurement challenge facing economic analysis examined in the blog post noted above. We have not settled on a uniform way to define and measure the gig economy. Economists are working on the question, (see here and here), but there will likely be no answers any time soon.

The important take away for the recruiting industry is that the first to figure out how to exploit the huge emerging gig labor force could well dominate the industry for decades to come. This is why new ideas such as moving from the existing recruiting model to a networking model holds such promise.

No matter how the recruiting industry addresses these changes one this is certain:

We are living in exciting and interesting times.



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Sex Scandals and Psychology: John Watson, Rosalie Rayner and the Emergence of Behaviorism

One of the most charismatic pioneers of psychology was John Watson. He was born into poverty and abuse, yet managed to turn psychology into a science and posed questions about who we are as humans that we continue to ponder half a century after his death. He enjoyed a spectacular rise to academic fame and public celebrity, and fall from grace just as spectacular leading to academic obscurity that resounds as a mystery to this day.

What led to that spectacular fall? A salacious sex scandal of course!

Born in 1878 on a South Carolina farm Watson was the fourth of six children who suffered through abuse and poverty. His father was an alcoholic who had difficulty holding a job, but was skilled at fighting, drinking, extra marital affairs and what we now call domestic violence.

His mother was a conservative Baptist who sought to rein in her son with the twin threats of God and the Devil. The threats did not seem to do much to curb his delinquent behaviors, but were quite effective in initiating anxiety attacks that lasted a lifetime.

By all accounts, Watson seemed destined to follow his father’s example, especially after the trauma of his father abandoning the family for another woman when Watson was 13. His teachers remembered him has lazy, argumentative, and disrespectful. As a teen, he was arrested several times for fighting and once for shooting a gun inside the city limits. Exactly who or what he was shooting at has been lost to history. Although Watson’s mother was intensely religious, she was unable to turn him from what seemed to a path to prison and poverty.

But Watson had several things in his favor. He was a handsome young man, very articulate, and extremely bright. He was also ambitious, yet very conscious of his less than stellar social status. In spite of his propensity for alcohol, partying and violence he was able to use his more urbane skills to win admission to Furham University to satisfy his mother’s somewhat unrealistic hope that he become a minister. Although his peers viewed him as a nonconformist and his teachers barely tolerated him, one professor saw some value in the rough-hewn Watson and encouraged his academic growth. Strangely enough, he found his calling in academia. Something must have clicked with Watson because he graduated from Furham with a Master’s degree and gained admission at the University of Chicago intending to earn a PhD Philosophy.

His first exposure to philosophy at Chicago convinced him that he needed to choose something else to study. The noted philosopher John Dewey delivered one of the first lectures Watson heard at the University of Chicago, and left young Watson completely befuddled. “I never knew what he was talking about then, and unfortunately for me I still don’t know”, he said years later.

This was the beginning of an incredible stretch of luck and coincidence that propelled Watson to the heights of academia, and then to wealth and social status in business. Watson entered the University of Chicago in 1899 when psychology was just emerging from philosophy as an academic discipline of its own. At the time, psychology focused on how individuals organized perceptions into an understandable whole — that is, consciousness. Watson was destined to turn psychology on its head and reinvent it for the 20th century.

One of the leading psychologists at the University of Chicago was James Angell, who would soon become President of a powerful academic organization, the American Psychological Association. In one of many amazing coincidences, Watson worked as a janitor to earn money for school, and drew the task of cleaning Angell’s office. The two became acquainted and developed a respect for one another, and Angell became Watson’s dissertation advisor.

In 1903, at the age of 25 Watson was the youngest ever to earn a PhD. at the University of Chicago. In addition, he graduated magna cum laude and earned a Phi Beta Kappa key. He was a rising star on the fast track to academic success, and everyone knew it. He married Mary Ickes, a student of his whom, legend has it, came to Watsons attention after writing a love letter as an addendum on a psychology essay. Ickes was from a wealthy and socially prominent Chicago family, giving Watson the social credentials he sought since his days at Furman.

At the turn of the century, psychology was in disarray, without clear direction or a unifying theme. Psychology came to America twenty-five years before when William James, a wealthy dilettante with a medical degree from Harvard, traveled to Europe where he learned of the new discipline of psychology, then little more than a philosophical concept. He found the new discipline fascinating and learned enough about it that he was able offer a class in physiology and psychology upon his return to Harvard in 1875.

For the next quarter century, psychology languished as an interesting philosophical school of thought, but failed to gain traction as a science. The problem was there was nothing to measure. Unlike natural sciences like chemistry or biology, psychology was concerned with internal mechanisms that defied measurement. Psychological research consisted of introspection — simply examining thoughts and perceptions that one experienced. Slowly attention turned to questions concerning how people related to their environment. Still there was little to measure, and psychology was not able to earn a reputation as a true science.

The abstract nature of philosophy did not appeal to Watson, and neither did the abstract nature of introspection and consciousness. His dissertation was on the neurological maturation of white lab rats — a line of study he was attracted to because it was so much more concrete than introspection.

Watson found himself in a dilemma: newly married to a woman from a successful family, and newly graduated with such notoriety that palpable expectations for academic success hung in the air, yet he did not really like working with people –the object of his chosen field. What to do? What avenue could he take that would allow him to make his mark on psychology, yet not require studying humans?

Watson turned his attention to the behavior of animals. He began to wonder why his lab rats did the things they did. Influenced by the work of Russian scientists IP Pavlov, Watson abandoned a psychology of introspection and concentrated on the study of observable and measurable behaviors. Watson published papers on the new concept of behaviorism after earning his PhD, and began to emerge as a leader in the quest to make psychology a natural science.

Then another series of uncanny coincidences unfolded that propelled Watson to fame. In 1906 James Angell, president of the American Psychological Association and Watson’s dissertation advisor gave the keynote speech at the APA annual conference in which he declared that the true focus of psychology must be behavior, not the process that underlie it.

And there stood Watson, already a leader in the nascent behaviorist movement.

Two years later in 1908 Watson accepted a professorship at Johns Hopkins University offered by James Baldwin, chair of the psychology department, and founder and editor of Psychology Review, an influential academic journal. Only a year after Watson’s arrival, Baldwin embarrassed both himself and Johns Hopkins when a raid on a notorious local whorehouse resulted in his arrest and plenty of newsprint. He resigned in disgrace from Johns Hopkins, and Watson took his place as the chair of the Department of Psychology, as well as the editorship of Psychology Review. Watson was only 31 years old.

This is when things begin to get very interesting. Watson continued his meteoric rise in the field of psychology, and began to be somewhat of a public celebrity. In 1914, he published his first book about psychology. In 1915, he won election as president of the APA. He turned his attention to social issues and began writing lay articles about child rearing and parenting. About this time, Johns Hopkins administrators rejected a proposal from Watson to research sexual activity and alcohol use among adolescents, holding that such work was too controversial for a conservative university. As it turned out Watson would not take no for an answer.

Nevertheless, Watson’s ability to sell himself and his ideas was bringing grant and foundation money to the university to such an extent that he earned a 50% salary increase in 1919 to forestall his defection to other universities competing for him. He had just published groundbreaking research demonstrating that fear of ordinary objects could be created in people under the right circumstances. His future was assured. He was untouchable, or so he thought.

In 1920, it came to light that Watson was having an affair with a much younger woman named Rosalie Rayner, who just happened to be his research assistant. Because of the social stature of his wife’s family, and Watson’s position as one of the first scientific celebrities of the 20th century the news caused frenzy in the press. His love letters to Rayner made it to the newspapers at the beginning of what promised to be a wonderfully salacious divorce case. However, the divorce case was abruptly settled and Watson was summarily fired from his position at Johns Hopkins. Subsequently he was not able to get a job anywhere in academia, and began what turned out to be a very lucrative career in advertising. Watson married Rosalie Rayner and they had two children.

The dismissal, combined with universal rejection from academia, seems harsh but makes more sense in light of what we consider very conservative sexual attitudes in the 1920’s.

There is something wrong with that explanation, however. The 1920’s were anything but conservative. Women had earned voting rights, were venturing into non-traditional jobs in government and academia and were making steady progress in areas as diverse as contraceptive availability, business ownership and political office. Certainly, affairs and divorce did not warrant such reactionary measures as blackballing a famous and promising academic professional who had achieved celebrity status while at Johns Hopkins, not to mention recently ascending to the presidency of the American Psychological Association, and the recipient of a 50% bonus only a few months before his fall from grace.

It seems there is more to the story.

Suspicion began to arise that Watson’s abrupt departure from the public stage had something to do with information Ickes family lawyers leaked to the administration of Johns Hopkins. The last thing the University wanted was to be drawn into a long and highly public divorce trial involving its’ star professor.

For years, rumors have circulated that the real reason for Watson’s excommunication from psychology was not a simple extra marital affair, but rather sex studies that he undertook with the assistance of “the other woman”, Rosalie Rayner. Furthermore, these sex studies involved measurements of physical attributes during the act of sexual intercourse.

A private sexual peccadillo and consequent divorce are one thing, but public admission implicating a university in clandestine sexual research is quite another, particularly when the investigators are also the experimental subjects. The fact one of them is married to someone who is not an experimental subject exacerbates the matter, and the allure to the press of wealth and society complicates things even further.

The story might have remained a hushed rumor had it not been for the discovery of instruments used to measure sexual response found in a collection of Watson’s effects in a Canadian museum in 1978. Had Watson and Rayner used these instruments for sexual research they surely would have maintained research notes, data and other records of their findings. It is easy to imagine that this was the evidence that Ickes lawyers revealed to Johns Hopkins administrators that led to Watson’s downfall. The 1920’s was an era of Hemingway, Fitzgerald and Steinbeck challenging the status quo, and flappers, birth control and woman’s suffrage challenging sexual roles. Watson’s affair might have been tolerated, but detailed notes on sexual response arising from that affair might not. This might be the real reason for the unexpected end of Watson’s academic career.

Although Watson lived an outwardly enviable life, he carried the burden of personal sadness and tragedy.

Handsome, articulate and urbane, Watson easily mingled in the upper class of New York society throughout the 1920’s and thirties. He cut a path as a debonair and daring gentleman, racing speedboats, drinking with movie stars and tycoons, and gracing the pages of magazines and newspapers. He built a huge house in Connecticut for his new family, staffing it with servants. For a while, it seemed that his charmed life would continue in new directions. It was not to be.

Personal tragedy and disappointment followed Watson for the rest of his life. Rayner died in 1935 at the age of 37. Watson became estranged from the children from both his marriages and lived alone in a small house in Connecticut from the time of his retirement from advertising in 1945 until his death in 1959 at the age of 80. The American Psychological Association awarded him a lifetime achievement award shortly before his death, but he refused to accept it, sending a friend instead.

The evidence remains unconvincing, and the “sex experiments” are no longer mentioned in psychology textbooks or histories. Just the same, if such experiments did exist they would make Watson’s harsh treatment more rational and easily understood.

We will likely never know how much truth there is to Watson’s alleged sexual escapades, but the possibility brings a refreshing bit of humanity to the otherwise dryly academic study of the history of behaviorism. It also makes for a much more interesting introduction to BF Skinner, who enters the behaviorism story shortly after Watson left, or more accurately, was yanked form the stage.

The psychological tricks we use to fool ourselves into believing fake news

One of the things I hope my statistics students learn is how irrational, subjective and suggestible human beings are. It is very easy for us to believe things that are obviously not true because random factors can have a huge effect on how we see the world.

Renowned psychologist Daniel Kahneman pioneered the idea of behavioral economics. His research reveals so much about how chance elements influence our thoughts that he won the 2002 Nobel in Economics. He shared his life’s work in Thinking, Fast and Slow, a hefty book explaining many of the things that make us poor interpreters of the world around us.

For example Kahneman and his research partner, Amos Tversky, performed an experiment involving the use of a modified Wheel of Fortune game. Students simply played the game in the same way contestants play it on TV.

There was a twist, of course.

There are actually two wheels. Unknown to participants, both had a series of random numbers, but one series of random numbers were larger than the series on the other wheel. Participants were randomly assigned to a wheel, played the game, won modest prizes, and competed a short survey before leaving.

Here is where it gets interesting .

The survey consisted of a number of arcane questions whose answers are unlikely for most people to know, forcing a guess. How old was Gandhi when he died? How deep is the deepest point in the ocean? How high above the Earth does space begin?

Amazingly, the people exposed to the lower set of numbers guessed lower to the questions and the group exposed to the higher set of numbers guessed higher.

Simple exposure had an effect on how subjects interpreted their world.

In another experiment, subjects were shown to a small office and asked to complete an assessment of altruism — attitudes about sharing and caring for others. Again, there were two experimental conditions. In one, the computer monitor on a nearby desk had a screen saver of a dancing dollar sign. In the other was a screen saver of a dancing heart.

Again, this seeming inconsequential random variable had a measurable effect. People exposed to the dollar sign scored lower on measures of sharing and caring than did the people exposed to the dancing heart.

These and similar experiments show that the way we experience the world can be influenced by events to which we do not realize we have been exposed.

This is why it is so important to know something about science and statistics. These subjects teach us a disciplined method of interpreting the world.

Even then, our brains are hard wired to trip us up.

Kahneman tells us we interpret the world using one of two methods.

System 1 operates very quickly with little conscious awareness. Generally, this method consists of heuristics — mental shortcuts that help us make decisions or gather information quickly. Soliciting an opinion from an expert in an example of a heuristic.

System 2 is the one with which we are most familiar. This the cognitive process of recalling previous information, thinking about it, reflecting, weighing the strength of variables and finally coming to a decision. An example might be working out a math problem, or inferring probabilities from tables of numbers.

These two systems are in the title of Kahnemans’ book, Thinking Fast and Slow.

One of the subtle System 1 methods of decision-making involves substituting an emotional/heuristic question for an objective/rational one. Kahneman gives the example:

Objective/rational question

“How much would you contribute to endangered species?”

Heuristic/emotional question:

“How much emotion do I feel about dying dolphins?”

We do this without being aware that we are doing it.

This might explain a behavior I find puzzling.

In one breath, staunch supports of universal health care passionately criticize the pharmaceutical industry as greedy opportunists preying on vulnerable ill people. In the next, they argue just as passionately for universal health care, which would open the gates of the US Treasury to pillage by the pharmaceutical villains they demonize.

Here is another example from the recent past:

Providing universal health insurance for all Americans is a monumental task with a host of interlocking challenges.

System 1 substitutes the hard objective/rational question of “how to pay for universal health care” with the emotional/heuristic question “how passionate am I about providing health care to everyone?”

System 1 provides a short cut to decisions, but it is not objective or rational. Subjecting the question of universal health care to System 2 thinking — the coldly logical cognitive process — reveals that without substantial rationing universal health care is simply unaffordable:

The California Legislature spent an entire session trying to hammer out such a system, but could not come to an annual price less than $400 billion dollars — more than the entire budget of the state of California.

None of the proposed solutions — taxing the rich being the most common — is workable. If any of them were viable the problem would be solved and California, (and maybe the rest of us too), would have top-notch health care.

There are other ways System 1 deceives us.

The Representativeness heuristic

The representativeness heuristic states that the more similar a person is to what we think are characteristics of a group the more likely we assume they are members of that group.

A woman moves into the apartment next door. She is prim and proper, wears conservative clothing, reading glasses hang form her neck and you notice the movers carrying in crates of books.

The System 1 representativeness heuristic would compare what you know about your new neighbor to people you know in various occupations and decide that she is a librarian, and not a business manager, doctor or truck driver.

However if you had used System 2 and gone to the Bureau of Labor Statistics website and compared numbers of women in those occupations you would find out that any of those other occupations have far more women than the occupation of librarian. Therefore, your new neighbor is not likely to be librarian.

The Availability heuristic.

The easier it is to being information to mind — the more salient it is — the greater its influence on decision-making.

We tend to give greater weight to negative and emotionally powerful information. There is good reason for this. Our species wandered savannas and jungles for hundreds of thousands of years. In that environment, information about sightings of snakes and lions is more important than wildflower blooms.

This is why we overestimate the probably of rare, but terrorizing events. Airline crashes are in the news for days or weeks, while fatal auto crashes are so common they barely make into a news feed. Consequently, many people are afraid of air travel, but have no qualms about driving to the airport, even though they are far more likely to be die driving there than flying somewhere else.

The current media and special interest driven hysteria about school shootings is another good example of the availability heuristic. Children are far more likely to die at the hands of parents, stepparents and foster parents than by a crazed gunman at school.

Another example of a media related availability heuristic the common fear of being murdered. The truth is that we are far more likely to commit suicide than to be murdered. This is because the media publicizes murder, but never mentions suicide, in the belief it would encourage “copycats”. (The same argument can apply to publicizing murders, by the way.)


Similar to the availability heuristic, priming refers to the availability of conscious information. Medical students often enter a stage of hypochondria because they are exposed to information about so many ailments, they interpret physical sensations they would otherwise ignore as a symptom of disease.

Priming also explains why we startle easier after watching a horror film.

Here is a real life example.

In 1974, I was walking along a sidewalk with a knot of people after watching The Exorcist. If you have seen the movie you know it contains graphic scenes of projectile vomiting . I noticed a young woman across the street vomiting into a sewer grate as her boyfriend held her steady. I have no idea why she was sick — maybe she had stomach flu, food poisoning or simply drank too much beer.

It didn’t matter to a woman well primed by the movie who yelled frantically and loud enough for everyone to hear, “My God, she’s possessed! Get away from her!”

Everyone was silent for a moment, and then broke into laughter as the embarrassed woman ran across the street to apologize and comfort the young woman.

Anchoring and Adjustment heuristic

The Anchoring and Adjustment heuristic is when we use a number or event as a starting point and make adjustments as we move forward.

You see a car on Craigslist you think you might want to buy. The price the owner lists is the anchor. It is at that point you and the owner negotiate adjustments.

That sounds straightforward enough, but what if you go to a used car lot?

In that case, there are all sorts of anchoring and adjustment: how much the salesperson offers for your trade in, the interest rate, the stated price of the car. This is why used car salespeople have such a poor reputation — they are very skilled at anchoring and adjusting variables to their advantage.

Here is a suggestion:

Let System 2 take over. Learn how to use Excels’ Payment (PMT) and Solver functions, then negotiate with the used car salesperson.

Anchoring and adjustment does not apply only to decisions involving numbers. Imagine you try a new restaurant, and have a bad experience. The server is surly, the food is cold and the plates look dirty. You vow never to go again, but a few weeks later a friend asks you give the restaurant another chance. You do and your dining experience is completely different. Great service, fabulous food and the place looks clean and inviting. Your opinion of the restaurant improves, but not to the extent that it might if you had not had the original bad experience. You will not likely choose the restaurant again, nor would you be likely to recommend it to your friends.

These are just a few of the ways that events we may not even realize influence our judgement and decision-making.

System 1 is fast and handy. Hundreds of thousands of years of cognitive evolution shaped System 1and its value is unquestioned.

But System 1 is more suited to immediate interactions with the physical world.

When we really want to know what causes things to happen — to identify cause and effect relationships — we need the discipline of System 2 thinking. It is slow and deliberate, but returns more accurate information than System 1, especially when we make judgements about other people.

Just yesterday a gentleman claiming to be an employment recruiter challenged a statement I made about a research finding that about one third of the men laid off during the Great Recession were still unemployed three years later and likely exited the labor force completely.

I posted a quote from the study supporting my assertion along with the citation.

His response?

“So 67% did (have a job). In my math, that’s a majority.”

He seems to accept the fact of the numbers, but completely ignores their meaning. Two thirds sounds so good!

For the person laid off a 33% chance of not getting another job for three years and possibly exiting the labor force is what is relevant, unlike the fact that a majority — more than 50% — might not face that experience.

A similar incident at the community college where I teach made me cringe for my colleagues running a vocational program.

A recurring advertisement on one of the big screen monitors all over campus featuring this vocational program quoted the total price of books and tuition as $12,500, and the tag line bragged of an 85% job placement rate after graduation.

Eighty-five percent makes me feel good, but…

Wait a minute! Two years and twelve thousand dollars for a vocational program that fails to place 15% of it’s graduates in a job? That’s awful! The unemployment rate hasn’t been that high since the depths of the Great Recession!

If we can turn objective questions into easy to solve heuristic/emotional questions to get a quick answer, we can do the opposite to turn heuristic/emotion questions into objective rations ones.

Would I gamble my life savings of $12,500 and two years of work without pay, (the two years of education), and the labor it takes to replace that $12,500 if there were a 15% chance of losing it all?

Only if I were desperate enough.

That’s why we need to approach many of life’s questions in a disciplined and methodical way.

So take that stats class!

Five ways to use this powerful psychological trick to lose weight.

Losing weight is something requiring more than just cutting calories. Our metabolism is a complex system involving many influences we rarely think about.

Everywhere we go we are confronted with messages about eating, most of them bad. The goal of food producers, marketers and retailers is not to keep us healthy, but to sell us as much high margin food as possible. Supermarkets, convenience stores and fast food outlets do not have our best interests in mind.

We have to look out for ourselves.

Think about what you had for breakfast. Oatmeal, maybe, or pancakes or cereal, right? These are not really foods in the natural sense, but “manufactured edibles”. The closest you will come to cereal trees or oatmeal bushes in nature is a wheat field. Most of these products are just vehicles for getting as many different concoctions of sugar into our bodies.

Why sugar? Because sugar comes very close to meeting the definition of an addictive drug. Robert Lustig, a leading metabolic expert and author if the excellent book Fat Chance, advocates government control over sugar products because they lead to disastrous and widespread health outcomes. Hear his reasoning by listening to the Big Picture Science Skeptic episode Got a Sweet Truth?

You can see how effective sugar marketing has been simply by looking around. It seems like every adult, and tragically, many kids, are inactive and overweight. We are in an obesity epidemic and there does not seem to an end in sight. Even if everyone in the world suddenly adopted a healthy lifestyle this very minute, we will be plagued with the consequences of our addiction to manufactured edibles for a generation or more.

Take a moment to think about all the messages directing us to compromise our commitment to living a healthy lifestyle. Not only is there a concerted and well-funded effort from the food industry, but an almost endless line of other bad influences. The internet is a breeding ground for websites whose aim is little more than to draw eyeballs, and they learned that publishing just about anything related to weigh loss, no matter how silly or far-fetched, brings eyeballs and credit cards.

There is also the influence of our friends, family and co-workers.

Even people close to us unintentionally undermine us. At lunch, friends chide us about ordering a side salad and a glass of water, instead of the 800-calorie chef salad and a sugary carbonated liquid to wash it down for an additional 250 calories. We tell them we shoot for about 1200 calories a day to maintain our weight and are quick to remind them that we are the world’s expert on our body before they contradict us.

So how do we stay on a healthy track in a world dedicated to undermining the healthy habits we strive to turn into permanent lifestyle changes?

I have found five things that help me stay on track, and they spring from a wonderful word from the world of psychology — salience.

Salience is the extent to which something is present in our conscious mind. For example if you are an apartment manager and want to encourage residents to keep the property clean you put garbage cans in prominent places where people cannot help but see them. That, along with signs encouraging people to throw things into the garbage cans, and maybe a word in a newsletter would all go to making the garbage cans salient, or in the forefront of the minds of residents.

We can use the same principle to keep ourselves aware of both general goals and specific behaviors we want to integrate into our lifestyle.

Tip #1 Weigh yourself every day

Weigh yourself at the same point in your morning routine every day. Make sure you do it at a consistent point so that you aren’t also weighing your morning cup of coffee. When I started doing this, I was concerned because of the wide variations from one day to the next. Then I found out that my morning cup of coffee weighed almost exactly one pound.

It is also a good idea to get a digital scale. Most analog scales give you a general idea of what your weight is, but they also allow “fudging”. “I almost lost a pound” becomes I lost a pound”. On the other hand, when a digital scale says you are still four tents of a pound from your goal it is much harder to “almost” your way into deceiving yourself.

Another nice thing about digital scales is that they usually have built-in body fat analyzer. The scale does this by running a small amount of electricity — so small you will not even notice — from one of your feet to the other. The resistance is than used to calculate body fat. Remember that scales tend to measure the fat found your middle, while hand held analyzers measures fat in the upper body.

Many people are resistant to weighing themselves every day. I think there are two possible reasons for this. First, they don’t really want to lose weight. The want to talk about food and eating, and thinking about their excess weight and the health issues it will cause makes them uneasy. It is more rewarding to obsess over food than to do whatever it takes to lose weight and get healthy.

Just weighing yourself every day makes your weight more salient — something you are aware of and remember when you think about eating and health. Something as simple and easy as weighing yourself every day puts the issue of weight and healthy eating in the forefront of your mind. If you know how much you weigh you will probably be less likely to eat between meals.

Tip #2 Put your weight on display

Also, remind yourself of your weight. You can post little signs reminding you of your weight. If it is higher than yesterday, it becomes a reminder to focus on eating. If you’ve lost a bit, it becomes a celebration of your victory and a reinforcement to continue your good habits. You can put little post-it notes around your home, create a screen saver for your computer or instruct your computer to send you messages throughout the day. The idea is to keep the issue of weight in the forefront of your consciousness.

Does this sound like obsession? It is.

How badly do you want to weight? How serious are you about living a healthy lifestyle?

Obsession in pursuit of health is no vice… and moderation in the pursuit of a healthy lifestyle is no virtue.

(Apologies to Barry Goldwater.)

Tip #3 Use software to analyze your weight

Something I still do that is very helpful for me is to record my weight on my computer using software designed for tracking weight. I use something called Diet Organizer, but there are many different versions, including mobile apps.

The great thing about these programs is that they generate all sorts of reports. You can track your weight, any number of nutrients like carbs, oils and potassium, and then watch a graphic display of the relationships of these variables over the course of a week, month or year.

This is a great way to learn about nutrition. I never could keep all that dietary biochemistry straight, but after looking at the reports in Diet Organizer, I started to realize how everything works together.

These programs will also export their data to and Excel spreadsheet for extended number crunching. My doctors continue to look forward to my visits because my software can generate such informative reports.

Tip #4 Keep others informed of your weight

Public commitments are easier to keep. When you make commitments public, you open yourself to a tremendous amount of motivation. This is why we make wedding vows in front of friends and family and sign our name on business agreements. There is a powerful social need to be seen by others as reliable and trustworthy. We can use that need to help us become the people we want to be.

Robert Cialdini talks at length about using social tools to help reach our goals in Influence: The Psychology of Persuasion. Cialdini explains how Weight Watchers uses this principle in their weekly weigh in. In front of everyone else in your group, you step on the scale and your loss or gain is on display for everyone to see. Alcoholics Anonymous uses the same strategy with their 12-step program. Members make a public commitment to the twelve steps to their mentor and others in their group, and report their progress on a regular basis.

There is no need to announce your weight loss goals and progress to the entire world. Informally sharing with friends and family works just fine. Do what you are most comfortable with, but remember choose your commitments and the people you make them to wisely. You are looking for support, not throwing out an invitation for criticism.

Tip #5 Try on your skinny clothes

I can’t put into words how thrilling it was to put on a pair of jeans I had not been able to wear since the 80’s. I discovered them in the bottom of a footlocker not long after I decided to do whatever it took to lose weight, and they became an icon that kept me motivated — a concrete symbol of what I wanted to become.

Naturally, there were times I tried on my skinny cloths and it was obvious that I was not losing weight. That when I went back to the nutrition data I was keeping and figured out where I could have done better. That was a motivator, too, because it was a reminder that I was in charge of my weight. There were reasons for my weight fluctuation, and I could figure out what they were and change my eating behavior.

Because I was monitoring my eating behaviors, I could change them.

As I lost weight I bought clothes that were just a little too snug, and each item became a motivation that I could see and hold in my hands. When I tried them on, I could actually see my progress, and when I was finally able to wear them comfortably, I felt pride. I also made a point to wear these clothes in public places. People didn’t need to know it, but I was showing off.

So there you have it. Five things I did that helped me lose forty pounds.

Here ae the books mentioned in this article:

Cialdini, R. B. (2006). Influence: The psychology of persuasion (Rev. ed.). New York: Morrow.

Lustig, R. H. (2012). Fat chance: Beating the odds against sugar, processed food, obesity, and disease. New York, New York: Hudson Street Press.

The media might be celebrating, but let’s untangle the May jobs report before joining in

The Bureau of Labor Statistics (BLS) released its monthly Employment Situation today and the media predictably has seized on only one number — the U-3 measure of unemployment — and is throwing a party over it.

Unemployment is down to 3.8%, representing 6.1 million people and that is a good thing, but it is only one number of many. If you want to understand what is happening to the economy you have look a little deeper.

The BLS includes a section called the Household Survey Data in the Employment Situation. This section summarizes the data most of us find interesting.

Looking here, we can see that while unemployment dropped for men, Blacks and Asians nothing much changed for women, teens Whites and Hispanics. This means that positive changes benefit male Blacks and Asians, but not for males of other races, teens or women.

The 1.2 million long term unemployed, (jobless for six months or more), hasn’t changed, accounting for about 20% of the total unemployed. The good news is that long-term unemployment is down by about half a million over the preceding 12 months.

But don’t throw a party just yet.

That decrease may not mean that long-term unemployed (LTU) are finding jobs. A 2010 analysis in the Monthly Labor Review finds that the composition of long term unemployed changed dramatically since 1980. Increases in LTU came disproportionately from people over the age of 45, accounting for about 15% of the LTU, an increase of 185% since 1980. (See Allegretto and Lynch, 2010)

There are many reports from older workers of age discrimination and rejections based on “over qualification,” a term once considered a euphemism for “too old.” This might represent a decrease in the value employers place on work experience.

That sounds like a very strange thing, but as new technologies come and go ever more rapidly, it may that current experience is the only kind that has value. Experience older than maybe five years could be irrelevant.

At some point, older workers exit the LTU category for the Out of the Labor Force category when they begin drawing Social Security retirement benefits.

We don’t know how many people “retire” out of long-term unemployment and into Out of the Labor Force. We also don’t know how many people cannot find a good job and exit the labor force to go to school.

One BLS researcher has some interesting comments on these two related issues:

“The aging of the population would be expected to increase labor force exits, but the increase in the education level of the labor force would be expected to decrease it. For workers ages 25–54, increases in education would similarly be predicted to lead to a decrease in exits (with little effect caused by aging within this group) instead of resulting in the substantial increase we observe.” (Frazis, 2017)

The implication is that although people are returning to school they do not return to the labor market afterwards.

Next, we come to the category of “part time for economic reasons” totaling 4.9 million, unchanged from the previous year. These people can only find part time work even though they are looking for full time employment. The classic definition of contingent workers.

But contingent workers also work at full time jobs that may not last very long. These people are probably part of the “marginally attached” category — not in the labor force, wanting a job, looking for work in the last year, but not in the last month. There are about 1.5 million people in this situation.

Adding the 1.5 million in this category the 4.9 million considered “part time for economic reasons”, we get 5.4 million contingent workers.

Let that sink in for a minute.

The number of unemployed is 6.1 million, but the number of people hovering around financial catastrophe in contingent jobs or flitting in and out of part time/limited duration employment is about 5.4 million.

Put those two groups together and we can say that over ten million Americans who are in the labor force do not have full time jobs. They are either looking for work when they can, working at part time or short duration jobs, and sometimes retiring or going back to school, but not coming back into the labor market.

And let’s not forget that the average workweek in May was about 33 hours, and that wages increased less than 2%over the previous 12 months.

Let’s celebrate that 3.8% unemployment rate, and keep in mind it is about the only thing to celebrate.


Allegretto, S., & Lynch, D. (2010). The composition of the unemployed and long-term unemployed in tough labor markets. Monthly Labor Review, Bureau of Labor Statistics, 133(10), 16.

Frazis, H. (2017). Employed workers leaving the labor force: an analysis of recent trends. Monthly Labor Review, Bureau of Labor Statistics (May 2017). Retrieved from