A Deconstruction of a Typical WSJ Article

“The bullshit piled up so high in Vietnam you needed wings to stay above it.” Apocalypse Now

I’m travelling, so at breakfast at the hotel I picked up a recent copy of Wall Street Journal.

The beauty of not reading WSJ regularly is that your bullshit radar, weaned off of daily exposure to it,  regains its sensitivity. You open a ‘Markets’ section and bullshit jumps at you, offending all your senses.

I see a headline: “Another Danger of Rising Wages” by Justin Lahart. (The online version says “The Other Risk from Rising Wages.”)

If you don’t have access, no worries: I’ll be dissecting almost every sentence in the article.

The author’s major lament is that in current tight labor market the wages might rise, although he’s not sure whether or not this will lead to inflation. Today, he’s more worried about tight labor market leading to lower stock prices. Notice how right out of the gate, in a typical WSJ fashion, more concern is given to investors and markets than the wage schmucks. “A Danger” of rising wages. God forbid.

But there are ways to deal with this danger.

“One way wages could rise without inflation running hotter is if productivity picks up. This would be a good thing.” Good thing for who? He explains: “the more productive the economy is, the better off everybody can be.” Translation: If before you worked 10 hours a day for $11/hour, then if you now work 12 hours a day for the same $11/hour – you’re better off. See, it’s good for you to work more hours.

“And there is some hope that productivity growth, which has been woefully weak, kicks in as companies step up capital spending to combat rising labor costs.” Think about this for a moment: the productivity will grow, this guy argues, if companies spend money NOT on labor costs, but on COMBATING labor costs. Spend cash on devising remedies that make workers work harder for less and you won’t have to spend cash on wages!! Watch and learn, MBAs.

But there’s a problem with this approach though. You see, he then points out, “The problem is that investment in productivity won’t translate into productivity gains for a while.” Aawww! 😦 There’s a time-lapse between implementing those remedies and workers working harder.

“The other way wages can rise without inflation picking up is if companies eat their rising labor costs (wait, is there a remote possibility of redemption here? KG) – a scenario investors probably wouldn’t like.” (Oh, nevermind. Let’s not forget about the investors. KG). “Profit margins are near historic highs and are expected to go higher as a result of the tax cut, but more of that money than investors expect could be going to paychecks instead of earnings.” (OMG! The Horror! The Horror!)

“That wouldn’t be surprising. Inflation has been so low for so long, (btw, does this casual confession mean that WSJ will now rescind a decade of hysterical articles about the lurking inflation? KG) consumers have become conditioned to it, making it harder for companies to raise prices without losing customers.” Being a company is hard. Fucking workers demand a higher salary, fucking consumers are a bunch of flaky brats. Hey, maybe you should close up shop then? Oh, I forgot: Your fucking profit margins are near historic highs and are expected to go higher.

He concludes: “This might work out fine for everyone if low inflation kept the Fed from tightening aggressively. But with wages rising, the Fed will at least keep to its current path of rate increases. The result would be lower profit margins and higher rates – not exactly the stuff of investor dreams.” Yes, the investors dreams – that sacred ideal on which a civic society is built.

This mindset is so emblematic of our skewed priorities: We are asked to serve the market. We are the cogs and ‘the Market’ and ‘the Investor’ are supreme beings whose interests are more important that a working stiff’s to the point where companies are willing to spend money to PREVENT the working stiff from getting a decent wage.




3 thoughts on “A Deconstruction of a Typical WSJ Article

  1. Vlad says:

    Why do you immediately and unequivocally conclude that rising productivity comes from working harder and longer hours? I suspect you are the only one to think that, just not sure why? To fit your narrative? Everybody else expects increased productivity to come from working smarter, more effectively, using more advanced software, machinery, streamlined processes, whatever. That is why it is discussed in the context of capital investment. Nobody makes capital investment to make people work longer and harder. Investment in what, guards with dogs?

    My recollection from the school days is that productivity is actually defined as output per hour worked, so even by definition it is not about longer hours, but producing more per hour.

    You have got to know that, so it is really perplexing why you choose to so blatantly misinterpret a pretty simple concept. A while back your opinions were balanced and believable, but, sadly, with every passing year I observe an unmistakable slide towards ideologically induced blindness to alternative interpretations of reality, even the most reasonable ones if they don’t fit your vision. It really is a sad but telling sign of times, when logic and reason fail even the better ones among us.

    Do not bother answering, I am not planning to come back. Just hoping it might give you a pause or a jolt and bring some of your former objective self back, Inshallah.

  2. It’s sounds like you wanted to criticize my entire ideology with which you disagree, but were only capable to find one narrow avenue to do so: one faulty definition. You cling to one aspect of my criticism, that my definition of productivity is incorrect, having nothing to say on the broader point that I made: That the human factor is treated as an afterthought, that we’re all expendable cogs, not worthy of a raise even in the tight labor environment, that we serve the market as opposed the market serving us. But this way of thinking would require looking beyond numbers and balance sheets. They don’t teach you that in business school. If this is what you call ‘ideologically induced blindness’ then so be it. But I would invite you, in your spare moment, to try to answer a question: Why is the introduction of technology to improve the productivity good? You’d probably answer that because then you produce more stuff in less hours. The problem with this definition is that it is only applicable to some industries, say, fintech and auto production. It is not applicable to waitresses and, well, guards with dogs. And what are they? A rounding error? What about people who lost their jobs due to automation?

    And, further still, what good is it to have a choice in front of us to either to be a cog, who is being asked to be more productive for the benefit of shareholders, or to be a bum? It is a philosophical question, well beyond WSJ writer’s capacity to ponder. Economic explanations are unsatisfactory to me, because market is a man-made entity and if we, the society, really wanted the benefits of higher productivity to be extended to everyone we could. Do “advanced software, machinery, streamline processes”, all impressive innovations no doubt, bring us closer that? Do these innovations help us become better people or better workers? And do you even distinguish between the two?

    THAT’s the part that is incomprehensible to you. I don’t begrudge you this, my old self (that, predictably, you like better than my new self) wouldn’t understand it either. It’s a rare luxury to be able to rethink and reformulate one’s worldview without being guided by a professional bias. I’m simply lucky to find myself in such a spot, without family or professional constraints, so it would be unfair to proselytize or to judge. But I extend you a warm hug instead. And I mean it unironically.

  3. David says:

    I think you’re spot on and I have watched the change in your writing over the last couple years with a good deal of interest. Having the time to think and ponder the 30,000 ft. view is a privilege that not many have either the time or talent to nourish. I’m happy that you are able to do so.
    Keep up the good thinking.
    A warm hug…indeed.

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