Workplace Rent-Seeking

 

 

architectural design architecture blue sky business
Photo by Juhasz Imre on Pexels.com

 

Introduction:

One of the core principles of Public Choice Theory is the concept of behavioral symmetry.  Behavior symmetry can be best defined as

“… the same behavioral model of human action must apply to all decision-makers regardless of institutional setting (public or private).” (Shughart II & Wardle, 2020, P.594)

This conceptualization firmly reflected in James M. Buchanan’s proclamation of  Public Choice Theory being ” politics without romance“. Meaning whether you work in for the government or a private corporation your incentives generally don’t change. Working as a bureaucrat doesn’t dampen the allure of a high salary or generous benefits. Many people tend to view politicians and government employees as working towards the common good. Ignoring the fact that their decisions are not immune to self-interest. Demonstrating that this faulty assumption about civil servants is nothing more than a halo effect. The belief that government employees are striving towards a higher moral good than individuals employed by a corporation is illusory. People respond to incentives regardless of their occupation.

 

Considering the previously described application of behavioral symmetry, it wouldn’t be outlandish for a phenomenon that transpires in the public sphere to occur within a private institution. To take it a step further, to even claim that it takes place on an individual level. As in actions taken by a single person versus a solitary institution.  Could the principles of Public Choice even be applied to the individualized interactions of workers in an office environment? Certainly! After all, incentives do not change. We are merely changing the environment and the scale of transactions.

 

The concept of rent-seeking tends to be commonly reflected in the behavior of office workers. What is rent-seeking? It can be described as a person or organization attempting to secure wealth without creating generating any productive output. Generally, this is done so by seeking an institutional advantage. Gordon Tullock, the theorist who developed this theory, utilized the example of tariffs to demonstrate a practical application for this concept. Governments typically do not impose tariffs on their own, but rather due to lobbying pressure from interest groups. Tullock referred to this variety of behavior as “wasteful” (Tullock, 1967, P.5). As a side note, Tullock may have been the architect rent-seeking, however, it was economist Anne O. Krueger who coined its name’s sake back in 1974.

 

Based on my observations of working in a corporate office there are three prevalent forms of workplace rent-seeking. This list includes: self-praise/  verbal demolition of co-workers, brown-nosing, and creating busywork. Any action or omission of action in the workplace is overtly economic. No one works for free. The only difference is scale. Many of these behaviors are anti-competitive. At work, your co-workers are your competition. All of these behaviors are attempts to secure gains without creating any additional wealth. Through damaging the image of co-workers or the individual improving their image, they are gaining potential job security which protects their paycheck. Typically, at the expense of the employer because this behavior does not distract from employees doing their jobs.

 

Self-Praise and Verbal Demolition of Co-Workers:

As the saying goes talk is cheap. Unfortunately, empty words have carried more clout than they should out on the sales floor. Anyone can pat themselves on the back and expound upon the “superior” customer service they provide. Especially when the boss is present. Much of this bluster, whether it is factual or not, skew popular perception. It is easier to take things for face-value than to look below the surface. If someone is persistently selling their skills and value to the company, it is easier to believe them than to validate their claims. Even when faced with contrary metrics many managers still fall into the folly of accepting the shameless self-promotion of these under-performing employees. This acquiescence is generally also reflected in the perceptions of this subpar employee’s peers. Despite all of the opposing evidence they will express a favorable opinion of this individual. Making the manager less inclined to terminate this individual. The manager would not want to jeopardize group dynamics. However, baseless self-promotion does is nothing but counter-productive and a waste of company resources.

 

The devious foil of Self-praise is the verbal demolition of co-workers. Portraying co-workers in a bad light to distract from an individual’s performance deficits. One common example is proliferating gossip and rumors. Even to be so brazen to fabricate formal complaints regarding interactions with individuals. For example, a false sexual harassment complaint filed with human resources.  Gossip being on the lower end of the scale and fraudulent human resource reports being a more extreme form. Going to great lengths to assassinate the character of your co-workers requires a great deal of time and effort. It could be suggested that it would even be easier to just do your job. Versus wasting everyone’s time and resources with such puerile and sophomoric attempts at subterfuge.

 

Brown-Nosing:

 

Complimenting the boss, attending all of the social functions you are invited to, pretending to be his friend, laughing at all of his lame jokes. Brown-nosing, sucking-up… this behavior goes by many terms. No one every engages in brown-nosing without having a specific set of ends. Whether it would be the boss overlooking poor performance or giving other forms of preferential treatment. Such as being picked over more qualified candidates for a promotion. Why work harder when you could just work smarter? It is easier to go get drunk with your boss at a happy hour and pretend to be his best friend than to do your job. It is astonishing how many people in management fall for these naked attempts to curry favor with them. Then again an entire encyclopedia could be written about the psychology behind this mystifying phenomenon.

 

Creating Busywork:

 

The image of busy workers is synonymous with productivity.  Is this always the case? Not always. Sometimes workers will generate work or purposely utilize inefficient methods to complete tasks to create the perception of productivity. Some employees will go so far to create arbitrary tasks they will intentionally do their jobs incorrectly. Their pointless busywork would be correcting their own mistake. As perverse as that sounds, I have seen it with my own two eyes! Unfortunately, perception tends to carry more weight than substance.  Even if that perception is illusory.

 

A more traditional example of this rent-seeking tactic is to intentionally procrastinate and then do all your work at the end of the day. To create the illusion that you are busy and working hard.  Versus addressing action items as they come in throughout the day. Generating the image of having a mountain of work to do makes it look like you have a heavier workload. Making you less susceptible to being ousted out in the next round of layoffs. While counter-productive these methods aim to mask the fact that their position is nothing more than a redundancy.

Machiavelli in the Office – Part V: Respect Property and Privileges

 

man wearing blue crew neck top
Photo by Startup Stock Photos on Pexels.com

 

 

 

Machiavelli’s remains one of the most insightful and misinterpreted philosophers of the Pre-Enlightenment era. His observations have been grossly distorted to the point that his very name inspires fear of treachery and callous calculations. Few people in human history have ever been honored with having their name made into an adjective. However, this honor for Machiavelli is muted by the fact that it carries a negative connotation. Leading to his legacy as a writer and thinker to be forever stained.

 

Machiavelli’s legacy is marred by misconceptions is typical for writers who are either seldom read or read in the proper context. I would tend to agree with Machiavelli scholar Harvey Mansfield that the latter is very much applicable to his work [1]. Machiavelli was immoral or amoral as he is typically painted by popular perception. Rather he departed from the classical understanding of morality.  Favoring pragmatic uses of force and deception versus appealing to divine directives. These same godly decrees most likely were given lip service by the pre-renaissance ruler. However, once they interfered with the interests of the royal court were quickly dispensed with. Leading one to surmise that maybe Machiavelli wasn’t any less moral, but rather was more forthright.

 

All because he has been misrepresented over the centuries does not mean we cannot draw valid lessons from him. He provides some great reflections upon general aspects of human nature that extends beyond the blood-soaked halls of the 16th-century Florentine royal court. Lessons that can be applied to just about any social structure including the work environment.

 

In Niccolo Machiavelli’s book The Prince, he mentions several times that a rule needs to respect the property of his subjects. This lesson can be modified for a manager in an office environment by supplanting property with workplace privileges. An example would be allowing your employees the ability to work remotely a few days a week. Keep in mind this example may be more applicable in the pre-COVID-19 world. It will work for this essay. Naturally, if you receive a directive from upper management to suspend this privilege with little justification their will be some backlash.  The brewing undercurrent of frustration and resentment will dampen morale.  The consequence of backlash is referenced multiple times in The Prince.

 

Machiavelli cautions to be cautious when levying taxes upon your subject because unjust and burdensome taxation could fuel discord (Machiavelli, 1532, P. 68 & 72, Transl. Mansfield, 1985) [2]. Predating the whole “taxation is theft” mantra. However, he does more directly call out the vice of not respecting property rights among rulers.

 

What makes him hated above all, as  I said, is to be a rapacious usurper of the property and women of his subjects. From these, he must abstain, and whenever one does not take away either property or honor from the generality of men….  (Machiavelli, 1532, P. 68 & 72, Transl. Mansfield, 1985)  [3].

 

In other words, it might be wise if you have any leverage to debate this policy change with upper management. Otherwise, you will have some disgruntled employees on your hands. Unfortunately, in some instances, managers need reminders to keep their hands off of the property of their subordinates. It could be as minor as using Karen’s bottle of hand sanitizer when she on vacation without her permission.  It could even as severe as taking claiming to Henry’s commission on a sale behind his back. Both situations demonstrate a boss disrespecting the property of their employees. While the scene with the hand sanitizer is little more of minor faux pas, taking someone else’s commission is stealing out of their pocket.  Aside from the moral consideration of theft, how are you going to gain the respect of your staff if you are willing to blatantly steal from them?  You are lucky if you can retain staff at that point never mind have them respect you.

 

Unfortunately, I have to say don’t fraternize with the spouses and romantic partners of your employees. Not that they are property. Slavery has been abolished, therefore people cannot be property.  There is no better way to sow resentment than to cross that line. It is a folly that will not only sully your reputation as a leader but will cause unnecessary friction.  Also, it is completely a superfluous action. There is never a good reason to venture into that territory.  No one leadership using reason would ever think that such conduct is permissible. You are not a member of congress. You are not in the oval office. There is no reason to ever go there.

Credential Inflation: Is College Worth It?

 

accomplishment ceremony education graduation
Photo by Pixabay on Pexels.com

 

 

As a society, we invest in many things. We invested in promising startups. We invest time in our community through charity. We even invest in ourselves. Which explains the plethora of fad diets and gym members we have to choose from in America. Americans also invest in human capital. Mainly through acquiring college degrees. Does a bachelor’s degree look impressive when nearly half of all Millennials have one? [1].

 

Investing in a college degree is certainly a costly endeavor. The typical college student who graduated in 2017 owed on average $28,650 in loans [2]. The assumption being that the student is going into debt to purchase a degree that will be the golden ticket to a good salary. Unfortunately, this is a somewhat faulty assumption. The significant numbers of college graduates are underemployed [3]. In 2008, it was estimated that 17 million college graduates employed in jobs that did not require a college degree (Vedder, 2012, P. 8) [4]. Notably, examples of underemployment being 29 % of flight attendants, 17 % of hotel clerks, and 23.5 % of amusement park attendants hold 4-year degrees (Vedder, 2012, P. 8) [5]. There is nothing wrong with any of the listed occupations. Is it wise to go into debt to take a job that requires no more than a high school diploma?

 

Underemployment is a key fixture of what has been credential inflation. Similar to monetary inflation is the depreciation of requisite education for a specific job. In a fiat system of currency when we print more money the purchasing power of our currency decreases. Likewise, flooding the job market with applicants possessing  4-year degrees diminishes the “purchasing power” of this previously advantageous form of human capital. The law of diminishing returns applies to education and the underemployment of college graduates being symptomatic of over-investment (Vedder, 2016, P.3) [6]. That’s why expanding college education universally will only compound the issue. The prevalence of college degrees has deduced this level of educational attainment to a bare-bones requirement. Putting into question the value of investing in a bachelor’s degree.

 

To really illustrate the dramatic increase in college obtainment it is important note when World War II started less than 5 % of adults had a degree (Bankston, 2011, P.3) [7]. Truly making a college degree a prestigious achievement. Part of what has driven the dramatic influx in college attendance has been government subsidies. For example, the Pell Grant established in 1972 to provide funding for low income students to attend college. Which ended up providing assistance to 5,428,000 students in the 2007-2008 academic year (Bankston, 2011, P.11) [8]. Outside of grants loans and other forms of financial aide have also contributed to the sizable increase in college attendance. It should also be noted that societal pressure also come into play. Your parents, teachers, society, and even politicians urging you to go to college.

 

Some would argue that there is  a two-sided debasement of the college degree. Not only is there any increased quantity, but a decrease in the quality. Some experts believe that the college curriculum has been “dumbed down” (Bankston, 2011, P.20) [9]. Which I personally find to be difficult to empirically determine. We are making a qualitative statement that can be swayed by perception. Standardize testing results perhaps? SAT scores for math have improved since 1966-67 school year, however, reading scores have been on the decline (Bankston, 2011, P.20) [10]. Is college admissions testing specific enough of a criterion to assess curriculum quality? I believe that is an open question. It is fair to question the conviction of current college students. The typical college student spends 900-400 hours a year on school related activities (studying, class attendance, etc.). In contrast the average full-time employee spends 1,800 to 2,000 hours annually (Vedder, 2012, P. 5)[11]. This may not necessarily measure the same variable. However, it does put into question strongly encouraging young people to attend college. If their priorities are video games, beer-pong, and dating then maybe it might not be the strongest option.

 

It is it really wise to be pushing recent High School graduates towards college? Considering odds are even with a college degree they will be underemployed. While away at college will spend more time hitting the beer-pong table than the library. Not too mention the cost. There was a 32.4% increase in the cost of college from 2001-2011 (Lemke & Shughart II, 2016, P.1) [12].The costs are only going to continue to rise. I would suggest that perspective students judicially choose their majors for what will have the biggest return in the job market.  Otherwise your decision will be a prime example of malinvestment. You will end up with massive student loans making 13.00/hr at a call center. However, computer science, applied mathematics, healthcare, and engineering  (P. 12) are “safer” bets than a philosophy degree.

 

Fortunately companies such as Google are not weight college degrees as heavily in the process of job candidate selection. Which is a shrewd move considering the number of programming certificates that exist. In all honest maybe more beneficial than a degree.  Even some grants now are predicated on the contingency that the recipient does not attend college. Example being the Thiel Fellowship. Shifting away from the college degree signaling model discussed by economists such as Bryan Caplan [13].

 

I have been personally impacted by credential inflation and have been lucky enough to rebound from underemployment. I was urged by my mother to attend college. I wasn’t too keen on it , so I decided to get my core requirements satisfied at a Community College. Due to my academic achievement at Community College I received a break on my tuition when I transferred to a 4-year institution. Luckily, I got my partying days out of the way in High School. Graduated Summa Cum Laude from University and was then in the massive expanse known as the job market. Armed with a mere Bachelor’s of Science in Psychology, needless to say I didn’t fare too well. Ended up working as a janitor at a casino. Thankfully, due to my strategic planning I graduated with virtually no debt. Then ended up working several office jobs. Typically, corporate offices prefer candidates with college degrees. Which is gratuitous because there is nothing about the job that makes inherently necessary to hold a college degree.