Gift Shop Shirker

     Over Thanksgiving and Christmas break I usually come home and want to relax. It is a time to take a break from the hustle and bustle of my life at UVA....but that is not the case sometimes. I got home this past Thursday night, and I was greeted with the complaints of my mom's current job issues. My mom is the manager and buyer for a hospital gift shop in Atlanta. She has a total of about forty employees that rotate shifts. The goal of the gift shop is to bring a smile to people's faces and to lighten up what may be one of the worst days of their lives. 

    Linda has been working for my mom for the past three years, and my mom is getting fed up. She began to rant to me about how Linda goes on her phone, takes snacks and candy from the shop, and she shows up late to work almost every shift. My mom holds her employees to a higher standard than this. I sat in the car listening to my mom rant about her job troubles, and I knew immediately this was an example of shirking. 

    Shirking occurs when an employee or agent is not doing what they were hired to do to the best of their ability. My mom did not assign a specific output, making it hard for her to hold her employees to a specific standard. It would be easier to talk to Linda about her lack of effort if there was a tangible number of sales she needed to reach per shift. Even if it was a small number to start, it would give her a baseline of what she needs to accomplish. There was also no urgency to replace workers like Linda. If my mom had a line of people wanting to work in her shop, it would make her job easy. She could fire Linda and hire a more motivated worker. There were no alternatives to hire new employees. Shirking seems too easy in my mom's store, so I told her to lay down the law and put a number to her employees. Make them meet a benchmark, monitor them more closely, and send out a performance review form of how the employees are doing. Those were a few tips I gave her, but who knows if she will use them? I guess we will hear about Linda over Christmas break....

Elon Musk and Opportunism

The other day in class we discussed opportunism. As a reminder here is the definition: the taking of opportunities as and when they arise, regardless of planning or principle.

One of the many projects Elon Musk and SpaceX have been working on over the years is Starlink. Starlink is a satellite constellation providing internet access to over 40 countries. Just two days after Russia’s invasion of Ukraine, the Ukrainian government requested access to Starlink. And in just another two days the first terminal arrived in Ukraine on 28 FEB. In a seemingly altruistic act Elon Musk provided a country with vital internet access in their time of greatest need. But on October 14th his act may be seen in a different light, it could now be perceived as opportunism.

 

On this date Elon asked the Pentagon to start footing the bill for the service he was providing to Ukraine as SpaceX would no longer be able to fund the internet service to Ukraine. The tricky thing about his request was that 85% of the Starlink terminals sent to Ukraine were already paid for by the US, Poland, and other countries. On top of that the same countries cover 30% of the internet connectivity fees, SpaceX covering the other 70%. Elon also gave Ukraine his top service of $4,500 a month compared to what most users wanted, $500 per month service. Elon saw an opportunity in Ukraine, to increase the usage of his service and to get it partially paid for by the money pouring into Ukraine. Now as the country of Ukraine is dependent on this service, he has begun to ask the Pentagon to fully fund Starlink in Ukraine. Looking at situation, Elon obviously didn’t plan for this to happen and took the opportunity to support Ukraine, but he is now trying to profit from the conflict, showing a disregard for principle. He does mention that he just trying to avoid bankrupting Starlink, but he also provides services to 40 other countries, so in keeping Starlink afloat he looks to earn profit from it.

Elections in my sorority

In my sorority, our election process for the next executive board just happened this past week. Each pledge class elects two representatives to meet and decide from reading applications who the best suited members for the next exec will be. These two representatives are chosen by popular vote and are supposed to have over 50% approval by each pc(majority rule per Mueller 7.1), but this often doesn't happen so we resort to the two representatives with the largest amount of votes. From being on the exec board during this past year, I am very familiar with the fact that most of the chapter does not utilize their right to vote and have their voice heard within the chapter. Many members do not see their vote of being impactful and do not derive much utility from acting in our elections. However, with less than 50 people per pc, each vote carries significantly greater weight than most other elections. In the equation Ui = p[IVi] + EVi,  the physical impact that an individual has on the vote is substantially higher than they may think.

According to Johnson, individuals have no incentives to invest their time and other resources in obtaining information on issues to make informed voting decisions. Therefore, rational ignorance on public sector issues makes sense to a rational, self-interested individual. However, in our personal situation, the costs of obtaining information are incredibly low as you can choose to vote for your friends who you know very well. Therefore, the C(costs associated with voting) in p*B - C + D is very low. From what we have learned in class, it does not make sense that the entire chapter would not participate as costs to vote are low and potential to have a decisive vote is high. So why wouldn't the chapter elect to vote in selecting who chooses our new leaders? NPR cited that the majority of respondents to their poll listed that they, "feels that voting has little impact on their lives, and that it won't change how the country is run." The personal value or emotional response derived from the process of voting is so low that it is negligible; this may be why members don't choose to exercise their right to vote in our elections.

SLT Works Great Until Your Business Cannibalizes Itself

If you've watched Arrested Development, you're by no doubt familiar with the Bluth family Frozen Banana Stand. If you haven't... I'll wait here. It's only a few short seasons. Particularly episode 8, season 3:

The family company's competent president Michael Bluth foolishly gives his brother, the incompetent magician Gob (pronounced Job (pronounced Jobe)), funding for and control of a second Bluth Banana Stand. Gob finds no trouble justifying his opening of the second banana stand "twenty feet from the old banana stand": "I did the research. Did you know that more frozen bananas are sold on this boardwalk than anywhere else in the O[range] C[ounty]?" 

Gob's justification calls to mind spatial location theory, as his firm establishes itself where it has the greatest chance of capturing the most customers, based on market research. Due to the frozen banana market consisting of one other supplier, another Bluth Banana Stand, who is really the same supplier, this attempt to increase profits by capturing consumers fails. This attempt backfires... to say the least. 

Sorority Elections & Agenda Setting Power

  Recently, my sorority held its annual elections to determine the new Executive Board and the other chapter officers. We accomplish this by first holding interviews with all members that are interested in the positions, then there is a nominating committee that decides who can be voted on by the chapter, and finally there is a vote held for the entire chapter. The nominating committee step in this process is a strong example of the importance of agenda setting power. 
During this years election there was some serious controversy over how the slate was set. The nominating committee decided to single slate a position that had multiple people run for it in order to make sure that a specific person was chosen for the job. Within this article this is described as the ability of a group to prevent the larger group from making a decision, and this decision to single slate is an example of preventing the chapter from making its own decision. This represents how much of an affect agenda setting has on the electoral or legislative process. Because the nominating committee had so much power over the process of the election they were able to make the decisions that they wanted even if these decisions weren’t in the best interest of the chapter. This slating committee is a small scale example of the committees that have the agenda setting power within congress. These congressional committees determine if an issue or a bill goes to the floor and this is paralleled in the election process of my sorority where the slating committee controls what individuals can be on the slate that the entire chapter can vote on. 

Hi, it's me, I'm the [principal-agent] problem

        Recently we’ve discussed the principal agent problem in class, and I have come to realize that I am in fact a contributor to this problem at my own place of work, The Virginian Restaurant. The Principal Agent Problem occurs when an agent, assigned or hired to carry out the preferences or desires of the principal, have different preferences, and therefore act against the preferences of the principal in order to fulfill or works towards their own private preferences. This occurs for a variety of reasons, and is caused at times by lack of oversight and asymmetric information. I realized during class one day, that I, in fact, contribute to this problem. When I work as a bartender or server, I am an agent, hired by the owner of the restaurant, UVA alum Andy McClure, to carry out his preferences – at times my preferences and Andy’s do not always align.

Andy does not believe in pooling-tips (a conversational restaurant policy), as he believes this does not provide his employees the right incentives to provide quality customer service and sales – but this also provides me new incentives so I can make the most money. My preferences include setting my good friends up with good deals when they come visit me during long shifts, and making as much tip money as I can. The other week, one of my best friends Katie Taulbee came in while I was bartending for a brief pregame and rundown before heading out to some kind of function. She came in, told me all her wonderful plans for the night and told me she would inform me of any fun things or drama that may occur as soon as she could. I promptly gave her two shots of Ketal One Vodka (a mid-shelf vodka option at the Virginian) and sent her on her way. I was pleased because I had been able to treat my friend and chat with her, but also, I don’t think Andy would be pleased that I gave away some of his vodka. Alas, he wasn’t there (no oversight!). Another week my sister and her friends came down from DC, and spent the night at the bar with me. I would charge them for drinks, but at a discounted price, which granted me great cash tips from them (which I don’t get taxed on). I fulfilled my preference of making great tips, but I was also shirking Andy a little bit (Andy, I hope you never come across this blogpost).

There is opportunism in discounting my customer's drinks, as it provides incentives for them to give a bigger tip, which ultimately goes just to me, not to Andy. Tipping as a system provides incentives for working hard, but also for shirking the restaurant owner in order to make personal gains.  Nonetheless, I do really love my job and this bar, so I be sure to give only certain, and very deserving customers, special treatment once and awhile, as at the end of the day, I want the restaurant to succeed too (or I’m out of a job).

Parking Attendant Shirking

Since my Junior year of high school, my family has collectively decided to take up a new hobby, one that requires great skill and attentiveness, an analytical sense of the market, and a very competitive nature... the trade of being parking attendants. My father works in a building his company owns in downtown Tampa where many people park their cars to see concerts and the Lightning Hockey Team play in Amalie Arena a couple of blocks away. We decided that instead of letting people free ride, we should charge them to park in the lot. Normally, we charge $10-$20 per spot, depending on competitor lots, for regular-season hockey games or concerts, but when the Lightning are in the playoffs, we are able to charge up to $60 (cash or Venmo), depending on the supply and demand. The lot has 13 spaces, and normally fills up in less than an hour. All the job entails is that we stand outside the lot facing the traffic waving a sign that reads the amount we were charging for the night. Once a car sees us and decides to park, we show them to their spot and collect our profit. Recently, we have even upped our game and bought flashing lights and wear bright orange vests. It is the easiest and quickest profiting job I will probably ever have!

While my mom wanted nothing to do with what she thought was an embarrassing project (we would in fact be standing in the middle of downtown wearing orange vests on yelling at cars going by) my dad, my sister Miles, and I decided to all take turns parking the lot. However, it became clear even from the start that my sister Miles was going to be a problem. Every time it was her responsibility to hold the sign, we would catch her either with the sign on the ground while she was texting on her phone, not paying attention to cars driving by or wanting to park, or complaining that her arms hurt. She would rely on my dad to help her park, but in the end, she would still maintain all the profits. Through and through, Miles was a shirker!

My dad and I had a team meeting on how we were going to control Miles's shirking. We came up with two solutions. First, since there is a well-defined output, so we were going to keep the rules strict: however many cars just Miles parks is the profit she keeps. Monitoring her behavior clearly was not working, so we decided the second way to keep her motivated was to secure an alternative. She wasn't threatened that my dad or I could take her spot, but when we hired Bryce, her boyfriend, to pick up her slack, she became enraged that we chose him over her. The next thing we knew, Miles was hard at work, and at least for the time being, we had solved her shirking problem! 

Summer Camp Shirking

    The past two summers I have worked for a camp in Northern California as a summer volunteer along with 149 other college students. Throughout the summer we perform various tasks such as working in the kitchen, managing ropes course, answering phones for guest inquiries, and much more. Most of the areas are led by one older crew member with other crew members working under them. In my two summers, I have listened to constant complaints by these area leads about their crew “employees” failing to show up to their work area or coming and perform at a level far below what they are capable of. This is an example of shirking which we have been discussing in our class. Shirking occurs when an agent isn’t doing to the best of their ability what they were hired to do. This article has an interesting quote by Fredrick Taylor about the inevitability of shirking that says, “Hardly a competent workman can be found who does not devote a considerable amount of time to studying just how slowly he can work and convince his employer that he is going at a good pace”. 

    It is clear to me now that although this problem was annoying, it was bound to happen, as our work environment at camp is a shirking breeding ground that lacks all 4 of the shirking controls we discussed in class. First, there is not a super well defined output. Each crew member is not given a certain number of tasks to complete, orders to fulfill, or guests to serve. Generally, everything must be done, but there is no assigned quota of work each person must do. Second, there is very little monitoring by anyone except our leads who as fellow volunteers do not have much tangible power over the employees. The full time staff rarely take the time to observe the behavior of specific crew members, as they have bigger picture issues to be focused on. Third, we were only supposed to have 1 performance review in the entire 3 months, and for most people that one didn't even happen. Finally, there were no alternatives to hire. Constantly crew members would make jokes saying they couldn’t afford to hire us, and in a way it was true. They did not just have other college students sitting around able to fly out to remote California on a whim. Together, all of these characteristics of our work environment resulted in an incredibly high and incredibly annoying presence of shirking. 

Pennsylvania Moonshine and Rent Seeking

 A couple weeks ago I was driving up to Pennsylvania with some friends to visit another friend of ours. On our drive up, we passed a billboard advertising a moonshine distillery- I think it was for this one. Tall Pines Distillery advertises itself as the first legal moonshine distillery in its county in Pennsylvania since the prohibition. Under Pennsylvania state law, the production of moonshine by individuals is illegal. This article explains that in 2011, state legislature changed, allowing the distilling and distribution of moonshine. In order to do this, the men who started the distillery needed a license, which they applied for and eventually received. According to one of the men, "it took more than two years to meet the regulations put in place by the state and the federal government". 

This is an example of the rent seeking we've talked about in class. By opening one of a limited number of moonshine distilleries in Pennsylvania, the men who started it had an opportunity for economic profit. In order to secure this profit, they diverted resources (we don't know exactly what sort, but at least the two years spent seeking to meet state and federal regulations) in order to be eligible for a license. This rent seeking can lead to a deadweight loss, and likely did in this case because of the time and resources spent in order to meet regulations, and also because there may have been others who diverted their time and resources towards gaining a license who did not get one. Now the owners of Tall Pines Distillery are reaping the benefit in the form of economic rent, though there may have been others who missed out because they were unable to get a license.