Financial topics

[Higgenbotham]

To summarize, the 30,000 smartest people in the United States may be employed approximately as follows:

2,000 as tenured professors at top research universities
2,000 as physicians
1,500 as attorneys
1,500 as founders of their own companies

200 as managers in Fortune 500 companies
200 as engineers in Fortune 500 companies

[Heisenberg]

End result.

A person in the top 2% enters an organization in a management trainee role. There are many others like him or her. There is much camaraderie and mutual understanding. The person works hard. The person is rewarded, advances and runs things.

A person in the top 0.01% enters an organization in a management trainee role. There are no other people like him or her. Fellow trainees think their colleague is a bit weird. The person works hard. Others can see the person is more capable and sabotage. The person leaves the organization. The organization eventually collapses.

A father I know was talking about his 2 daughters (fraternal twins). One falls into the first category above and the other into the second. He stated that the first one is "smart enough" to make it anywhere, while the second one has "no common sense." He is correct, but the world civilization doesn't survive without making proper use of the second one.

Truman and Einstein. Who followed Truman's order to drop the atomic bombs? Somebody. Who listened to Einstein? Nobody.

I know Von Nuemann had some input on at least the placement of the bombs but on the general decision to drop I'm not sure, and I don't have his biography on hand to reference.

[John]

> I think there's an additional factor since The Peter Principle was
> written - jobs at all levels have become more complex. Over the
> past 30 years, it's become harder for a person at the 98th
> percentile to be effective in a technical job.

This is entirely counter-intuitive.

I don't know what you mean by a "technical job," but operating a
computer in the 1970s required much more sophistication than operating
a computer today, even a Linux server. Looking more broadly, doing
accounting for your business required a team of accountants creating
reams of tables and charts, while today a single accountant can do the
same job. He still has to understand accounting principles, but once
the core principles are understood, the job is far less complex
using accounting software.

Another example: The Xerox machine required a secretary to look after
it several times a day, since changing paper or toner or freeing jams
was fairly complex, much more complex than those same jobs are today.
Or if you wanted your computer to print something out, then you needed
to use the line printer, which was fed huge boxes of perforated
sheets, requiring a computer operator to service it, and it went
clunk, clunk, clunk as it printed out each line of text. Now, of
course, you just click "print."

Or how about printing out a graph in color? I remember ooohing and
ahhhing at a device in the 1980s. It was a large, flat surface, and
at the top were several bottles of colored ink with a pen. Each pen,
in turn, would come out and start drawing lines or circles of whatever
was required. It was extremely cool to watch, but it was very messy
and complicated, and today, or course, you just click "print."

So I could go on and on, but technical jobs were much more complex
then than they are now.

[Higgenbotham]

> I think there's an additional factor since The Peter Principle was
> written - jobs at all levels have become more complex. Over the
> past 30 years, it's become harder for a person at the 98th
> percentile to be effective in a technical job.

So I could go on and on, but technical jobs were much more complex
then than they are now.

Let's say an engineer was hired by Microsoft in the 1990s to manage a team working on Windows 3.1 versus being hired today by Microsoft to manage a team working on the latest version of Windows. How would those situations compare? Or, really, any similar situations in your industry (software) that you are familiar with.

One thing that comes to mind that you discussed was the Obamacare software debacle. Versus 30 years ago, mismanagement and incompetence have become more of a problem, which makes the job more complex and makes it harder for even smart people to be effective.

I'll post specific examples when I get a chance.

[John]

> Let's say an engineer was hired by Microsoft in the 1990s to
> manage a team working on Windows 3.1 versus being hired today by
> Microsoft to manage a team working on the latest version of
> Windows. How would those situations compare? Or, really, any
> similar situations in your industry (software) that you are
> familiar with.

> One thing that comes to mind that you discussed was the Obamacare
> software debacle. Versus 30 years ago, mismanagement and
> incompetence have become more of a problem, which makes the job
> more complex and makes it harder for even smart people to be
> effective.

> I'll post specific examples when I get a chance.

If you're going to say that a job with a Silent manager is less
complex than a job with a Gen-X manager, because the Silent
manager is a lot more competent, then I guess I'd have to agree
with that.

However, the core technical complexity has got to be reduced today,
simply because computer software takes most of the complexity away in
most jobs.

With regard to managing a software project, there are many tools today
-- sophisticated compilers and debuggers, bug tracking software,
scheduling software -- that weren't available in the 1990s.

With regard to health care, my doctor had a whole room filled with
hundreds of file folders containing the health records of his
patients. Today, there are no more file folders. The data is readily
available online.

[Higgenbotham]

Here's a simple one.

An engineer who is the proprietor of a small engineering firm modeled a water distribution system. Nowadays, most such engineers are good at inputting into the model but they've forgotten what went into the model to begin with. So while it's easier to build a model (similar to what you described), you have to know both how hand calculations were done pre-model and how to do a variety of computer models. For water, the models use the Hazen-Williams equation, which assumes turbulent flow.

Since this was a rural system with some long runs of pipe, I spot checked some Reynolds numbers and it turned out the flow was laminar for miles near the end of the system. So the model could be used up to the point where the flow transitioned to laminar, then the rest had to be hand calculated.

Having read your post, I would say in the situation I'm describing most engineers would just use the computer model and do it incorrectly and that would in fact be easier and require less knowledge.

[Higgenbotham]

Another simple one.

A major energy company purchased a natural gas peaking plant built by Enron at a fire sale. We needed the specs for the plant to see if the buried pipe met codes. No drawings existed. That one was a major headache when the regulators got involved.

[Higgenbotham]

Last example. The financial system and trading.

HFT, spoofing, fake news, bots, etc. More information equals more deception, and more complexity.

[Higgenbotham]

There have never been this many job openings in America
by Patrick Gillespie @CNNMoney
August 8, 2017: 11:27 AM ET

American employers are trying to hire, but they can't find the right workers for the right price.

The U.S. boasted 6.2 million job openings in June, a record level, according to a Labor Department report published on Tuesday.

The high number of job openings illustrates a strength and a weakness of the U.S. job market. On the good side, American employers are ready to hire. During the Great Recession, job openings plunged to as low as 2.2 million in 2009. The Labor Department began tracking open positions in 2000.

On the downside, employers increasingly say they can't find skilled and available workers to fill their open positions.

A growing debate has emerged among economists: Some say American workers need better skills while others argue that employers need to offer higher wages to attract better talent.

I've always assumed this situation exists because:
Gen X doesn't know how to hire
Gen X doesn't have the skills to train workers
Gen X has such poor management skills that they need the workers really cheap to cover for their inefficiency

But if I'm wrong about that, these jobs might be going unfilled because the jobs have become too complex for many people to do.

[Higgenbotham]

Job Openings and Labor Turnover Summary

For release 10:00 a.m. (EDT) Tuesday, May 8, 2018 USDL-18-0742



JOB OPENINGS AND LABOR TURNOVER – MARCH 2018

The number of job openings increased to 6.6 million on the last business day of March, the U.S. Bureau
of Labor Statistics reported today.