by Brian Brady
Commercial Real Estate Finance Expert
Structured Debt and Equity
Licensed Real Estate Broker in AL, CA, and FL
The current Adminsitration has its target on one more component of the capitalist model; free labor. From today’s Wall Street Journal:
You might therefore expect a federal effort to encourage employers to give unskilled youngsters a chance. You would be wrong. The feds have instead decided to launch a campaign to crack down on unpaid internships that regulators claim violate minimum-wage laws.
“If you’re a for-profit employer or you want to pursue an internship with a for-profit employer, there aren’t going to be many circumstances where you can have an internship and not be paid and still be in compliance with the law,” the Labor Department’s Nancy J. Leppink tells the New York Times.
Did you hear that? You might not be allowed to employ a willing student, who wants to learn a trade, without paying him minimum wage.
Consider these two summer job options:
1- Working in the Goldman Sachs mail room for minimum wage. That job certainly gets a young person in the door but the opportunity to learn, network, and accept greater responsibilities are practically nil.
2- Interning on a trading desk, for PIMCO, for no compensation. While that young person won’t make a dime, she has the chance to work alongside fixed income legend Bill Gross. She’ll speak to fund managers all over the country, meet people who might hire her after graduation, and accept challenges few people her age would ever see.
Anyone should be able to see that the latter is the equivalent of a free MBA while the former is an invitation to a labor union. Chris Gardner knew the value of an internship. He worked for free, when he needed fast cash to support his son. He willingly traded his labor for future opportunity-that’s an investment.
Read what Greg Swann wrote about the value of free, in the early days of Bloodhound Blog:
How much future is there in a job that millions of very smart people are willing to do for free? Maybe not the same work, but so close that any differences become academic.
Greg was talking about the disintermediation of the newspaper industry but he foreshadows subsequent essays about the concept of abundance. This is what the dinosaurs in the current regime can’t understand; the economy is shifting not depressing. The harder they try to hammer the orange, the messier it’s gonna get. In a world of abundance, certain products of labor will become useless. Other opportunities will be so lucrative that people will apprentice for them.
I have a lot more thoughts about the importance of the entrepreneur in the coming Dawn but I”ll save them for another post. I’d love to hear your thoughts regime’s latest attempt to abolish the practice of investing in your future.
PS: This “crackdown” is only applicable to “for profit” entities. Governments, schools, and any non-profit are exempt.
Greg Swann says:
Labor unions making war on young people — because they don’t vote. Wonderful…
April 6, 2010 — 10:00 pm
Jim Klein says:
I try to convince myself that it’s dawn that we’re seeing, but it’s looking more like twilight by the day. I guess they made a little adding error about California’s unfunded liabilities and they’re really more than half a trillion dollars. What a shock, eh?
I’d like to think Greg has the motivation behind this nailed, because that would demonstrate at least some neural activity going on! But I’m more afraid that you got it right with your one emphasized word—“willling.” Sometimes it seems that this is the target of the Great Prohibition.
Oh well, all the force in the world can’t capture a single mind, so I guess it’s up to us to hurry the dawn. Thanks for doing your part.
April 7, 2010 — 8:26 am
Sean Purcell says:
You cannot create a socialist utopia without nominal control. (If you’re offended by the S word, grow up. It’s not a pejorative, it’s the name for a certain social, economic & political belief system.) There are three main avenues for amassing that control: information, regulation and money.
Owning information is by far the most powerful tool (hence its use in totalitarian regimes), but extremely difficult to effect once the genie is out of the bottle. (That’s not to say it isn’t being tried: net neutrality, backed by the ironically named Free Press Organization, is an innocuous sounding step down that road.) Regulation works fairly well but is messy. Witness cap & trade, the health care reform debacle, even the new HUD good faith estimate. Regulation is the required precursor to “unintended consequences.” Money is, by default if not efficacy, the path of choice for most entities seeking to increase their power in order to foist their ideals upon others.
Allowing someone to work for free is a real problem then. The very act of interning in return for learning precludes the state from using information to coerce. By removing money from the equation the state is left with regulations as the only tool available. Which brings us right back to the Labor Department’s Nancy J. Leppink. I wonder if she wears a Brooks Brother’s Suit…
April 7, 2010 — 11:43 am
Joe Dallorso says:
I’m afraid we are on a one way street to a Progressive Socialist utopia. So let me be the first to propose how to survive and prosper in the age of Obama.
Real estate as we know it must go. We have to form the first non profit 403b real estate franchise, no lets make that a cooperative. We will charge no fees to either buyers or sellers. Instead we will rely on large government grants, funds we extort from what is left of the private sector and obnoxious fund raising like PBS. We will of course specialize in helping people with no money and a history of not paying their bills buy homes. Instead of commissions we will all get a generous salary & benefits from our non profit and at the same time be able to establish a certain moral superiority because we help people and don’t work for a profit. No one will expect us to work very hard and certainly not on the week ends or holidays because we won’t be charging a fee. We’ll just be helping people.
Trust me, I know this stuff. I grew up in Massachusetts 🙂
April 7, 2010 — 1:20 pm
Brian Brady says:
Joe- that Mass quip was sadly funny. I might disagree, though. I think one of the first rays of sun peeked through the clouds with the restoration of the “Kennedy” seat to the citizens of the Commonwealth.
Greg- I think you’re correct but I wonder why the young people that do vote continue to overwhelmingly support this regime. My theory is that we have a generation tainted by gov’t schools.
April 7, 2010 — 4:38 pm
Greg Swann says:
> I wonder why the young people that do vote continue to overwhelmingly support this regime.
They’re very bad at math. We don’t study math to learn to calculate, we study math in order to learn how to think. This is why math was destroyed first by progressive education — by the teachers’ unions, that is.
> My theory is that we have a generation tainted by gov’t schools.
I started seeing the progressive teachers in the seventh grade, call it 1970 or so. That’s forty years of mangled minds, everyone from age six to age 50 or so. Everyone 65 and older is already a welfare slave, so the country is literally hanging in there on the strength of one remaining generation of reasonably well-educated people.
Here’s the good news: The net disintermediates everything. I’m not in love with the Rush Limbaughs and the Glenn Becks of the world, but there were zero alternatives to the mainstream media when I was growing up. It is very far from implausible that America will make the same lemming-leap taken in the last century by the Germans, the Russians, the Chinese, et cetera. But it is also plausible that people who have become tired of the pain and poverty ensuing from bad philosophy will take advantage of the internet to acquire the education they were denied by the teachers’ unions.
April 7, 2010 — 6:21 pm
Jim Klein says:
That’s no theory, Brian; it’s fact. As I predicted long ago, it would take two generations…one to snag the educators and one to do the real job.
Joe, at least now I know who’s the brains behind this regime! And Sean, if you want to know how dizzy I am, I first thought yours was a serious post about how to create an actual utopia. When I start losing my mind, you can be sure something’s cookin’…I think it’s our goose!
April 7, 2010 — 5:18 pm
Brian Brady says:
@Greg I agree. When the subjects that encouraged critical thinking were debased (Math, Latin, Logic), the ability for students to form independent opinions died.
@Jim I’m an optimist so I think Greg’s last line might ring true (internet as educator). I think we have a chance to make the government educators irrelevant
April 7, 2010 — 6:53 pm
Sean Purcell says:
I’d like to be optimistic about the potential of the internet and the dissemination of knowledge, but I am not. That’s not to say it won’t happen at some future date, but it’s difficult to imagine that day while watching CA continue loading lead weights on a ship taking water at the main deck.
This looks to me like a race: the contest is between those who choose to educate themselves in service of self-reliance, and those that prefer the indolent position of dependence. The latter group appears to me to be pulling ahead at an alarming rate. (Check employment numbers carefully; the total number might move slightly in one direction or another, but the exportation of jobs from the private sector to the public sector is alarming.) Government control of education financing, proposed regulation of the financial industry and the activities of Brian’s post all point toward a population directly or indirectly coming to rely on the governemnt for their comfort, their safety and yes, their thinking. Once we cross that tipping point (have we already), it’s exponentially harder to exhort people in a sluggard recline toward the reward and value of self-reliant work.
Sooner or later the system must collapse on itself of course, as we have witnessed over and over across the world. Freedom is a natural state that will eventually exert itself in even the most broken soul. But the distance between now and then may be measured in decades… and the cost to mankind of our failed experiment not measureable at all.
April 7, 2010 — 8:20 pm
Greg Swann says:
I have to write this at length, but I can summarize the argument in two words: Meme liberty.
If people are open to ideas, why not open their minds to the best ideas? This is something that each one of us can do now that none of us could do before. Can one person change a million minds? Who cares? Can a million thoughtful people change one mind each? Oh, you bet! A thousand times over.
The world is always ours to win — and never more than now. Don’t ever doubt it.
April 7, 2010 — 9:45 pm
Brian Brady says:
An appropriately optimistic message, Greg
April 7, 2010 — 10:38 pm
Greg Swann says:
> An appropriately optimistic message
Battle cry. You already get it. So does Teri. It’s just a matter of understanding it as a strategy.
“Meme liberty” would work as a bumper sticker, and that kind of economy is unbeatable. “Give me a lever and a firm place to stand and I will move the earth.” We’re there. The Greeks have inherited the earth. Now I know we can win.
April 7, 2010 — 10:46 pm
Greg Swann says:
> Now I know we can win.
Very big night for me: It’s always been about notation. Fathertongue — the language(s) of conceptual knowledge — grows best in the pure sunlight of freedom. Grows like weeds, says anyone whose own seedling theories have been put in the shade. So, for those who would take power, if fathertongue can’t be domesticated, it has to be eradicated. Except by now it is ubiquitous, every day ever more omnipresent. It can’t be eradicated.
…And I have a grand unifying theory of liberty and tyranny… Very big night. Thank you all so much!
April 7, 2010 — 11:21 pm
Joe Dallorso says:
Greg asked > I wonder why the young people that do vote continue to overwhelmingly support this regime.
Aren’t most young people liberal? I was growing up in Mass & going to college in Boston in the 70’s.
“If you’re not a liberal at twenty you have no heart, if you’re not a conservative at forty you have no brain”
It’s tax time & I just read that 47% of people won’t have to pay federal income taxes. What do they have to lose? The founding fathers feared Democracy as mob rule. The majority confiscating property via the ballot box. It’s not math skills that are lacking but an understanding of the constitution that gave us the freedom & prosperity that we have today.
Then there’s the politically incorrect notion that most people just “ain’t too smart” and are easily manipulated especially if you control information and education. It’s hard to think for yourself & much easier to believe.
April 8, 2010 — 5:00 am
Robert Worthington says:
I’m 28 and I feel most young people don’t understand how evil progressives really are. The whole idea of government is good has been diligently carved into millions of minds in young people as well as people who want a free lunch. Why do I have to be a minority in a generation of progessives? This is sickening.
April 8, 2010 — 12:19 pm
Al Lorenz says:
It sounds like there will be a whole bunch less learning going on this summer and more students who are unemployed. The market will respond to this intrusion as well.
April 8, 2010 — 2:07 pm
Brian Brady says:
A lady named Alexandra said, on my Facebook page:
“The focus from Gov. here is not on the ‘paying’ part (they would care less) its all about making it difficult for the biz to function, and gaining control of the industry. This is the ultimate goal, their strategy. Look at their overall approach …..and you shall see the true reasons.”
Now this is me:
Regulation is the weapon of choice for the regime’s middle managers:
“FCC lost in the Supreme Court? We’ll regulate all ISPs like utility companies” My bet is that we’ll have cowboy ISPs and radio stations, etc. Ireland tried this in the 80s radio business and the cowboys destroyed the ‘licensed’ stations, broadcasting from boats offshore.
This is one more way to infiltrate, harass, and and eventually strap big businesses so that the Gov’t controls the lion’s share of the economy.
I agree with Greg, though. The way to win this war is to bring one mind back to Liberty, each day, for the next 3 years. If one million people can do that, until 2012, this country is going to look VERY cool in the latter part of this decade.
April 8, 2010 — 2:14 pm
Michael Cook says:
Leave it to me to be the one lone dissenter in this lovely “progressive” lovefest, but am I the only one that looks at this as pure nepotism, bribery and any other word you want to describe one of the many subtle ways a majority group remains in firm control over the wealth and knowledge in the US?
If this was simply as altruistic as you all seem to think, I am quite sure the government would care less about it. Some of the statements above border on sheer lunancy…
“Allowing someone to work for free is a real problem then. The very act of interning in return for learning precludes the state from using information to coerce.”
Really??? The only way the government controls what you and yours learn is if you allow them to. If your child learns more at school then he/she does at home, that is the failure of the parent, not the government. Furthermore, if anyone believes that because the government says you cant get your country club buddy to give your son an unpaid internship that learning will suddenly disappear you are giving the government way too much power.
If this group would take just a minute to look at changes in legislation as more than just the government trying to boss you around, I think the discussion here would be much richer.
Consider the free internship program implications. It strikes me as just another form of payola for cushy customers or the CEOs son/daughter, rather than a leg-up for hard working youth. Why not legitamize it anyway with minimal pay? It would be more rewarding to both parties. I did my internship along side a “free-rider.” Trust me, he didnt get the value of an MBA education. (I know how much Greg loves anecdotes…)
Government is not always the enemy and government doesnt have nearly the power you people give it in my opinion.
April 8, 2010 — 2:57 pm
Brian Brady says:
“It strikes me as just another form of payola for cushy customers or the CEOs son/daughter, rather than a leg-up for hard working youth”
On what do you base that allegation, Michael?
“Government is not always the enemy and government doesn’t have nearly the power you people give it in my opinion.”
You couldn’t tell that from the last 12 months. The Federal Gov’t has nationalized the student loan industry, the health insurance industry, and the mortgage industry. It owns 4/5 of the largest insurance company, and has made inroads to banks which they can control, in order to squeeze out profitable smaller banks (like they did in 1989-93).
Shall I continue? The Federal Gov’t owns the lion’s share of the domestic automobile industry and uses regulations, against foreign automakers, to protect its investment in same.
Want more? Dissenters are demonized for daring to exercise their duty of citizenship and questioning the “lords”…and still Rome burns.
The Federal Gov’t has instituted (and extended) the PATRIOT Act and proposes a National ID Card, so that it can track not only every citizen’s financial transactions but his movements, too. This from an entity that is supposed to PROTECT our privacy rather than invade it. Please don’t tell me that I have nothing to worry about if I haven’t done anything wrong.
“Really???”
Yep. Really.
April 8, 2010 — 4:59 pm
Doug Quance says:
Don’t forget Cap and Trade, Brian. Tax and regulated, essentially, your breath.
The youth of this nation will live love enough to pay for this.
April 8, 2010 — 6:31 pm
MB Realty says:
Unpaid interns is a beautiful part of the capitalistic system. No one “makes” people intern for free, they “choose” to. In my opinion, this is one area where the gov’t should stay out.
Thanks for the post!
MB
April 16, 2010 — 5:24 pm