Bad management

Managers are strong complements to workers; with bad managers, everyone's productivity goes down the toilet.

Eli Dourado reckons the cost of managerial complements makes a case for zero marginal product workers: the worker might be producing more value than he's taking home in pay, but not enough to cover the cost of the manager that lets the worker produce positive-value products. Read the whole excellent post.

And we can see this when the managerial complement goes awry. Case in point: Mexico. 

Mexico City’s Buena Vista Walmart is the first super-market I’ve ever seen paralised by a trolley-jam. It is not more busy than any other large city supermarket, and not understaffed. No: the reason it takes ten minutes to walk from one side of the store to the other every single night is because they have no baskets—only large trolleys. To my sample of Mexican Walmarts, this is unique; most Mexican Walmarts have trolleys and baskets. And so the error must have been made by the managers of that particular outlet. Of course, this is only a small example of inept management in Mexico, but it’s sadly representative—labour productivity in Mexico is about a third of that in the US. If Mexico were as well managed as the US, it would be as rich.

This all raises a few questions: why are managers in Mexico (and the developing world in general) so terrible? why are those in the US so good? and how much of the difference is able to be affected by policy?

James Savage chalks it up to Mexico's caste system, nepotism / seniorism, and an awful school system. If your first worry is about hiring somebody who won't steal from you, you'll weight connections over competence. But again, read the whole post and despair at the morass of interlocked problems that reinforce each other and make solutions difficult. Foreign firms coming in and bringing with them stronger demand for competence has to be part of the solution, but the Walmart example suggests it might take a while.

Air Canada provides a different problem. Here's Josh Gans, lamenting just how awful Air Canada is compared to what he's been used to in Australia. Where Virgin in Oz had in-flight face painting for the kids at the back of the plane - effectively in-flight child entertainment far away from the parents - Air Canada seemed determined to make sure his family of 5 were separated throughout the plane. Josh very nicely explains the obvious points about just how terrible it is for all fliers that Air Canada made it impossible for him to sit beside his kids; it would be surprising if Air Canada's gains in forcing families to book through the Air Canada system outweighed the losses they get from ruining everybody else's flight.

The less sinister explanation is that Air Canada have a very poorly executed booking and flight reservation system. Someone, somewhere forgot about families and deep in the code there is no way for Air Canada to sort out the mess. My bias is on incompetent planning rather than evil attempts at price discrimination in these matters.

This is observationally equivalent to my hypothesis, formed about a decade ago and now potentially out of date: a too-large proportion of Air Canada staff actively hate the passengers.

I don't think Josh's explanation is sufficient; Air Canada could always choose to release third-party booked seat allocations more than 24 hours ahead of flights. And my "they hate the passengers" explanation is not only more plausible than that it's profit maximizing to impose potentially massive costs on full-fare paying flyers to keep price-sensitive families from using aggregators, it's also parsimonious, explaining much of the overall Air Canada experience.

Again, like James's Mexico problem, we've got a set of interlocking issues: this time around union rules, seniority, effective domestic monopolies, and government bailout backstops making for soft budget constraints. But this one seems easier to unravel. Canada could unilaterally allow cabotage on its routes instead of waiting for a bilateral agreement with the States. Let Virgin America run intra-Canada flights, drive Air Canada into bankruptcy, sell off the planes to new entrants, and start over with new management that doesn't hate passengers.

I'll continue to be very happy with Air New Zealand (regardless of changes to its AirPoints upgrades system), and even more happy with Emirates on the Trans-Tasman.

Catching cheaters

Panos Ipeirotis notes the extreme cost to lecturers of pursuing cheaters.

By the end of the semester, 22 students admitted cheating, out of the 108 enrolled in the class.

The process of discussing all the detected cases was not only painful, it was extremely time consuming as well.

Students would come to my office and deny everything. Then I would present them the evidence. They would soften but continue to deny it. Only when I was saying “enough, I will just give the case to the honorary council who will decide” most students were admitting wrongdoing. But every case was at least 2 hours of wasted time.

With 22 cases, that was a lot of time devoted to cheating: More than 45 hours in completely unproductive discussions, when the total lecture time for the course was just 32 hours. This is simply too much time.

When 1 out of 5 students in the class being involved in a cheating case, the lectures and class discussions became awkward. For the rest of the semester there was a palpable anxiousness in class. Instead of having friendly discussions, the discussions became contentious. Not a pleasant environment.

This, of course, had a direct effect to my teaching evaluations. Instead of the usual evaluations that were in the region of 6.0 to 6.5 out of seven, this time my ratings went down by almost a point: 5.3 out of 7.0. Instead of being a teacher in the upper percentiles, I was now below average.

The Dean’s office and my chair “expressed their appreciation” for me chasing such cases (in December), but six months later, when I received my annual evaluation, my yearly salary increase was the lowest ever, and significantly lower than inflation, as my “teaching evaluations took a hit this year”. (And I publish in journals not endorsed by Business Week, but I will leave this story for another time.)

Josh Gans explains that optimal structures take enforcement out of lecturers' hands so that enforcement is more credible.

So what should the administration do to change the equilibrium? First, take the enforcement of cheating out of the Professor’s hands. Employ a policing person who is the one who receives the Turnitin results and decides what to do about it. Make it their job and you solve the free-riding problem right away. You also allow cross-course, repeat offender detection. And you change the cheating equilibrium to one where enforcement is expected. Finally, the Professor has their hands clean and so suffers no conflict over teaching evaluations.

Canterbury isn't far from this. Everything is run through TurnItIn. Anything that looks dodgy, I hand off to the Head of Department. There's still a short meeting between the student, the HoD, and me, but it's short and the HoD is the bad guy. And there's reporting within the College (and hopefully extending within the University) on proven cases of plagiarism such that track records get established; we then can apply schedules with increasing marginal penalties.

This was all getting pretty reasonably firmed up in the pre-quake world. I'll be using TurnItIn again this semester; hopefully, I won't have to haul anybody into the HoD's office. But TurnItIn has embedded itself nicely here; after a few years, most students have cottoned onto that they can't get away with the dumber forms of cheating.

Wasting Josh Gans's time

Josh Gans left Australia to take up a position at the University of Toronto. And now he gets to deal with Canadian Immigration, who've made him spend four hours proving that he can indeed function in English. Presumably he could have chosen to sit the test in French instead. Despite having more published papers than I care to count, Josh still had to sit through this kind of nonsense:

The first part was a speaking test. This is where a tester sat across from you and carried on the most unlikely conversation for someone you just met. He read a scripted piece which I filled in the other side of the conversation from. It started off standard and friendly enough with some exchange of basic information before he somewhat ominously decided to put a question to me where I would be allowed some “thinking time” before I answered. The question was to describe a job that I believed helped the world and to explain why I thought that. Of course, my first thought was “well, not your job because this is clearly a waste time in some broad sense.” But as I was the only person in our family required to take this test, I had been ordered to be on good behaviour. So I went with scientists and put in a solid discussion of the microfoundations of endogenous growth theory for a minute. I don’t think he was that intrigued because when my minute was up he cut me off mid-word — apparently more desperate to be free of this than I was. He then decided to provoke me by asking whether I thought that “industry destroyed the environment.” I said I thought that by definition all human activity, including industry, destroyed the environment, what of it? We then meandered back into whether technology was making people’s lives more enjoyable (I said, “it is me! I have an iPad”) but before I could get onto the Easterlin Paradox, my time was done.

And it gets better from there; read the whole thing. He concludes:

Anyhow, I cannot recommend against doing this enough. There has got to be a better and quicker way to assess language — maybe some two step procedure. I’m glad it is over — assuming I pass that is. If I don’t pass, it will turn out I am not recognisably proficient in any language!

Take Josh's experience, multiply it across all the thousands of English-speaking immigrants to Canada, multiply it by the value of their time, add in the bureaucracy's cost, subtract the bureau's cost of an alternative triage method: there's a social cost for you!

At least it sets people up with proper expectations of the Canadian bureaucracy. When I was home in Manitoba, a friend was talking about somebody who was trying to get into farmed fish. They'd gotten all the permissions for the fishing operation, but hadn't realised that their meat processing facility, already certified and registered, couldn't be used also for fish without an extensive additional permitting process. Instead of anger at the bureaucracy, folks instead puzzled over why the would-be entrepreneur hadn't made sure from three potentially relevant certification agencies that everything was allowed; the default assumption is that something is forbidden unless permitted in triplicate. That's no way to live. I was reminded of how Ellis Redding, paroled after decades in prison, still couldn't stop asking for permission to use the bathroom.

Meanwhile, here's how Immigration New Zealand solves the English-language problem:

The principal applicant is the person making the application. If you are the principal applicant, you must meet our standards of English. The minimum standard of English is an International English Language Testing Systems (IELTS) certificate, with a band score of 6.5 or better in the General or Academic modules. This certificate must be less than two years old.

However, we may consider one of the following as evidence if you can show us that you:

• have a recognised qualification from a course taught entirely in English,
• have ongoing skilled employment in New Zealand, and have been in the job for at least the last 12 months, or
• have other evidence proof of competency in English. We will consider a number of factors.

When I made my application a few years ago, in the third of the page where it asked for evidence of English competence, I listed a few publications and offered a copy of my dissertation. That was good enough.

Kiwis have no clue how bad things are elsewhere.