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Part of Ellen Pao’s direct testimony in her lawsuit against Kleiner Perkins included that she was having sex with a co-worker whom she knew to be married (Business Insider). Presumably everything in Pao’s “case in chief” is intended to persuade the jury that they should be sympathetic toward her. Thus we can take this as a barometer of how times have changed in the U.S. If we were to go back 50 years, for example, it seems unlikely that a plaintiff seeking sympathy from a jury would have started out “So I was having a multi-month adulterous affair with a married guy at work…” Perhaps a public statement like that would be made on some sort of television investigative news program and the person confessing his or her part in what was then a crime would been shown with a face obscured in shadow but certainly nobody would have expected to be paid $2.2 million in 1965 (equivalent to the $16 million Pao seeks today, adjusting for inflation) after relating a tale of this sort.

Separately, I wonder what the jury will make of Pao’s complaints that “After she filed the lawsuit, Pao said the work environment at Kleiner Perkins became ‘extremely difficult and very uncomfortable. Partners were uncomfortable talking to me… if I went to their office they seemed nervous.'” (arstechnica) Maybe someone could sue General Motors and expect to keep working on the assembly line. The money sought from litigation would be coming out of the shareholders’ pockets, not the personal checking accounts of co-workers. But Kleiner Perkins is a partnership. Pao was essentially suing these people individually and then being surprised that it was hard to work with them after that. (There is some precedent for Pao’s expectation. Unlike some Scandinavian countries that have an administrative process for divorce (98 percent of Swedish divorces happen in this non-adversarial manner), in the U.S. the government encourages one parent to sue the other and then pays workers, such as judges, to express dismay at the resulting lack of cooperation between the litigants. We just finished analyzing some data from all 243 May 2011 divorce lawsuits in Middlesex County, Massachusetts. Only about 16 percent of the couples had filed a “joint petition” indicating that they had gone to a mediator rather than one running to the courthouse to sue the other. So 84 percent decided that a good way to embark on the next phase of a multi-decade co-parenting relationship was a lawsuit.)

Finally, after reading the news coverage of this case I am wondering if I myself might have a case against Kleiner Perkins. This New York Times article is typical: “Ms. Pao, who came to Kleiner with the dream of helping direct such a fund, graduated from Princeton with a degree in electrical engineering. She got a law degree from Harvard and worked for Cravath Swaine & Moore for two years doing international deals. She returned to Harvard for a business degree and worked for a variety of tech companies, including BEA Systems and Tellme Networks. Her geek cred is pretty unassailable.” In other words, a person who got an undergrad engineering degree and then never engineered anything has “geek cred” and, implicitly therefore, is entitled to be selected as a senior partner at Kleiner Perkins. What is the basis of the Philip Greenspun v. Kleiner Perkins lawsuit then? I have an engineering degree and have actually had jobs doing hands-on software engineering and electrical engineering. So the Greenspun geek cred should be at least as strong as Pao’s. Like Pao I have been inside the Menlo Park offices of Kleiner Perkins (not to have sex with a married employee, but to talk about some of their portfolio companies’ projects and to attempt to hector them into finding a team and building a startup around my “Mobile Phone as Home Computer” idea). As happened to Pao, the Kleiner Perkins partners with whom I spoke failed to recognize my potential to join them as a senior partner. Instead of issuing me $16 million in paychecks they escorted me to the front door and into my rental car.

Related:

• previous posting regarding Ellen Pao v. Kleiner Perkins

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Apple is now taking $200 of electronics that typically retails for $349 and will be worth $0 in a few years, wrapping it in $640 of gold (source: Forbes), and selling the combination for $12,000 as “Apple Watch Edition.” I’m looking at a 6-year-old Panasonic 1080p plasma TV on the wall. It might be worth about $349 on Craigslist and will be worth $0 as soon as 4K goes mass-market. I am going to remove the black plastic bezel and replace it with a metal bezel containing some gold, fusing the two together so that they can never be separated. The result will be the $12,000 “Apple TV Edition.” The weight of the metal bezel will not generate complaints such as this one from Bloomberg about the Apple Watch.

How many people are out there willing to spend $12,000 on a fancy case inextricably linked to almost-immediately-obsolete electronics? Vertu supposedly found about 350,000 customers for its expensive-on-the-outside phones. I’m guessing that Apple could sell at least 10 times that number over the next three years. That’s $4.2 billion or a little over a week of revenue for the company.

What do readers think of the $12,000 Apple watch? Is it more evidence for the philosophy of David St. Hubbins? (“It’s such a fine line between stupid and clever.”) On which side of the Hubbins Line does the watch fall?

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Shuttle bus drivers in the San Francisco area are unionizing (SFGate), thus potentially rendering their employer unprofitable and inducing customers, such as Apple and Yahoo, to switch to non-union bus companies. This is kind of the same situation as with airlines and unions. At any time the drivers (pilots) can unionize and potentially render the airline insolvent. The resulting sustainable structure in the airline industry seems to be that a leasing company owns the airplanes. Then when the airline is bankrupted by a union contract entered into during a fit of management optimism, the physical airplanes can be moved, repainted, and put into service at a new carrier. ILFC is one example of such a lessor and it worked well enough to turn Steven Udvar-Hazy into a multi-billionaire.

Is there now an analogous opportunity in the Bay Area? Form a leasing company to own a fleet of luxurious buses ($300,000 each?). Use easily replaced vinyl wraps for branding. Lease them to an operator who will hire drivers and contract with Apple. When the operator’s employees unionize and the Apple contract becomes unprofitable, move the buses to a newly organized non-union operator who can be competitive. The regulations and start-up delays for a bus company shouldn’t be anywhere near as painful as for an airplane.

Where’s the flaw in this business plan? Is it already too easy to obtain low-rate bank financing for buses?

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The latest Sheryl Sandberg piece is “How Men Can Succeed in the Boardroom and the Bedroom”.

Sandberg says “If men want to make their work teams successful, one of the best steps they can take is to bring on more women.” In other words, men are too dumb to realize how much richer they could be if they hired more women. (Related: the Kleiner Perkins partners were too dumb to figure out how much richer they would have been if they had promoted superstar Ellen Pao to partner.) Women are also too dumb to get rich by hiring women, as evidenced by the fact that Yahoo did not go on a feminine hiring spree after Marissa Mayer took the CEO job, nor did HP when run by its female CEOs (Carly Fiorina and Meg Whitman). Even Sheryl Sandberg the COO is dumb compared to Sheryl Sandberg the pundit. Facebook has a low percentage of female employees and managers (Bloomberg). Her article doesn’t explain why she has elected to cut her own compensation by not hiring women to make Facebook more successful and thus boost the value of her Facebook shares.

Sandberg says “Research shows that when men do their share of chores, their partners are happier and less depressed, conflicts are fewer, and divorce rates are lower.” Presumably it would be Sandberg (previously divorced, according to Lean In) who would decide what each man’s “share of chores” should be. Sandberg adds “Couples who share chores equally have more sex.” (she does not cite “Does a More Equal Marriage Mean Less Sex?”, a February 6, 2014 New York Times article about research concluding the opposite, nor “Why Most Published Research Findings Are False”).

Sandberg writes from her fully staffed household in which “[second husband] Dave pays bills, handles our finances, provides tech support” to suggest that other women’s husbands should behave differently than her own: “when fathers shouldered an equal share of housework, their daughters were less likely to limit their aspirations to stereotypically female occupations. … For a girl to believe she has the same opportunities as boys, it makes a big difference to see Dad doing the dishes.” Could it be that this study simply shows that girls age 7-13 perceive marriages without a division of labor as inferior overall? If a girl sees her dad doing the dishes every night she is more likely to reject the concept of marriage and therefore prepare for a life as a single person with a high-income job? Perhaps she will later change her mind and get married anyway, but the “aspirations” measured by researchers interviewing 7-13-year-olds would be toward a career without marriage or children. And that does raise the question of whether research by a graduate student interviewing 7-13-year-olds is something we should base our lives on. The interviews that I have conducted with children indicate that 35 percent of Americans are veterinarians (35 percent of children said that they wanted to be vets and it seems reasonable to assume that they followed through on their plans from kindergarten).

Sandberg shows the value of a Harvard economics degree when analyzing complex data: “Twenty-five percent of United States gross domestic product growth since 1970 is attributed to the increase in women entering the paid work force.” In other words, if a higher percentage of the population has a waged job, the GDP number will go up. Inspired by Sandberg, my personal plan for boosting GDP will be to have every child in American sign up to Uber. Then when a parent has to drive the child to a soccer game, the child will put the request in through Uber and pay the parent for accepting the trip. Where does the child get the money? The parent can hire a payroll service to issue the child paychecks and an end-of-year W-2 for doing homework. If successful, parents will also sell at-home meals to children. Then we hire the neighbor to clean our kitchen while taking a 1099 job cleaning his kitchen every night….

Sandberg says that more gender equality will make “entire societies prosper.” This U.N. ranking does not seem to support this theory. If we take “prosper” as something broader than the GDP number and more like the U.N. Human Development Index, there does not appear to be a strong statistical link between prosperity and gender inequality. Poor countries seem to rank lower in gender inequality but perhaps this is because one of the things that people like is equality and rich countries buy more of it while poor countries can’t afford it. (One interesting item in the table is that China is closer to gender-equal than the U.S., as are Japan and Korea, despite our stereotypes of Asian countries as male-dominated.)

One of my Facebook friends wrote about this piece: “Guys, Sheryl tells us to replace foreplay with choreplay ™. It ‘is real’. I am all for equality and stuff, but I feel like everywhere I look, I see half-baked pieces saying that nearly all problems in the world can be solved by ‘bringing on more women.’ Sounds more like Sherylplay to me.” As he is a white male Harvard graduate it was with glee that I was able to comment “Check your privilege.”

Sandberg’s theories are about to get a test now that Germany has put in a quota system for female board members of public companies(Guardian). If German companies continue to outdistance their Spanish, Italian, and Greek rivals Sandberg can say “Their success is attributable to the quota for women on boards.” (Thus contradicting this paper by Ahern and Dittmar regarding Norway’s quota: “The quota led to younger and less experienced boards, increases in leverage and acquisitions, and deterioration in operating performance.” (fortunately, all irrelevant when you have a country of 5 million people sitting on billions of barrels of oil)) [Separately, how can a 30% quota be justified? If there is to be a quota, why isn’t it 51%, reflecting the percentage of women in the German population? And how does this dovetail with Sandberg’s quote that “Men may fear that as women do better, they will do worse. But the surprising truth is that equality is good for men, too.”? Unless German companies expand their boards, won’t every woman who gets a coveted board job under this new quota system mean that a man must lose a job?” Is the number of jobs that are actually worth having growing fast enough that 51% can be taken by women (gender equality) and yet leave men with more of these good jobs than they had before?]

What do readers think? Could it be that all humans on the planet are so stupid compared to Sheryl Sandberg that they had not previously figured out these simple-yet-foolproof ways to (a) get rich, (b) have a successful marriage, and (c) rear high-achieving children? Can middle-class people get useful tips on how to arrange their domestic lives from one of the world’s richest persons? Can people who run companies subject to competition get useful tips from a manager who has spent her entire career working for monopolies? (U.S. Treasury Department, Google, Facebook)

At first glance Sandberg’s claims invite skepticism. But then look at the people U.S. public companies actually do hire as top managers (also this CNBC list) and it is clear that Econ 101 cannot explain what happens in the real world (see my economic recovery plan for what I would change regarding public company boards). Maybe it is time to buy more stock in German companies…

Related:

• my review of Lean In
• shorter piece on Lean In’s domestic relations chapter
• Should the SEC make it illegal for public companies to employ men?
• “Union for Radical Political Economics” in which a Wellesley professor said “[Lean In is] an example of liberating only white privileged women”: “Sandberg talks about breaking the glass ceiling but for poor women the basement is flooding.”

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I was asked to pick up a bottle of Veuve Clicquot Champagne for a thank-you gift. I was accompanied by a 5-year-old and she asked what it meant. I explained that it was “the widow named Clicquot” and that she had taken over a business previously run by her husband, but that she proved to be a far more able manager than he. Then I said “I wonder if that guy was the first empty suit?”

What do readers think? Who besides Francois Clicquot is a reasonable candidate for the honor?

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A friend and I watched the movie Chef and we wondered what bureaucratic hurdles a real-life food truck operator would have to jump. We discovered that the Boston License Raj requires seven separate permits (flow chart from Harvard Law School experts) and that one must become a customer of at least two government-selected companies (Trimble and Sprint). Los Angeles doesn’t seem to be very different (example; see also this guide). Chicago bans food trucks within 200 feet of any restaurant (Huffington Post). How about in Miami, where the movie food truck gets its start? This site says that 10 separate licenses are required and notes that “Miami entrepreneurs will find no shortage of licenses they must obtain.”

Related:

• America’s License Raj (Economist)
• “The Unequal Effects of Liberalization: Evidence from Dismantling the License Raj in India” (American Economic Review 2008), in which the 10 lb. heads of Harvard, Princeton, etc. found that “industries located in states with pro-employer labor market institutions grew more quickly than those in pro-worker environments” (i.e., employers chose to locate in employer-friendly places)

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I read The Unsubstantial Air: American Fliers in the First World War and learned that World War I military pilots would climb to as high as 20,000′ without oxygen (and 22,500′ for some German photo reconnaissance equipped with oxygen). The Wright Brothers flew to an altitude of 10′ during their famous 1903 flight. So that’s 10 feet to 20,000 feet in 15 years. Not a bad rate of progress!

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The New York Times carried an article today wondering how it was possible for wages to stagnate while the unemployment rate fell. This Bureau of Labor Statistics chart shows that the percentage of American adults who work has fallen from roughly 66 percent of the population (2005-2008) to just 63 percent today. Wouldn’t the BLS chart alone be able to explain a falling unemployment rate while wages remain about the same? With fewer people in the workforce, if there are the same number of jobs at the same pay rate, the unemployment rate falls and generates excited newspaper headlines and dramatic claims by politicians despite the fact that the same number of people go to work every day and get paid roughly the same.

What do readers think? Do all of these American adults on the sidelines have an effect on wage growth? Or are they not significant compared to the available workers worldwide?

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Friends have been asking me about Harrison Ford’s crash landing in Santa Monica. It isn’t too surprising that a vintage World War II airplane with a radial engine suffered an engine failure. Generally it is impossible to get a new or factory-rebuilt radial engine, so you’re relying on at least some parts that are more than 50 years old, albeit regularly inspected.

The Facebook buzz seems to be at least partly along the lines of “Why do they let rich idiots fly their own airplanes?” I.e., pretty much the opposite of the reaction that people had to the engine-out landing of Captain Sully and Jeff Skiles in their Airbus, despite the similar nature of the problem and the similar solution (“choose a reasonable place to land”). Ford’s engine failed at a much lower altitude so he had less time to think and plan.

Perhaps this will be a good marketing opportunity for the Chinese owners of Cirrus Aircraft!

[You might well ask why did the engine choose to quit immediately after takeoff? There are a disproportionate number of power failures in the few minutes before landing and in the 30 seconds or so after takeoff. The pre-landing failures are easy to explain: fuel planning was close but not quite right, thus leading to running out of gas with just a few minutes to go (of course, a conservative pilot would elect to make an unplanned fuel stop rather than push his or her luck). The post-takeoff failures have to do with the fact that airplane engines are run at 100 percent power while rolling down the runway and climbing up to 1000′ or so. This is when piston engines tend to come apart, rather than in cruise flight when 65-75 percent power is standard. Robinson figured this out and designed its helicopters so that the piston engines never run at more than 80 percent power at any time. This reduced the failure rate so much that a piston engine that is typically overhauled after 2000 airplane hours is recommended for overhaul at 2200 hours in a Robinson.]

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When I read about President Obama’s veto of Congress’s approval of the Keystone XL Pipeline (proposed in 2008), I was reminded of the fact that the U.S. announced the construction of the Alaska Highway, most of which is within Canada, prior to obtaining approval from the Canadian government. No wonder they hate their arrogant neighbors to the south!

[Separately, it is worth comparing the productivity of North Americans then and now. The 1700-mile Alaska Highway was conceived in earnest late in 1941. It opened less than one year later. We’re seven years into the Keystone XL project without a single mile of pipeline having been constructed. If it ever is finished it will be less than 1200 miles long.]

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