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Tuesday, 13 June 2017

The diabolical dilemma of e-commerce: losing money on your business or losing your whole business

People who follow me more closely and visited my LinkedIn page in the recent past, know that I work for a large chain of supermarkets in The Netherlands. 
And of course this supermarket chain is involved in e-commerce (i.e. online sales of groceries). As a matter of fact, I work in the team that is responsible for maintaining and improving the omnichannel webshop, including the normal webshop, the mobile webshop and the web apps for Android and iPhone.

It is a safe conclusion to state that omnichannel e-commerce as a prominent sales channel is booming. My company presented double digit growth on its online channel sales last year and this year promises to be even better than last year.

So everything is cool, right?! Well, that depends...

E-commerce is more and more turning into an arms' race between competitors in the same line of business. It is not enough for a large online store to just have a stable and reliable webshop with a proper, state-of-the-art e-commerce CMS (i.e. Content Management System) behind it, that offers a nicely looking and smoothly operating frontend webshop.

The website should be established and maintained with usage of the latest trends and insights in neuro-marketing, SEO (i.e. Search Engine Optimization), customer-tracking and behaviourial prediction, as well as continuous performance improvement for an optimal shopping experience. On top of that it should be optimized for conversion, conversion and conversion alone, in order to make it pay itself back. Everything else is ballast and loses your store money.

Letting your customer wait for 1 minute on your website or app means angry or disappointed customers; letting them wait for 3 minutes means a new customer for one of your competitors. Customer gone = customer gone forever... or at least until the moment that all your competitors scr*w up themselves and you are back in business again!

And with respect to the shipping and delivery of the ordered goods and products to the home of the customer, it aren’t delivery days anymore, but delivery hours(!) nowadays.

Being too slow in any shape or form means that you can be out of business very soon, as your competitors never sleep and are always behind you to raise the knife against you and your online store: even if these competitors come from a totally different line of business (hence: Amazon and their innovations with respect to supermarket services).

And the biggest question regarding e-commerce is: does it earn you any money?! Where that seems a straight-forward and very simple question, the answer is quite complicated in fact!

Supermarkets and large department stores are wonders of efficiency and effectivity. 

Concepts like optimal store design and optimized shelf layout, just-in-time replenishment logistics, as well as cash registers connected to automated stock control and order services and enterprise resource planning tools (ERP) have been developed to an exceptionally high level of effectivity and efficiency in most modern supermarkets and store chains. 

The choices between A-brands versus house brands for various food and non-food products and the usage of direct mail / leaflets as effective marketing tools are thought over time and time again, making the supermarket as a ‘living organism’ extremely efficient, effective and customer-guided. Also in modern department stores, logistics and just-in-time stock replenishment is a path well-trodden and optimized to a T.

Everything in a modern supermarket and department store is set up to deliver an optimal shopping experience to the customer and welcome him back every time.

Yet, e-commerce – in any which way you do it – is a whole different ball game. 

The customer does not need to visit a supermarket or department store anymore in order to know what he wants to buy. He uses the website for that. Consequently he doesn’t come over to collect his groceries or purchased products, but leaves that for the supermarket or online store to do, as quickly and accurately as possible.

This means that either (wo)men or robots must do this collection job: men and women that need to be paid an hourly fee or robots that need to be programmed and operated at quite high operational expenses. A very efficient in-store shopper might collect 4 to 5 shopping carts per hour and a shopping robot in a “dark store” (i.e. a small warehouse or distribution centre acting as a specialized collection supermarket for robots) might collect 8 to 10 shopping carts per hour. This means that the hourly fee of the human shopper or the total operational costs per hour of the robot shopper must be divided among 5 to 10 shopping carts, meaning an additional cost of €2 - €3 per shopping cart.

And then is there the delivery of goods to the home of the customer, ideally within 2 – 3 hours after the electronic purchase. About the maximum amount that the customer will pay for this delivery to his home alone is roughly €5 - €6. Otherwise the delivery is becoming too expensive for the customer from a psychological point of view, forcing him to collect his groceries himself after working hours. 

Or...  the customer may order his groceries at the supermarket’s direct competitors when they charge lower delivery costs. There are also supermarkets and online stores that do this delivery for free occasionally or even structurally, when the customer exceeds a minimal shopping amount of f.i. €25. So being too expensive is not an option for an online store or supermarket.

Ideally a store courier for an online supermarket can deliver 8 to 10 shopping carts with groceries per hour in an average city or village, but 3 to 5 is probably no exception. This depends on the distance that needs to be driven between two customers. 

This means that for supermarkets the whole delivery process from store to home takes at least two staff members (groceries collector + courier) and one (shared) delivery van per shopping cart against hourly delivery fees of (at most) €60 per hour, but often much less.

Most online department and specialty stores can negotiate special contracts with large couriers like PostNL or DHL, but small online stores mostly pay the normally pending fees for packages and mail.

Needless to say that in most cases the charged delivery fee is hardly covering expenses for supermarkets and online stores. This means that already the delivery part of the e-commerce shopping transaction is eating away the margin of the supermarket on the purchased goods...

And to a certain degree, online supermarkets have it still relatively easy in comparison with online department or specialty stores for a simple reason: unless their customers discover a flaw in their delivered groceries – damaged goods or spoilt fruit, vegetables or meat – they wil never return their goods. This makes the issue of returned goods a relatively small risk for the online supermarket operator.

However, for online department stores or specialty shops (f.i. shoe and fashion stores), the issue of returned goods is a serious extra expense for the store management. The EU obliges the online store to pay the full shipping expenses for the customer in case of returned goods. Some customers abuse this obligation by sometimes ordering 3 pairs of shoes or 3 different dresses, only to keep the best fitting ones and subsequently return the non-fitting items to the store, at the expense of the storeowner.

This is the nightmare of every online store and it is nearly impossible to prevent themselves from such unwanted customer behaviour. The largest online stores might operate their own returned goods fleet in order to save a few bucks, but most stores toothgrindingly pay the mounting shipping expenses of PostNL or DHL. 

Consequently, such extra shipping expenses for returned goods are large margin eaters: especially for shoe and fashion stores, like Zalando, that suffer from loads of returned, non-fitting goods.

And then there is of course the issue of the e-commerce infrastructure itself: a good, efficient and well-maintained omnichannel e-commerce platform (i.e. suitable for all desktop and mobile devices) with a proven, high conversion rate costs somewhere north of € 3 – 5 million per year for a store or store chain with approximately  €100 - €200 million in online sales.

This amount includes scalable hardware or cloud services, software, web design, consultancy (Search Engine Optimization(!)) and dedicated personnel. 
This means that an additional 2% to 4% margin on the sold goods is eaten away by the e-commerce infrastructure alone. Not one year, but every year...

Nowhere the expression “stagnation is decline” is more true than in case of omnichannel e-commerce platforms:

If you neglect the response times of your web services and especially your customers’ forced waiting times – impatiently looking at sandglasses and spinning wheels on their monitor – you might be out of business without you even knowing what hit you in the first place. Customer loyalty in case of brick & mortar stores is a thousandfold of online shopping loyalty. One or two bad shopping experiences and your customers skip your online store for months, years or for eternity.

All this puts high pressure on your performance, your Search Engine Optimization (“if your SEO is not optimal, you simply won’t be found on Google”), your webshop design, your product presentation and shopping cart handling, as well as on your discount calculation and weekly promotions. 

And last, but not least, on the scalability of your online store, for the days of the year that are decisive for your annual success: Sinterklaas (i.e. Dutch children holiday), Thanksgiving (in the US), Christmas and Eastern.

Summarizing, there is so many that can go wrong with one’s e-commerce platform and the expenses of keeping it up to speed and on topic are so high, eating away a large share of one’s margin, that one could wonder why he should operate an e-commerce platform in the first place and not simply stick to the old-fashioned brick & mortar store.

To be frank, when one would look at the continuity, cost-efficiency and sheer profitability of omnichannel e-commerce alone, the crystal clear message would be: don’t do it! It costs you a whole lot of money every year and yet offers a lot of uncertainty regarding the continuity of your online shop and whole business.

But 1 + 1 isn’t always 2 in the commercial services and retail industry... 

Especially in case of (not) offering e-commerce possibilities to one’s customers, the answer to this question is not a question of black and white.

This is for the simple reason that offering an up-to-date e-commerce platform costs a lot of money per annum, but not offering an e-commerce platform could put a store chain or supermarket out of business, due to being obsolete, out of fashion and not in connection with its (future) customers anymore.

The number of people that goes to B&M stores is steadily declining and – to make things worse – real-life, offline shopping is turning into a generation thing: the older generation still mostly prefers visiting the B&M stores, while the younger generation prefers doing their total shopping online. So operating a B&M store alone and no omnichannel e-commerce platform, may get you stuck with an aging customer base and a bleak future in the end.

That is the diabolical dilemma of e-commerce today: losing money on your business or completely losing your business.

And this diabolical dilemma is not only the dilemma of small, online specialty stores (“mom & pop stores”) with a limited range of exclusive products, but also the dilemma of the largest online stores (Amazon, Zalando, Bol.com) and supermarket chains, like the one I am working for.

Especially the logistical issue (i.e. order collection and shipping) and cost-efficient e-commerce platform maintenance, in order to keep it up-to-date and customer-oriented, are almost impossible nuts to crack: for now and for the distant (?) future. There is no self-driving courier or robotized drone that will change this conundrum soon. And also no maintenance-free website that still features all your products and articles in a customer-friendly and topical way.

And that makes that the sheer profitability of e-commerce platforms and online stores will remain dubious in years to come. That is, until customers start to pay a fair price for collection and delivery of their ordered goods and stop returning so many of them.

But abolishing the online store is simply not an option, unless you only want to serve the elderly!

Saturday, 10 June 2017

Election gamble blows up in the face of British PM Theresa May. Or how settling for an insecure coalition cabinet with a stronger opposition could become a blessing in disguise for the UK as a whole.

British Prime Minister Theresa May of the conservative Tory party had it all figured out: with the extremely tough Brexit negotiations with the European Union ahead and with the Labour party, led by Jeremy Corbyn, seemingly flat on its back, it seemed like an appropriate time to organize national elections in the United Kingdom.

According to her plan, these national elections would act like a two-edged sword.  When she would indeed have the sound victory based upon an absolutely majority that she anticipated, she would acquire a stronger mandate with respect to the EU negotiations and it would also rub her adversary Jeremy Corbyn deeper in the dirt of his own incompetence, she figured.

With the Tories as absolute majority leaders in parliament and Labour lying in tatters, she would be energized to take the tough stance against the EU that she deemed necessary to carry out the best possible results from these negotiations.

Things went... a little different:

The Tories won the elections by a small and non-decisive majority of  58 seats (319 seats against 261 for Labour, according to the latest polls) and they saw Labour gain a quite impressive 29 seats, in comparison with the last elections.

When one takes into consideration that Labour under the “clumsey leader” Corbyn seemed a lost cause  and that May seemed on her way to a landslide victory only a few weeks ago, it is clear that things went horribly wrong for Theresa May.

And the remarkable thing is that neither the Brexit nor the terrible terrorist attacks of the last few months in the United Kingdom seemed the direct smoking gun, with respect to this strongly disappointing election result.

The terrorist attacks – terribly brutal and vicious as they were – were of course condemned by all parties and it was not that the policy of either the Tories or Labour would have led to a different outcome. Besides that, all three attacks (i.e. the two in London and the one in Manchester) were executed by people living in the UK for a long time or even all their lives, so even the most restrictive policy regarding immigration would not have stopped these terrorist attacks at all.

To put it even stronger: the perpetrators were perhaps all part of the United Kingdom’s colonial heritage and not a consequence of the unhindered immigration of the recent years.

And the Brexit was not even the elephant in the room in the prelude to the elections. As Bernard Hammelburg, the savvy Dutch correspondent for Foreign Affairs of BNR Radio stated (if I recall him correctly): “the Brexit itself as an event hardly played a role in the British elections. The Brexit was a thing from the past, upon which all the important, gamechanging decisions were already taken. It was especially the unclear economic outlook and the feeling that not all would be hunky dory within the British empire after all, that drove the people – especially the youngsters – towards Corbyn’s Labour party”.

BNR Newsradio Foreign Affairs journalist Bernard Hammelburg
Picture copyright of: Ernst Labruyère
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Whatever the reason was: fact is that the whole plan of Theresa May to improve her position via these elections blew up in her face.

Instead of having an absolute majority of at least 326 seats, she ended somewhere south of 320 seats. In order to find a workable majority directly after the elections, May called in the help of a Northern Irish splinter group: the Unionist Democratic Party. This party is far more populist and conservative than even the Tories would like to endorse. Nevertheless, calling in the help of this party seemed the only way in which she could continue her governmental plans at short notice.

This means that due to this UDP party participation her hands could be tied with respect to all kinds of political hot potatoes, like the Brexit (the difficult choice between a soft and hard Brexit), the open border with Ireland, immigration and the economic development in all the countries within the United Kingdom.

And on top of that she seems to have lost the confidence of many youngsters in the UK, in favour of Labour with its leader that initially “nobody wanted” and that really nobody among the powers-that-be took serious in the beginning.

Corbyn was considered a basket case, with a totally outdated political view that came straight from the Eighties of last century: a political Catweazle [Catweazle was the name of a fictious wizard from medieval times, who was transported to the 20th Century by a failed spell – EL]. 

But the tides have turned for both PM Theresa and Labour’s Jeremy Corbyn...

So what can Theresa May do, now it is probably not possible to maintain her tough stance against the EU (i.e. “a Brexit on our terms or else... no deal!”), as she is now stuck somewhere between the desires of a now very powerful Northern Irish splinter group, a strongly divided Tory party and a Jeremy Corbyn with much more power than before and with the momentum going his way?

Perhaps the best solution would be to grind off the sharp edges of her current Brexit-related policy by diluting it here and there with a dash of mildness and a spoon of compromise and humility. She knows that she has to take three totally different opinions into account (Labour, Tories and UDP) in order to get anything through the parliament in the coming years. 

She can’t always trust the hardliners within her own party for automatically voting in her favour, so she must be able to find a broader compromise than she did before.

In other words, she has to take Labour’s desires also into account to a certain degree and stick out a hand towards the man that she probably dislikes more than anyone else: Jeremy Corbyn. Will she be able to do that? Who knows?!

I think the best she can do, is creating a compromise that nobody loves, but nobody hates either. A compromise that is in the best traditions of Dutch politics with its outrageous number of (small) parties and its long, long history of coalition cabinets, that were always a difficult marriage between sense and emotion.

And probably, when Theresa May grinds off the sharp edges of her Brexit policy, the EU is also willing to abandon their plans to punish the UK for trying to leave the EU.

The toughest nut to crack will be the immigration issue, as well as the free traffic of capital, citizens and goods and services. However, even in these formerly non-negotiable areas of EU policy there might be a small opening.

Immigration already has turned into the hottest potato within the EU itself and the member states are already discovering that unlimited free traffic of citizens (i.e labour) has a series of serious drawbacks that cannot simply be ignored by the powers that be.

Politicians start slowly to discover that the EU citizens become more and more fed up by the EU’s neoliberal policy of the last thirty years, because it largely ignored the sense of security and financial / economic stability that almost every citizen requires, in order to have a decent living and raise a family in relative prosperity. That could mean a chance for the UK in the coming negotiations.

However, the most important factor will be whether Theresa May is able to sing a different tune or not? Will she be able to show the EU negotiators a little more humility than before, when she made it seem that she held all the cards and the EU leadership had to sing to her tune in the Brexit negotiations.

Even though the UK is still very much a stronghold in the financial and commercial services industry and not all financial companies are automatically choosing to leave London after the Brexit, May must understand that the UK still needs the EU more than the EU needs the UK after the Brexit. It is simple as that.

The UK is in my opinion quite vulnerable in the areas of agriculture, manufacturing and heavy industry, as well as the exports of manufactured goods, as the island cannot and will not be self-supporting in the coming years.

In some industrial areas, like the steel industry, the country still suffers from obsolete and hopelessly inefficient plants, that are no match for the cunning and efficient German industries or the heavily subsidized Chinese industries with their dumping of steel and other semifinished products. And nobody can eat or drink financial services alone.

So finding a viable and feasible compromise in the prelude to the Brexit can be a lifesaver for the UK in the end. The decision to start the Brexit can probably not be withdrawn without a massive British loss of face, but the way that it happens is very much in the capable (?) hands of PM Theresa May.

And then, this outcome of the elections, even though it will be a tough lump to swallow, could be a blessing in disguise: both for Theresa May and for the United Kingdom as a whole. And they can be a good chance for the EU to show a more friendly and humane face as well. 

A British mandate that takes the interests of more people into account is probably a better mandate in the end.

Saturday, 27 May 2017

Ernst’s Economy present at the ‘For the Turnaround’ event, together with Paul van Liempt, Kim Putters, Harald Benink and Arend Jan Boekestijn

I am very blessed with the contacts that my personal blogsite ‘Ernst’s Economy for You’ (the one that you are reading now) has brought me in the six years of its existence. The advantage of getting to know new people, is that these people can bring you at places and events where other people don’t go, as they are unaware of them happening.

The distinguished Paul van Liempt, interviewer par excellence, TV-presenter at the Dutch business channel RTLZ and radio presenter at BNR News Radio is one of those people that added a little extra to my life.

The Freedom Lab where For the Turnaround was organized
Picture copyright of  Ernst Labruyère
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Paul van Liempt, Interviewer par Excellence
Picture copyright of  Ernst Labruyère
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Paul is someone, who does not only do his job in the meadi, but looks at his place in society and at the positive influence that he can have on other people.

Together with philosopher Ad Verbrugge, he started the initiative “Voor de Ommekeer” (i.e. ‘For the Turnaround’ ) as a discussion platform, aimed at the time after the crisis has been fully solved.

Philosopher Ad Verbrugge, co-founder of For the Turnaround
Picture copyright of  Ernst Labruyère
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The people behind For the Turnaround [I use the English translation from now on – EL] are very aware of the fact that the world can’t just simply resume their ‘business as usual’ stance after the crisis and the depression coming out of it ended. 

Casual Discussions in and around The Freedom Lab
Picture copyright of  Ernst Labruyère
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Casual Discussions in and around The Freedom Lab
Picture copyright of  Ernst Labruyère
Click to enlarge


Casual Discussions in and around The Freedom Lab
Picture copyright of  Ernst Labruyère
Click to enlarge
The leading countries in the world can’t act as if nothing happened at all during the last decade and the world did not come in the worst economic/financial crisis since eighty years. And in the grasp of mounting, violent nationalism, rising international tensions, the emergence of more powerful and ruthless dictators and erratic presidents all over the world and last, but not least, crumbling supranational organizations, like the European Union and the United Nations.

For the Turnaround therefore brings several thought leaders together for open discussions about the economy, the current societies and the international political and religious situation, hoping to find a way to make the world a better and more stable place after this all has ended.

Paul van Liempt invited me for this event, as he probably appreciates my original thinking and the fact that I dare to ask questions and give my opinions in the ongoing discussions. And Paul understands the fact that I try to change things for the better on my level and within my reach.

Among the guests of this event on Sunday May 21st, which was not televised and not recorded at all, were:

Kim Putters, Director of the Social-Cultural Planning Bureau
Picture copyright of  Ernst Labruyère
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  • Kim Putters, the distinguished director of the official Dutch ‘Social-Cultural Planning Bureau', which researches and publishes about the softer, less tangible, but nevertheless important sides (i.e. the social and cultural sides) of the Dutch society, next to the Central Planning Bureau (economic and financial outlook) and the Central Bureau of Statistics;

Arend Jan Boekestijn, a prominent member of the liberal-conservative of the VVD party
Picture copyright of  Ernst Labruyère
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    • Arend Jan Boekestijn, an eloquent and intelligent historian and former national VVD-politician (Dutch liberal-conservative party), with a much broader and more intelligent view on The Netherlands and the European Union than most of his party members;

    Harald Benink, Professor in Banking and Finance in
    discussion with Arend Jan Boekestijn,
    Picture copyright of  Ernst Labruyère
    Click to enlarge
    • Harald Benink, a professor in Banking and Finance at the Tilburg University and someone as well with bright views on the Dutch and international economy.
    Young rightwing, thought leader Sid Lukkassen, involved in the discussion at For the Turnaround
    Picture copyright of  Ernst Labruyère
    Click to enlarge

    • Also another young thought leader was present: Sid Lukkassen, who replaced another guest who could not make it to the show. Sid Lukkassen is a right-wing thought leader and alderman for the VVD party in Duiven.
     


    Paul van Liempt in discussion with Kim Putters
    Picture copyright of  Ernst Labruyère
    Click to enlarge
    • Paul van Liempt and Ad Verbrugge acted both as discussion leaders and participants, even though the latter had some trouble with listening to his speaking partners, as he too often wanted to express his own opinions towards the other participants and the present public.

    The original reason for this gathering of For the Turnaround was the strongly anticipated outcome of the French presidential elections. These elections were in advance considered as a touchstone for the real strength of the populist parties in Europe. 

    When Marine Le Pen of Front National (French populist party) would have won these presidential elections and she would indeed effectuate her simmering plans for a French departure (i.e. Frexit) from the European Union, this could have become the beginning of the end for the EU and the Euro as a unity currency. France is one of the early founders of the European Economic Community and still one of the most influential and important members of the EU, whose departure from it would spell a dark future for the union. 

    Fortunately, this did not happen as Emmanuel Macron of En Marche (a recently founded central-liberal movement), who is an avid supporter of the EU, won the elections and became the next president of France. Nevertheless, even though Macron won the second and decisive round with a landslide difference, it was a fact that Marine Le Pen was the runner up in these elections, making the Front National again a party to be reckoned with in France.

    Therefore the main message that the people behind For the Turnaround wanted to express – now that the imminent danger of a Front National presidency was out of the way – was that this new, liberal president would not change much about the difficult political situation in France and the alienation between the different population groups in one of the largest countries in Europe. The symptoms perhaps vanished optically, but the disease was still very much there, waiting for another defining moment to come to the surface again.

    France still has an issue with the often poor, poorly educated and unemployed people living in the banlieus in France – areas around the big cities with heavily populated blocks of flats, where many impoverished people from the former French colonies, like Algeria and Ivory Coast live. In these banlieus important factors like islamic radicalism, unemployment, poverty and hostile insurgence against the French government and the police cause many problems and turn the areas in ticking timebombs. 

    Paul van Liempt in his trusted role as discussion leader
    Picture copyright of  Ernst Labruyère
    Click to enlarge
    Violent protests coming out of nowhere, chaotic uprisings and publicly displayed contempt for the police have already emerged at quite a few occasions and they can come to a new outburst over and over again.

    At the same time, there are the rural French areas which have their own battles with economic backwardedness, obsolescence and poverty. One of the factors, the outflow of youngsters to the large cities leaving only the elderly behind in their home towns and villages, leads to a smaller economic role in society for such towns and villages and towards an impoverishing area. It is probably caused by the absence of large employers, who can create sufficient jobs and a prosperous future for the people originally living in these areas. 

    The idyllic, rural landscape and the small, picturesk villages with their French wine, baguettes and ‘joy de vivre’ might still attract loads of tourists, but they cannot disguise that such small areas go through difficult times, with a difficult future ahead.
    Ad Verbrugge and the present crowd both listen to the discussions
    Picture copyright of  Ernst Labruyère
    Click to enlarge

    Another complicating factor in France is the blatant allergy of the whole population for economic restructuring and societal changes and their ubiquitous proneness for protests and strikes against such changes. This makes it almost a political no go-area for politicians to endorse such radical, but probably necessary economic and social changes in the country, in order to prepare it for the 21st century. 

    Most politicians simply don’t want to burn their fingers on such ‘hot potato’ topics and rather go with the flow of slow, slow change and even societal and political stand-still. And even when they try to change things more radically, their attempts mostly smother in the protests emerging all over the country. 

    This is the reason that France has a undeniable history of shooting itself in the foot. The country wants the economic situation to change for the better, but seemingly doesn't understand that in order to change things, it must change society itself. Yet is seems that France must change economically and societally to stay in the race for future economic prosperity and not become a relic of backwardedness in Europe, totally dependent on agricultural produce and tourism, while Germany becomes the sole winner of the economic crisis and the undisputed export champion that keeps the whole EU afloat.

    All these factors together make the French economic and societal problems urgent, but nevertheless very hard to solve. And in the process, the French problems turn into European problems as well, for the simple reason that Europe needs France's leadership more than it has ever needed the British leadership for instance.

    One of the most visible problems after the deadly IS attacks in Nice and at the Bataclan concert hall, is the problem that the muslims in the banlieus become more and more radical and hostile in their vision on the islam, according to the people behind For the Turnaround. 

    These muslims increasingly alienate themselves from the Christian majority in France, while releasing themselves for the toxic views of the radical Salafist islam. They slowly become endorsers of IS and Al Qaida, in their hate-driven battle against the Western world and everything for which it stands. Especially in France with its large and strongly growing population of formerly Algerian and Morrocan citizens, this is a mounting problem, which is nearly impossible to solve.

    While the ‘moral majority’ of France now still chooses for French unity, ‘liberté, egalité et fraternité’( i.e. freedom, equality and brotherhood), it is a fact that this mounting alienation between the radical islamic minority and the Christian majority could lead to many more violent incidents and also for a greater popularity of the radical Front National, when another big terrorist attack occurs.

    And when France sneezes, the European Union catches a cold.

    The For the Turnaround group is watching the economic, societal and demographic situation in France closely and they are hoping that Emmanuel Macron, the bright and charismatic young president, can turn the tides for this country.

    The events in France cannot be seen loose from the situation in the other European countries, like Germany and The Netherlands, where societal tensions are also rising between groups within the population. Or for instance Italy and Spain, where the economic situation is still extremely difficult, with high unemployment and a grim economic outlooki in some impoverished areas of the country.

    Or Eastern Europe, where increasingly radical and dictatorial leaders set new and dangerous standards for societies within the EU. Everywhere the poisonous mixture of economic hardship, massive unemployment, a disappointed population losing trust in their own policital leaders and soaring religious and demographical tensions within the society, could act as a ticking timebomb within countries and in between countries.

    Arend Jan Boekestijn and Paul van Liempt both closely listening to the discussions
    Picture copyright of  Ernst Labruyère
    Click to enlarge

    Arend Jan Boekestijn, a very prominent VVD member and definitely part of the intellectual thought leaders within this liberal-conservative party, blamed the Dutch Prime Minister Mark Rutte (also VVD) for his generally lackluster defence of the EU and for his sensitivity for populist statements by other parties, like Geert Wilders’ Party for Freedom (PVV) and the Forum for Democracy of young gun Thierry Baudet. This vulnerability for the populist voice made the general tone of voice of his own party more and more populist itself, making it sometimes quite hard to distinguish, whether a point of view came from the populist PVV or the mostly more moderate VVD itself.

    Therefore it is so important, according to the For the Turnaround group that politicians speak out their confidence and trust into the European Union and make clear that they will go all the way to save this supranational institution that brought us all so many years of peace, friendship and prosperity between European countries. 

    It is time that the European leaders become openly proud and protective of what they have and not threaten to ditch it all in cheap attempts to listen to the loudest ‘vox populis’. 

    It was an interesting meeting in Amsterdam on May 21st and it is a good initiative to have such open discussions between  the thought leaders in Dutch society. Ernst's Economy for You will probably present again the next time of For the Turnaround.

    Thursday, 25 May 2017

    “Forged in Fire” and the importance of finding meaning and purpose in your life: doing something that makes a difference for yourselves and for others

    One of my favorite TV shows of these days is the show “Forged in Fire” on the History channel:

    Strong, rugged-looking and often bearded professional and amateur bladesmiths –  almost always men I must confess – are hammering, bending, welding, polishing and grinding on red-hot steel, like the devil is on their tail. In the process they create hunting knifes, switch-blades, swords, sabres and other old-fashioned battle blades that put a greedy smile on the face of every would-be hunter and knight-in-shining-armour.

    In the end, these newly created and beautifully looking weapons are tested under the most gruesome circumstances, by hammering and stabbing them into big animal bones, pig bellies, gelatine dummies, metal sheets and unforgiving blocks of ice. And as a piece-de-resistance, sometimes even a bullet is fired at the edge of the sword blades to see if these survive this kind of torment and cleanly split the bullet in two or three pieces.

    The winner earns $10,000 in the end, while the losers get compliments and constructive criticism from the strict, but fair and very savvy jury members.

    This show is perhaps nostalgia, but with an important twist. It is very popular and appeals to a lot of people, as it brings back memories of times in which people were much more self-supporting and responsible for the things they created, than nowadays.

    As a matter of fact, it seems that almost all these “documentary channels”, like History, Discovery and National Geographic are currently built around rugged and seemingly unadapted men and women, standing with one foot in untamed nature and with the other foot in a workshop, where they perform old-fashioned handicrafts, which are normally done by robots, computers and fully automated and industrialized processes. 

    It is interesting for me to see it happen and I wonder why these shows like Forged in Fire, Alone, Dual Survival, Mythbusters, Mountain Men and many, many others are so extremely popular nowadays.  

    This is what I think: nowadays most working people are little more than tiny cogwheels in a much bigger manufacturing or administrative process and they often have nearly zero percent influence on the endresults of the company or government body, where they spend their daily working hours.

    On top of that, the executive management of many companies and government bodies have started in the past to treat their personnel as (to their eyes very unreliable and expandable) durable production devices: necessary tools to perform their daily business, but nevertheless something that they want to replace by automatized and robotized means of production as soon as possible. 

    Robots can work 24-7 and never complain or strike, never require more salary or wages and never find something too difficult. Until that moment of full replacement their personnel will do, but this personnel is not so appreciated anymore as a few decades ago: rather a drag than an asset.

    The people, on the other hand, in their current (slightly) undervalued and underused state get a yearning for doing and creating things that really matter for themselves and for others. And the more futile and unimportant their own work seems, the stronger this yearning becomes, as an outlet valve to mitigate the loss of control, meaning and purpose in their own lives. To these eyes this explains the enormous popularity of all these ‘rugged men and women in nature and workshop programs' on the documentary channels.

    But why is this phenomenon worth an article? The Dutch newspaper Trouw came yesterday with an interesting observation about current time jobs and how the circumstances at the job can cause mental illnesses like burn-out, depression and other job-related affections. Here are a few snippets of this very good article:

    On 18 December 2013, the Dutch ‘Philosopher of the Motherland', René Gude, talked with the Belgian phychoanalyst Paul Verhaeghe about burn out and depression as widespread societal diseases. Verhaeghe stated that stress is the main cause of mental problems. And work, he added, is the main cause for stress...

    Interesting is that Verhaeghe – wellknown from his bestseller ‘Identity’ (i.e. ‘Identiteit’ in Dutch) – stated that stress is not a psychological problem, from which individuals can be freed, but a societal problem. The question at hand is how we – collectively – created and set up our working environment and everything in it?

    That night Gude stated that the problem about which Verhaeghe talked, was a problem of (missing) meaning and purpose [in life and work - EL]. Gude:’When a society, even when people want the best for each other, does not find a destination automatically, then target, meaning and purpose need to be taken in their own hands by the collective’.  

    Based upon research and clinical experience the experts were all convinced that the problems, regarding people falling-out of the labour process, are structural and they are connected with the labour organization within a broader societal context. Paul Verhaeghe: ”It is necessary to kick in this open door, as on the workfloor the opinion persists that a burn-out is an individual problem. 

    People with a burn-out, so is the misguided common idea, are people with little inner strenght. Such a common idea quickly turns into an implicit accusation by their peers and managers: ‘You are the weakest link. Goodbye!’ ”.

    Also Verhaeghe thought that finding meaning and purpose on the job could be a solution for this problem. “But you must realize that finding meaning and purpose is a collective task and as such the opposite of individualization. This means that courses in meditation or mindfulness – which are aimed at the individual alone – are NOT the required solution to fight depression and burn-out”.

    Finding and giving meaning and purpose, is where people should find the solution, according to Verhaeghe. Why?  Verhaeghe: “People experience their job as not being meaningful anymore, as it gets more and more divided in tiny bits and pieces that don’t have a meaning and a purpose by themselves. And they also don’t bear the final responsibility for the endresult anymore. 

    Loss of responsibility over the big picture, in combination with the ongoing individualization, leads to loss of meaning and purpose”.

    This is a bold and meaningful statement in this article and it is important to keep it in mind when you look at your own job.

    Does your job make sense to you and do you produce something really meaningful in it?! Or are you just the producer of an endless flow of administrative / computer data or other utterly futile products, without a deeper meaning for the human race. 

    Products and data, that are not interesting anymore in the near future: for nothing and nobody. And that are only produced for the purpose of getting to know more about the habits and thoughts of other people, in order to sell them useless stuff. Or for the purpose of fulfilling the immediate needs of spoilt and impatient people with more money than time to spend.

    And are you the captain of your own ship, or just a simple cogwheel in an infinite jobflow, with no beginning and no end... no meaning and no purpose?! Will somebody miss you when you would immediately end your job? Or are a dozen people ready to replace you at the spot, without anybody noticing it?!

    Are you constantly chased and haunted by the fear for computers and robots, who can perhaps do your job better than you can eventually?! And does that keep you awake at night, asking yourself if “this is it and life does not have anything else for you to offer, except for your family and loved ones?!

    People should start to ask themselves such difficult and painful questions and they should perhaps act accordingly to the answers they give themselves.

    I think that this is one of the reasons that the aforementioned shows on the documentary channels are so immensely popular. Men and women there are busy with the creation of meaningful and very palpable things and they are involved in doing it themselves from start to finish, bearing the whole responsibility from the cradle to the grave. No excuses, no others to blame. 

    You either win or or lose, but the destination and the satisfaction in the end is always worth the travel and the hardship underway. 

    Of course it is impossible for everybody to do bold and difficult things like these guys and girls on the History Channel. Nevertheless, people should try to find more meaning and purpose in their own work and life, instead of simply reeling in the years and stowing away the time

    And please think sometimes about these heroes on the History channel. There is not a wonderful bladesmith in everybody… but there must be a job for everybody that brings back the meaning and purpose in one’s life. And also the feeling of utter satisfaction and happiness, when things go well. Everybody deserves such feelings.

    Bladesmiths! Start your forges and hammer on!!!

    Monday, 15 May 2017

    How the free market as ‘panacea for everything’ can work as a poison for the lowest qualified jobs and the people who execute them.

    When there is one thing that the neo-liberal/conservative politicians of the last three decades have advocated, it is of course the free market. That has proven to be a genuine panacea for all economical and political diseases.

    There is not even the faintest doubt among most national governments in Europe, or among the European Union leadership, that ‘the free market’ is the solution to all problems:
    • When the free market indeed succeeds to improve things in certain economic or social situations or in certain industries, it was obvious, as the 'free market' is THE answer to every economic question.
    • And when the free market fails(!) in certain situations or in certain industries, it was always a question of bad luck, mismanagement or unforeseen circumstances. Or... simply because the market was not free enough and the competition did not play a fair, competitive game.

    Well, you know the drill! 

    The answer to a failing free market... is administering more free market. Then the symptoms of pending economic and social problems will disappear like snow in the hot sun. It is the 21st Century version of the medieval habit of 'leeching', in case of dangerous illnesses, and virtually everybody believes in its healing force.

    There is not the slighest clue among the ‘believers’ that the gospel of the free market could lead to undesirable, totally unfair or straight away absurd situations in the global economy. That’s simply impossible. There is nothing outside the free market and the euro and dollar are its prophets. Amen!

    The apostles of the free market believe and defend their gospel with an exasperated energy and an intolerance for contradiction that reminds of the socialist/communist revolutionaries in their finest hours during the early Twentieth Century. Everything that stops, hampers or questions the free market must burn on the holy stakes of the free market evangelists.

    The result is that most people ignore the negative side-effects of the free market by simply looking the other way, or consider them as ‘a small price to pay’ for the best economic system there has ever been in the world.

    On the electronic highway, a few companies – you definitely know which ones – call nearly all the shots by monopolizing their whole, global line of business and by dredging up nearly all the global advertisement sales with their ubiquitous dragnets, from which nothing and nobody can escape. 

    Or by milking their hundreds of millions of customers as ‘information cows’ and by infringing every privacy law in the book, through the application of never-ending and unreadable terms and conditions for usage that – understandably – nobody reads, because normal people don’t even bother to chew through those.

    And last, but not least, by hampering their new competitors with takeover threats, useless lawsuits for copyright and patent infringements “because they can”or by hindering their business with useless and complicated conditions for software usage, user certificates and services.

    But that’s not all... 

    Instead of companies paying the lion share of their taxes in the countries, where most of their customers live and where they earned the majority of their sales revenues, tax avoidance (or evasion) became a global sport for sanctimoneous multinationals with unctuously recorded commercials on TV and the internet. 

    Fair tax payment for all (multinational ) companies is replaced by lackluster philantropy and a few odd charity foundations, that seem more in the interest of the executives than in the interest of the people living in the countries were they earn their revenues.

    Perhaps the worst thing is that “the free market as we know it today” could turn lower-qualified or even (former) middle-class workers with dignity and a decent future before them, into vassals and serfs-out-of-choice, as there is really no choice for them.

    Most well-to-do people are clueless that fair jobs against fair payment could turn into a mirage for people without a fixed contract and with virtually no possibilities to organize themselves, when the free market does its demolishing work.

    This weekend I read on two different occasions about the negative side-effects of the free market, with respect to the labour situation.

    One ‘letter to the editor’, written by Tamara Ronteltap – an Organizational Purpose Coach – and published by Het Financieele Dagbladcomplained about the now quite common disdain for workers, by seeing them solely as a ‘sustainable means of production’, aka a profit machine:

    In the article about the Brexit, Simon Wolfson writes – triggered by the immigration conundrum – that the question at hand is: “Do we see people as an economic asset or as a liability?”

    In this vision, the worker is seen as nothing more than an asset for the profit and loss account, irrespective of his alleged positive or negative value.

    Also in the article ‘Still ill’, regarding research into continued payment during periods of sickness, the image pops up that the (sick) worker is solely seen as a financial entry in the company’s general ledger, who is – on top of that – incapable of taking his responsibilities in his own hands. The latter is emphasized by the sentence that the ‘ill worker must be actively spurred to resume his work asap’

    I definitely get Tamara’s point, as Theory X is having its finest hour in many companies these days, with the mounting distrust of employers in their workers and the resulting urge to control them 24-7. 

    Nevertheless, Tamara’s letter was a relatively innocent plea to take better care of companies’ and government workers and don’t treat them as a piece of machinery. Important, but not really shocking or mindboggling.

    However, the following must-read article was a shocking example of top-notch investigative journalism by Belgian journalist Michael Dilissen of De Redactie.be, in the best tradition of Günter Wallraf, the famous German writer of ‘Lowest of the Low’:

    Dilissen volunteered to work as a day labourer – with one day contracts alone – at what turned out to be international courier DHL, at the Belgian airport Zaventem. He describes how people are treated as vassals (or even serfs) through the usage of an imaginary carrot (i.e. 'a fixed contract) and a very real stick.

    I can’t print much more than a few of the most important snippets, but strongly advice you to read the whole article, as it will be worth your while:

    They have a lot in common, my new colleagues: an infectuous enthusiasm and an absolute belief in the promised fixed contract, as could be read in the vacancy add.

    Before we can walk to our working place, there is a word of the big boss. About the payment and the security rules for temporary workers of DHL.

    And then reality bites:

    “I want to let you know that what the consultants at the temp agency promised you, is not true. Not everybody will get a fixed contract; this is only for the best of the best. The happy few of the temp workers... So make sure that you get among them by never getting ill, working hard, never complaining, doing extra hours and never being too late!”.

    And as if that was not enough: “For the people who are late, we have an efficient method: when you are late once, we’ll keep you at home for one week. This means one week having no job and no income, but all the time in the world for thinking how to get here in time, next time. That is a way of learning a new attitude.”.

    [...]

    It is cold at night in the warehouse. The boxes become heavier by the day. My temporary co-workers don’t seem to care. They think about their fixed contract. Ahmed and Guido have worked with day contracts for several months, while Abdul and Najib received a week contract after four weeks only. Some have high hopes, while others get more frustrated by the day.

    [...]

    Friday is D-day. On Friday all interim workers receive an SMS with the planning for next week. It is a token of prove that you survived yet another week and are part of the game for one more week.

    Last week there was a lot of panic. There had been three tours with new loads of candidate-temp workers. New candidates mean undoubtedly that others must take a hike. The effect is unmistakenable. Everybody is working even quicker.

    [...]

    The payments of my interim job are impossible to check. Every time a different amount. Also the others complain of faulty payments. Abdul never received one hour of overtime. Every week Richard and Omar received up to €60 too little in payments. Complaining at the temporary labour agency is virtually impossible. Startpeople calls you with an undisclosed phone number, which makes it impossible to call back. 

    The writer Michael Dilissen stated that DHL was just a coincidental example of these opaque and intolerable practices and that probably many more companies use the same tactics of keeping their unorganized, temporary (day)workers on a tight leash, with empty promises and hardly disguised threats.

    The sick thing with these kinds of ‘near-slave’ labour is that nobody is really doing something about it, which leaves such a situation festering for years and years. This is the inevitable consequence of the ubiquitously growing disdain and distrust of employers for (fixed contract) workers and the diminishing influence of labour unions, as well as a result of the relentless cutbacks on labour inspection services throughout Europe during the last decades.

    One has to realize that in most cases an investigation is only started when one or more people file an official complaint against their temporary employer. However, filing a complaint is the surest way to lose one’s day job and source of income and also the (faint) outlook for a steady job at DHL  or other companies with the same attitude against temporary workers. 

    This is a Catch-22 situation, in which abuse of powerless workers by the employers is almost guaranteed.

    Things were so different when I was 25 years old and worked at the local ‘Melkunie’ milk factory as a temp worker: payment was great, the atmosphere at the job was great and foremen, bosses and managers were friendly and understanding towards their workers. Some of my fondest memories were created during my working hours at the milk factory.

    Workers even enjoyed one paid(!) break during working hours and good meals could be acquired at very reasonable prices. And last, but not least: there was always a warm welcome for temporary workers, who wanted to return to the job after some time away. 

    Even physically or mentally handicapped workers with sufficient working capabilities got the ‘Melkunie’ treatment, thus freeing them from a life living on subsidies and welfare payments.

    How different are things nowadays in situations, like the one described above. 

    Workers are treated like immediately replaceable resources, with virtually no rights and countless obligations, of which infringements are severely punished.
    I can only hope that the future government of The Netherlands and the current Belgian goverment – and as a matter of fact all governments and supranational governing bodies within the EU - take such excrescences in today’s labour markets finally serious.

    Companies and governments must understand that labour unions, as well as extremely brave individual workers and cautiously united worker groups gave their blood, sweat and tears for a fair treatment of lower and middle class workers by their employers. It would be a disaster when the clock was turned back to the appaling situation of the Middle Ages, in which workers were literally owned by somebody and had no rights at all.

    And so: when the free market blatantly fails, administering more market is amplifying the problem, instead of bringing the solution. 

    Strong governments must act on behalf of the people who don’t have the power to do so. Protecting the poor and powerless, instead of helping the ones who have it all. It is their one of their most important obligations and a large part of their raison d’etre.

    Yet, there are still few signs that the European national governments and the EU all understand that important message.

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