Hungry Gustav - Life Nonpareil

Plenty of snow outside! Some 9in in and around Berkshire. Picture taken from our living room.

Energy consumption nonsense

I am just watching "Bang goes the theory - human power" where presenters are trying really hard in showing how much energy we use. They are even using dozens of sweaty cyclists to dramatize the situation. They go even further and show how leaving laptops, TVs and other appliances on a stand-by is so wasteful that it could even destroy their studio if they released the amount of wasted energy. Now, I'm exhausted after a day's work but still, this is completely insane.

So now we should feel bad because the companies that produce these appliances are installing stand-by as one of the features, we should feel bad because innovators in these companies are producing ever new appliances that consume ever more energy (by the way, these same companies receive innovation grants from governments around the world), we should feel bad for consuming energy while energy producers constantly increase prices to fill their/government coffers with more money so their executives can drive huge petrol-guzzling cars, private jets and we should feel bad because we want to live decent lives???

Come on people, wake up! Why don't they create documentaries showing the other side of the game - the commercial side? Well, they won't because they are afraid of the consequences and losing advertising money if they upset some of the big players. They won't because it is easier to press on the average Joe but let me tell you something: We are not stupid, we know what the game is and you can show all the drama on the TV but unless you yourself change the behavior there is no way people will follow you. It's a hypocrisy game nonpareil!

A grim 2010 for construction?

It is tremendously difficult to provide any meaningful predictions accurately but instead of saying what might happen it is far better to look back and establish what was going on and why, and only then the pattern for the future might, just might become a bit clearer.

First of all, why have we witnessed a golden era of construction activity of the past decade or so? Tremendous amounts of available capital have enabled the kind of economic growth the world has never seen before. Whilst we still had some hard currency which the post WWII growth has been marked against, there was no such hard currency in the past decade or so. The growth was completely and fully fiat-currency-based (belief-based). With other words, the created value was thin air that worked as long as the growth propelled further growth. The trouble with this kind of a fragile close-to-chaos system is that once the chain is broken the whole system falls apart (the good old weakest link principle).

This always happens and has always happened but this time the self-propelled belief system went so far that it surpassed the real economy several times (or even several dozen times). Yes, this has created explosive growth in countries like China and India and spurred economic frenzy in whole regions including the Middle East but it has also led to tremendous excesses in our capacity to produce just about anything. These excesses are now actually beneficial because they act as preventative buffers to inflation that would normally result from printing money (err quantitative easing, sorry) but they are devastating for construction. Why? Well, you see, when Toyota deals with excessive capacity its managers simply reduce production, shut a few factories, lay off a few thousand people and weather the storm with further improvements to their already fantastic system. It’s a continuous and steady production flow they are dealing with. 

A typical construction company’s excessive capacity cannot be dealt with by shutting a few factories because there are no clearly defined entities of that sort. On the other hand laying off people doesn’t help either because most do not employ their own workforce anyway. Construction companies are project-based and they rely on a continuous flow of projects to maintain their cash flow and once this is broken, the system very quickly falls apart. There is very little buffer to play with (if any at all nowadays). Excessive capacity in construction is represented by a number of projects companies are involved in. The result of excessive capacity in an economic storm of current proportions for construction will be sudden and quite surprising complete collapses of very large companies. This has happened before, as we all very well know, but we have never had such an excessive capacity before.

Why is it all still working? Well, massive government stimuli and inertia is the answer. They now fuel the second mini wave of artificial growth that keeps the order books full despite the recession. However, governments haven’t addressed the basic problem of the fiat economy so nobody in the world can say for certain how much money the banks actually need to cover all the losses making quantitative easing more like shooting in the dark, and once this stops we will enter into the second phase of recession. Governments around the world will have to stop printing money one day and public spending will have to be severely cut but no political party is willing to admit just how harsh these cuts will actually be. The point is that once this happens the order books will suddenly dry out and that will then lead to the kind of collapses I was talking about earlier.

The solution? Hardly any available, to be honest, but my informed guess would be to go for little pockets of activity in countries that still rely on the real economy and build a total-package solutions. The clock is ticking and in construction it takes time before a contractor can grasp the market to a self-sustained level so moving ASAP where nobody else dared to go might be the major success factor. So what about the predictions? Well, it will certainly be much worse before it gets any better and this may take a few more painful years.

Advertising: Changing Perception

What a fantastic talk by Rory Sutherland! It's interesting how easily most people can be persuaded solely through advertising. I particularly enjoyed a few good lines on placebo education and diamond Shreddies.

Work Life Balance

Almost all magazines I opened today had an article about work life balance. Just pure coincidence or a hidden message? And not that I would be superstitious in any way. I read one, then the other and further I dug the more agitated I'd become. They are talking about healthy drinks, vitamins, healthy food, the need to exercise, blah, blah blah. That's all fine and nice, and even healthy, but there is much more to work life balance than healthy eating.

The major problem people face today is that they are overworked, they do not sleep enough and they spend more time with their work colleagues than their family. One of the main reasons we have ended up behaving so strangely is the push for higher productivity and I've covered that in my previous post. The other problem is greed and our obsession with achievements driven by the culture of continuous promotions. Yep, they work to a certain extent but the impact on our society is almost irreversible. Crime rates are increasing, close tied communities in their original form have more or less disappeared and as incredible as it may seem, morality and family values have become close to heresy.

So what can and should we do? Well, 24 hours can be nicely split into three 8-hour slots, each used for different purposes. We should work 8 hours, sleep another 8 hours and be involved in family life for another 8 hours. That is a fundamental requirement for work life balance and no diet will ever replace this. In fact there is plenty of scientific evidence behind this statement. For some people, running some types of family businesses for instance, 16 hours of work and family time will be blended but the end result should be that your family life or in deed your work life and sleeping do not suffer. What is obvious from all of this is that achieving work life balance is far more difficult than achieving an extremity in favor of one or the other 8-hour slot.

Real heroes are therefore people who can still achieve a degree of work-related glory but manage to keep the work life balance intact, including the stuff that magazines are so successfully selling. Why? Because when old and unimportant you should be able to look back at your life and see an encyclopedia rather than a professional dictionary, and then enjoy the remaining time filling up encyclopedic gaps rather than being confined to worn out specialism.