The Wonderful World of Panera

So, I am sitting at Panera Bread on High Street the other day in-between meetings, checking emails (got me a while to get on their free wireless network by the way). I stayed there for quite a bit and it was just interesting to observe the movements in the store. And before I get there and tell you more, let me just say - for those who are curious to know - that I find the pastries / breakfast items in general good but too sweet.

In the course of the 40-50 minutes I spent there, I saw a wide array of customers and staff. Customers were either tourists waiting to hop on a city tour, go to the nearby Aquarium, or visit Faneuil Hall which is just close by or people working in the office buildings around. I would characterize the style of the tourists I saw as preppy / suburban for the most part. Those folks may have stayed in nearby hotels too which happen to all be expensive.

There was a pretty strong disconnect between those tourists and the Panera Bread crew – all good people it seems and a reflection of America’s Lumpen Proletariat: Saïd, the store manager, from North Africa; several Latino men and women, generally in non-customer facing positions (fixing sandwiches), a couple of African-American folks, including one who had the distinct honor to clean the bathrooms every 10-15 minutes, and a middle-aged lady from I would guess Kurdistan or Iraq, maybe Iran.

The reason why you’ll find those folks working at Panera is because Panera does not pay high wages. Here in Massachusetts there is a minimum wage and I don’t know to what extent it is enforced. But I am guessing the Panera employees make less than $10 an hour – more like $7-8. In the meantime, I am paying around $2-2.50 with tax for my too sweet muffin / scone and $1.80 for a small cup of coffee. So, yes this is an expensive place.

It is “prime location”, mind you. The store is at the very end of High Street, at the corner of the new Rose Kennedy Greenway (where the Central Artery used to be) and the whole area has been beautified with the extra bonus of being close to the water and Boston Harbor.

That Panera Bread store is quite typical of other coffee / sandwich places in big cities in America: top location, hefty prices, underpaid staff, pretty fat margins I would guess (I can’t see how the rent makes up more than a small percentage of the overall cost).

Alright, but let’s be positive for a second – and I am thinking in particular of the non-US folks I saw in that store. Isn’t that what the American Dream is all about as well? Saïd is a store manager for god’s sake – I did not see any “white anglo” in the staff, he is the boss. The Panera crew did not seem overly depressed (can’t say that the big guy cleaning the bathrooms seemed particularly overjoyed though). They are making $7-8 an hour and hopefully, they get health insurance. Then they probably have another job and their spouse works hard too and their kids will someday go to college – perhaps to a state school and on from there.

I am thinking that they have to believe that it is possible to come to this country, stay, and thrive to some extent at least. Or not? The middle-aged woman from Kurdistan / Iraq (who wore a headscarf btw) sat down next to me for her break – I observed her discretely and at some point she looked outside and just stared blankly. The light was gorgeous that morning, beautiful late summer day. But I could no help but think about where that lady’s mind must have been wandering at that moment – maybe back home in her village, or small town, or big city, having fun with her cousins and friends?

The American Dream, whether she and others believe in it, comes at a price – even in the Wonderful World of Panera.

Ach, Gross Berlin…

The Track and Field World Championships ended last Sunday in Berlin. It was a wonderful week of competition and the crowd seemed absolutely overjoyed – I saw repeated “olas” (Mexican waves) in the public throughout the competition. Who said the Germans did not know how to have fun? Usain Bolt was the star of these Championships because of his historic world records on the 100 and 200 meters. But there were so many other great performances that I was just impressed with the terrific “ensemble cast”….

The US did pretty well as usual in those track and field competitions. They remain the only country that wins medals across the board, in pretty much all disciplines. Well sure, the Jamaicans kicked their butts in the sprint, both in men and women’s races. And for the Jamaicans, beating the Americans is always as sweet as if Puerto Rico defeated the US in basketball…

My favorite athlete of this generation, Allyson Felix, saved America’s day in sprint by beautifully winning the 200 meters (her third victory in a row in a world championship). That girl is amazing – I’ve had an eye on her since she ran junior championships – she was already terrific and it was not hard to predict that she would be a star. But she has everything going for her, her grace, her smarts (she finished her undergrad degree), and her sweetness.

It is just sad that track and field has to take so much of a back seat to football / baseball / basketball in this country. Such a beautiful sport!!

Different Views on Headscarf

I have often had questions as to why the burqa – or rather the headscarf - debate sounds quite different in the US than it does in continental Europe. It is actually more about the headscarf that views seem to differ across the pond than about the burqa – indeed, the burqa appears to cause widespread disapproval in Western countries. I guess that most people are put off by the appearance of a woman veiled from head to toe.

The fact that headscarf stirs much less controversy in the US than it does in Europe is related to the notions of freedom of expression and tolerance for religious practice. The picture on both fronts may not be that rosy in actuality in the US but there is still a deep belief among most Americans that those are fundamental rights – mostly, because most people here do not want those rights to be denied to them...

In continental Europe the main reason why the headscarf, even if in lightest form, provokes strong reactions is because most people view it as a sign of oppression. There is a general belief that somehow the practice is imposed upon women – even when they “freely” accept to wear a headscarf - and that at the end of the day the headscarf is just a reflection of women’s lesser status compared to that of men.

The second reason stems from the long tradition of separation of state and church. It gets back to the early 20th century in most Western European countries and there is till discomfort today about the church interfering in government’s affairs and anyone displaying signs of religious affiliation openly. And yes, there is probably a double standard between the headscarf and the Christian cross or David’s star but signs of affiliation are generally not welcome.

Also, and a corollary to this, the baby boomer’s generation and even more the Generation Xers in Europe grew up with a religion in general but feel detached from it for the most part. Even in countries like Spain and Italy, the percentage of those practicing religion is way below 20%. Thus, dealing with an immigrant population that mostly considers its religion quite seriously can only create tensions – let alone when obvious (sic) “exterior signs of affiliation” come into play.

Nice walk with the Minute Man

I spent a wonderful couple of hours today walking in the Minute Man National Historical Park. The Park is a stretch along Lexington Road in Concord / Lexington that includes a 5-mile trail along the historic route where the American militia man / patriots fought the British colonial forces on April 19th, 1775. This is “where the Revolution began” according to American history (as a National Park Service flyer points out…). For those like me who love nature, trails, and history, this is a perfect combination. I did not know the National Park existed until today. I just was familiar with the nearby Minuteman Bikeway that connects the Alewife subway station to Bedford and is well over 10 miles long. Do not expect everyone to say hi back on the trail though - after all, this is Massasuchetts...

Note that a number of plaques (I plead guilty, I am a “serial plaque reader”…) read, “British soldier(s) buried here” and next to those plaques, a small paper had been placed saying that the plaque honored the memory of “too often forgotten British soldiers” – well, yes, the poor lads lost that battle and their lives but it was a bit bizarre to realize that they had been buried where they were killed pretty much.

More info about the Minute Man National Historical Park at http://www.nps.gov/mima/. Enjoy!!

To cap the day, I had a haircut… Not that anyone cares, I know.

Unemployment in Europe – Two sides of the same coin

I was in continental Europe for a few weeks last month and the situation as far as the economic crisis is concerned felt different that it does here in the US. The main concern that I saw was the risk of unemployment vs. unemployment itself – as there have been fewer layoffs over there than in the US. The fear of unemployment is understandable, mostly among those who are little skilled and/or depend on their paychecks to just go by. But I have felt that in Europe a far broader section of the population is concerned, the prevailing thought being, “if I lose my job, it is going to be nearly impossible to find another one”.

I think there is definitely awareness that the existence of a solid safety net has contributed to making the labor market more and more rigid, leading folks who have a job to generally stick to it even when their level of satisfaction is low and discouraging a lot of companies, especially smaller ones, to create new jobs as not only do they have to pay high social charges but also – and more importantly – they know that they have little leeway as to eliminating positions even when a downturn occurs.

The high level of rigidity of the job market and the comforting safety are the two sides of the same coin, but not until my last trip did I notice how inherently rigid the labor market has become, at least in most people’s eyes, resulting in a sharp increase in pessimism about the immediate future.

A Favorite Boston Story – Thomas and the Police Details

Boston’s Mayor announced last week that he was in favor of maintaining police staff at construction sites around the city whereas the Governor has advocated for the use of civilian flaggers on lower-speed road in an effort to curb the cost of police details. According to the Boston Globe article published last week, Menino pushing for police as flaggers, police details cost the state a whopping $20-25m per year (and that is only the state portion) and Patrick’s plan could reduce that number by about $6-7m. The Mayor however has used a – hum – original argument since he cited the tortuous nature of Boston roads to justify the need for cops in all situations (article says, “But city officials contend that Boston’s road infrastructure is far more complex than that of any other community in the state and that roads with low speed limits can still have heavy traffic volume that calls for a trained Boston police officer”).

I did not grow up in Boston and there are a number of “only in Boston“ things (that locals seem to take pride of actually) that irritate the hell out of me… Police details are one of those. The question that goes around in my mind about these “only in Boston” characteristics is, how do other cities manage safety around construction sites? Why only in Boston do we resort to cops as flaggers – bearing in mind actually that not all construction sites have an impact on traffic but still, you’ll find cops there?

A newspaper story about how much money cops can make on details came out about 2 years ago and the highest-paid police officers could actually double their salaries through details. On average, I believe that the extra pay brings an additional 20% to cops. So, yes, essentially, it is a way to increase cops’ compensation. This is what it comes down to.

The value to the community as far as police work is concerned is limited in my opinion. Let’s hear what the police union thinks… In that same article, the union rep said, “If you can put an additional 300 to 400 officers into every neighborhood [working details], it’s a great deterrent.” My first reaction is, do we have to rely on cops hanging out doing details for us to be safe? Is this how police work is going to be conducted from now on?

No later than yesterday, I saw two (why two btw?) cops doing details, their backs turned to traffic, chatting with each other and hanging out with the construction workers. In the meantime, a car ran a red light in front of me and they did not see it… And I won’t mention the number of times that I saw cops speaking on their cell phones even though the use of phones is banned during details. But maybe they were placing important calls – that’s probably what it was…

So, is it surprising that a couple of months away from an election that promises to be one of the most competitive in years for Menino, the Mayor has backed the police unions’ stance around the Governor’s plan? Let’s remember that Menino was not exactly the police force’s hero when in 2005 a number of disagreements arose during contract renegotiations.

In sum, I’ll ask the Mayor to respect our intelligence and not use bogus arguments while his move is clearly political. Thank you Mayor Menino, and yes, I’ll let you shake my hand next time you are on Tremont St…

Modern Tale of Two Cities

I just finished reading Tale of Two Cities by Charles Dickens. It took me a while (I am not a fast reader) but I really enjoyed it. It is not exactly easy to get into this novel – I guess the 1859 English (the year that book was written) did not help but overall it is a great read. Dickens is very effective at using personal stories (those of a French family having settled in England and of a couple of Paris-based tavern owners mainly) and weaving them into that time’s events.

Tale of Two Cities has become the book of reference about the French Revolution in the English-speaking world even though Dickens himself never claimed his novel related actual stories collected from witnesses. The 60+-year difference between the time he wrote the novel and the French Revolution would not have made that easy anyway.

There are a couple of things that I found remarkable in the book, some of which turned out to be very “modern", i.e. be relevant today:
1) The first few chapters describe the condition of France’s common people in the 1770’s and 1780’s and Dickens suggests masterfully that the abuse they are taking – they are considered less than human beings - cannot last forever. For instance, the accidental death of a child (son of some peasant) that is run over by a Marquis’s carriage is viewed as a nuisance (to him…) by that Marquis. It causes him inconvenience. No feelings there whatsoever for the child and his parents because that kid is a lesser human being at best. It does not sound hugely different from the way slaves were treated in this country's plantations…

2) Dickens portrays the French Revolution as a terrible thing frankly. The end – and climax – of the book takes place around 1793-94 at the worst of the so-called Terror (no picture needed there) and thus, makes little mention of the few years between the time the Bastille was seized in 1789 and the era when the Terror began. By then, the whole thing which was at first a huge and successful liberation movement had become a bloodshed.

3) With that preamble, it is not surprising that horror seems inevitable in the second half of the book. That era seems marked by chaos and indiscriminate murder supported by the populace who seems to have lost any sense of what life is worth. Increasingly, the entire population is at risk actually and anyone irrespective of his/her social class can be brought to the Guillotine and executed.

4) That leads me to the last remark about the very modern nature of the book. While I was reading the last 50 pages that describe the heyday of the Terror period, I got a sense of what massive killings, indiscriminate bloodshed, and civil war could be. One of the main characters, Madame Defarge, the wife in the couple owning that tavern, becomes more and more obsessed with vengeance and fascinated with the Guillotine (that takes a quasi sacred place for her). She wants as many folks as possible to be executed, under the premise that they are all enemies of the Republic. Another central character, Dr Manette, becomes her target even though the guy is almost a saint, having been a prisoner at the Bastille under the Old Regime (which gained him a great reputation) and served as a doctor in prisons, honoring the Republic. She gets to a point where she can not trust her husband himself (who took care of Manette many years before but is like his wife full of hatred and resentment) and talks to friends of hers about her plot against Manette, admitting that she sadly cannot rely on her husband to bring Manette to justice…
Next thing I thought (and the book ends shortly after) is that one day she would start having suspicions about her husband and in her eyes, he too would need to be executed as an enemy of the Republic... Very interesting to see how that slippery slope can work and how one can turn against his/her very loved ones when the level of madness and fanaticism (because it is fanaticism right there) reaches a high.

In sum, an enjoyable read that resonated with some of today’s realities.

Disco Night

It is fun to see that PBS is airing a special Disco Night program these days as part of its summer fundraising drive. I mentioned in an earlier post that a Police concert was used also as an incentive for viewers to donate money in a fundraiser this spring. There is something good about aging then and slowly but surely being in PBS’s main target audience…

I got to watch only part of the show (the first 20 minutes) and it was great to see Taste of Honey (no idea those two ladies – who are still hot by the way – were “guitar heroes”…), the folks who created Disco Inferno, or two of the ladies of Chic’s early days. By the way, I always thought that their greatest hit “Le Freak c’est Chic” was spelled “Le Fric…”, which means money in slang in French… Not sure I understand why “Le Freak c’est Chic” but it is irrelevant, isn’t it?

Goldman’s profits or Goldman profits?

I was somewhat shocked that the announcement of Goldman Sachs’s huge profits did not stir more controversy. Goldman posted a record $3.44bn in profits for the second quarter of 2009 and, as a typical professional services firm, has set aside an enormous amount to be distributed as bonuses to its employees in 2009 ($11.4bn). This means that the average bonus (i.e. total profits distributed by the number of employees, including assistants and folks in the mailroom) will amount to $770,000. Why would anyone be shocked? Good for the folks in the mailroom (hopefully, they have a mailroom at Goldman…) and the assistants.

But that is not the point. Two interesting New York Times articles (see reference below) break down the sources of Goldman’s profits and it turns out that the bank made most of its money on trading activities. It reminded me of a presentation I attended late May during which investment management legend André Perold (long-time professor at Harvard Business School) explained, comparing Goldman’s balance sheet and off-balance sheet numbers (trading numbers are captured off balance sheet), that it had essentially become a trading firm as trading totals dwarfed any of Goldman’s more traditional banking activities by a enormous order of magnitude.

One of the articles also said that Goldman had increased its risk exposure in the past few months, which means that they took some “winning” – but risky – positions, and while the risk that they took (that can be measured by the “value at risk” ratio, i.e. how much the firm could lose in one single day) was not as high as the one that was prevalent just before the meltdown, it was still significant and much higher than that of its competitors. In trading, that is how you win big: if you don’t play big, you won’t win big – but you can lose big too…

And that is the main problem I have with these ballooning profits – that they were rooted in high exposure to risk – AGAIN…

What have we learned from the meltdown? What has Goldman Sachs learned from the meltdown? What is the nature of their business? What is their mission? I’d be curious to know. Are they a bank? A trading firm? Why are they around to begin with? What value do they create for society?

I don’t want to fall into the simplistic and cynical view that large financial institutions know by now that they can engage in whatever risky practices because they are pretty sure that the government is going to bail them out, as long as they are big enough.

I don’t think that those firms are led by loose cannons. But it is hard, reading that piece of news, not to wonder how what was supposed to be a new post-meltdown world order is going to be different from what it was before the crisis.

Also, working with MBA students on their career choices, I am probably particularly sensitive to compensation questions and the extent to which compensation is the main driver behind the interest in Finance jobs of the current generation of MBA grads. Oh yes, I have heard everything: those jobs are intellectually challenging, I’ll be with like-minded people, I like the hectic work pace, etc. and all that is true and is arguably exciting for a 27-year old. But how can numbers like that $770k (again it is an average, thus the number will probably be higher for any post-MBA folks) not be a huge draw for those young folks, and how then can their perceptions of a fair compensation – or for that matter of their own worth – not be totally screwed up by such an incredibly high figure?

http://www.nytimes.com/2009/07/15/business/15goldman.html?scp=10&sq=goldman%20sachs%20profits&st=cse
http://www.nytimes.com/2009/07/13/business/13goldman.html?_r=1&scp=7&sq=goldman%20sachs%20profits&st=cse