Monday, June 29, 2015

Samsung's Increased Maternity Leave

According to this article from The Korea Times, it appears that Samsung is unilaterally planning to allow its female workforce to take up to two years' of paid maternity leave.

The law, on the other hand, requires that businesses provide up to only one year.

It is not entirely clear why Samsung decided to be so generous suddenly. The article does state that it could lead to more loyalty from Samsung's employees and that other businesses from around the world calculated that they save quite a bit of money by doing this. However, considering how Korea is also referred to as the Republic of Samsung, employee loyalty might not be something that Samsung needs to be overly worried about.

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Regardless of the reasons, Samsung seems to have made this seemingly generous decision without being compelled to do so.

What is interesting, however, is the bit in the article that says:

As of last year, Samsung Electronics had 319,208 full-time employees globally, with South Korea taking up 31.1 percent. Entry-level female employees accounted for 48.3 percent, followed by senior working moms at 12.4 percent, the report said.

"The return rate after maternity leave was 91 percent last year after 92 percent in 2013," another company official said. "Therefore, we are not worried about a vacuum in our workforce as a result of this new policy and those who take a longer leave shouldn't be deterred by job insecurity."

Statistics can be odd sometimes. Samsung's spokespeople can probably say, without being disingenuous at all, that the company's return rate after leave is 91 percent, but it does not change the fact that entry-level female employees make up 48.3 percent of its workforce but that working mothers make up only 12.4 percent.

That is quite a significant difference. Is it possible that many of the entry-level female employees, who are mostly young and unmarried, tend to quit their jobs (or get fired) after they marry and/or get pregnant, rather than go on maternity leave; thereby guaranteeing that the company's return rate after maternity leave remains so high? Or is it possible that Samsung just does not employ pregnant women that much from the get-go?

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The article, as per The Korea Times' usual standard of journalistic excellence, does not explain. So one can't help but use one's own imagination. However, I doubt that one needs that much imagination (see here and here).

So, will Samsung's sudden generosity be beneficial for women? Personally, I don't think it will be helpful for women at all. And that is because I think these added benefits will simply compel a significant number of Samsung's Human Resources managers to accept fewer female job applicants from the get-go.

Case in point, according to this article from The New York Times, when the Spanish government passed a law guaranteeing greater maternity benefits, it was revealed that:

Over the next decade, companies were 6 percent less likely to hire women of childbearing age compared with men, 37 percent less likely to promote them and 45 percent more likely to dismiss them, according to a study led by Daniel Fern√°ndez-Kranz, an economist at IE Business School in Madrid. The probability of women of childbearing age not being employed climbed 20 percent. Another result: Women were more likely to be in less stable, short-term contract jobs, which are not required to provide such benefits.

Of course, in Samsung's case, upper management chose to increase the company's maternity benefits as opposed to getting their arms twisted by the Korean government. So, this might be comparing apples and oranges. However, it should be noted that Samsung is a very big multinational corporation; and like any large organization chock full of people, there is bound to be competing interests. And it should come as no surprise that some of those interests might not always be on the same page as that of corporate headquarters.

What is true, however, is that for the past few years, more women in their 20s have been employed than people from other demographic groups, especially compared to men in the same age group. However, it is also true that fewer women in their 30s and 40s are employed compared to younger women.

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The problems that women face are much more deep-seated in Korea's corporate culture, as well as Korea's familial culture. Therefore, without first making a serious effort to challenge accepted norms and mores, I think that increasing maternity benefits will only exacerbate matters further, rather than alleviate them.

Sunday, June 14, 2015

The Irrational Rational Fear of Cancer, MERS, and Terrorism

At the time of this writing, there have been fourteen deaths that have been attributed to MERS.

As a result, thousands of schools have closed, despite cooler heads warning that this was unnecessary. More than 20,000 tourists called off visiting Korea since June 5th, costing Korean businesses millions in lost revenue. Subsequently, the Bank of Korea has cut interest rates to a record low of 1.5 percent amid fears of a sharp fall in consumer spending.

As I had said before, however, I think that the fear of this virus has spread faster than the virus itself and that this fear is irrational. After all, this is not the first time an unusually strong strain of the flu virus spread in Korea. Also, statistically speaking, people ought to be much more worried about cancer and hypertension than about influenza or SARS or MERS or Ebola.

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So why do people overreact to relatively less dangerous things such as MERS and react so coolly to much more dangerous things like cancer? After all, the smoking rate in Korea is 42 percent – and even after the new tax takes effect and helps suppress demand, 34 percent of Koreans will remain smokers.

For all intents and purposes, people react disproportionately to different things due to different reasons.

Firstly, there is a difference in timing. Of the fourteen people who have died after having contracted MERS, the time that it took for them to die was a matter of days. Cancer, on the other hand, is often perceived as something that will occur some day far in the future. Despite what people say, we are all afraid of death. However, the further away death is perceived to be, the more abstract it becomes and the less we fear it.

Secondly, it's a matter of how much control we have. When we think of cancer, many of us tend to think that we have some control over it. We can quit smoking, eat less junk food, drink less coffee, apply more sunscreen, go for annual checkups, etc. Of course, we might not necessarily choose to exercise our convictions. How many times have we made the same New Year's resolution to drink less and exercise more and quit smoking? The point is that we feel that we can exert some control over cancer if we choose to do so.

But what about MERS or Ebola? Unlike cancer, diseases like MERS and Ebola feel like they are beyond our control. What if the disease is airborne? What if the lady sitting next to me on the bus is one of those patients who was quarantined but chose to go out to play a round of golf? We cannot see a virus; nor can we taste it nor smell it. And when we cannot control something, well...

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Thirdly, we also cannot ignore the power of imagery.

Many years ago, I saw a family friend die of cancer. She wasted away in the hospital. She lost weight, her hair, her youthful vigor, the sparkle that used to twinkle in her eyes. And the screams...

But toward the end, there was a calmness to it. Her system had been filled with morphine and she was finally asleep, peacefully. Her family had gathered all around her to bid her farewell. There were tears, hugs, and prayers. And then she was gone. The death of a loved one is tragic, but when people are given time to prepare for death, sometimes death becomes a little easier to accept.

On the other hand, however, what is the imagery associated with MERS? Violent fits of coughing, increased body temperatures, isolation and quarantine from all those that you love. Doctors and nurses wearing hazmat suits? Death suddenly seems abrupt and lonely.

What is the imagery associated with terrorism? Google ISIS and you will see. Or don't Google ISIS and spare yourself the unpleasantness.

Seriously, don't Google ISIS.
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Consider that MERS has killed only fourteen people and that thousands of schools have shut down. Also, despite the fact that only one Korean teenager has so far volunteered to join ISIS, the media spent a disproportionate amount of time worrying about ISIS's influence among Koreans. Also, the government has created spyware for smartphones that will watch out for, among other things, mentions of “IS” and “terrorism.”

So, for various reasons, we fear the wrong things much more than we need to and we fear those things that we do need to fear less than we ought to.

The kicker, however, is that this messed up set of priorities is perfectly rational; so long as we define “rational” as “that which is based on or in accordance with reason or logic.” So, it's the reasoning that is faulty.

I am reminded of a phrase that I once learned in a computer science class I took in school a long time ago – Garbage In, Garbage Out (GIGO).

For good or for ill, humans have never achieved the status of homo economicus and probably never will.

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Sunday, June 7, 2015

Documentary Review – The True Cost

Today, a correspondent who goes by the moniker “TheBoss” shared with me a link to a documentary called “The True Cost.” For those who are interested, you can watch it for free here.

This documentary explores the “hidden costs” of fast fashion. The filmmaker, Andrew Morgan, highlights the terrible work conditions and pay in garment factories located in third-world countries such as Bangladesh and Cambodia. The film goes to list the hardships that these workers face – urban squalor, polluted environments, deteriorating health conditions, broken families, etc., and, of course, also focuses on the avarice and ignorance of shoppers in the developed world, all the while accompanied by a moody score.

I have already written an article where I defended the existence of sweatshops. You can read it here.

However, I felt that I had to add a bit more for this particular documentary. Although this documentary lasted for about ninety minutes, one question that is never asked throughout the whole film is “as compared to what?”

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This is a very important question. Essentially, this documentary is about economics and it calls for economic reform. However, it is calling for sweeping economic reforms but, at the same time, refuses to talk about economics by ignoring this question.

When we compare the work conditions and the pay that workers in Bangladesh receive to those of workers in the developed world, they are, indeed, awful. There is no doubt about that. However, that comparison is misleading.

The real comparison that has to made is those Bangladeshi workers' current pay and work conditions with these workers' realistic alternatives in Bangladesh.

What this documentary gets absolutely right is that their working conditions are dangerous as evidenced by the collapse of a factory building in Bangladesh, which resulted in the deaths of more than a thousand workers. So the question is why do so many of these workers still choose to endure such harsh conditions and low pay? After all, no one is forcing them at gunpoint to work in these factories.

The fact that they still choose to work in these dangerous sweatshops is powerful evidence that these workers' alternatives are even worse.

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Throughout the film, various activists, and Mr. Morgan himself, call for changes to be made in the fashion industry. It demands that workers be guaranteed a living wage. It demands that consumers in the developed world change their shopping habits and attitudes about materialism in order to alleviate the strains that those workers suffer.

Let us be generous and assume that they succeed in their efforts. Let us say that those workers are paid a living wage (whatever the hell that means) and affluent shoppers' demand for clothing produced in the third world drops significantly. Then what would become of those workers?

Naturally, they would be forced to choose to toil at jobs that pay even less and in conditions that are even dirtier and more dangerous. Case in point, local NGOs in Bangladesh estimated the total number of female prostitutes was as many as 100,000 and UNICEF estimated in 2004 that there were 10,000 underage girls used in commercial sexual exploitation in the country, but other estimates placed the figure as high as 29,000.

The intent of this documentary appears to be shame its viewers into believing that we are pointlessly destroying the environment and prolonging the suffering of the poor with our materialism, over-consumption, and avarice.

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As Milton Friedman used to say, these people are soft of heart, but, unfortunately, they are also soft in their heads. This documentary was all emotion and no perspective.

Never mind that most of the documentary was filmed in countries such as Bangladesh and Cambodia – countries with poor records of protecting property rights and encouraging market activities that promote industry, trade, and economic growth – things that Mr. Morgan seems to think are harmful.

What this documentary did not focus on at all are the benefits that would not have existed had the global trade that fast fashion helped to spur did not occur. For example, this documentary did not mention at all that in the past eight years, Bangladesh's GDP has doubled and the same can be said for Cambodia.

This is how economies develop. Before the Miracle on the Han River, Koreans, too, lived in conditions that were not too different from those conditions that we now see in places like Bangladesh and Cambodia.

Many people in the developed world take our affluent societies for granted. Our ancestors had to suffer for our affluence to exist. The only difference is that we can see Bangladeshis and Cambodians suffer now but we cannot see the suffering that occurred in our own past.

Mr. Morgan and those other activists in his film may have good intentions. However, it does not change the fact that they all suffer from a debilitating case of economic ignorance; and it is this ignorance that is the true enemy of the poor.

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However, the point is that all of this may be moot in the not-too distant future because of improvements in technology. According to this article in The Economist, robots that can stitch and sew keep getting better and cheaper. Mr. Morgan might get his wish some day after all. The question is whether he will be happy with the results.

Thursday, June 4, 2015

Feeding the MERS Panic

As MERS (Middle East Respiratory Syndrome) continues to spread in Korea, over a thousand people are now under quarantine as it has been confirmed that a third person has died after having contracted the virus.

As a precaution, hundreds of schools have been closed, too.

Also, about a hundred airmen from Osan Air Base have been placed under quarantine at a military hospital when an NCO tested positive for MERS. This is the one to watch out for. Considering how people are packed together in the military, a virus like MERS could be even deadlier than the North Koreans could be.

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Personally, despite all that, I think that the fear of this virus has spread faster than the virus itself and that it is important that people should have some perspective. After all, this is not the first time an unusually strong strain of the flu virus spread in Korea. Also, statistically speaking, people ought to be much more worried about cancer and hypertension than about influenza or SARS or MERS or Ebola.

That being said, however, the public's concern is not entirely hard to understand. After all, wanting to be safe is certainly an understandable response.

Therefore, considering the fact that most of the people who have been quarantined are those who had been unlucky enough to have been in close proximity to the initial patients, especially those who had been in the same hospitals, the government could have publicized the names of those hospitals where the patients were quarantined so that the rest of the public could take precautions and avoid those places.

However, the government chose to keep those names a secret. The government reasoned that publicizing those names would create panic. The government's reasoning is not without merit. If the rest of the public chooses to avoid those hospitals like the plague (pun intended), those hospitals could lose badly needed revenues.

The fact remains, however, that there is something grossly perverse about the government refusing to share information with the public that could be in the public's best interest.

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I think that this is as good a time as any for the government and the country's hospitals to discuss a new insurance policy that hospitals can choose to purchase should epidemics like this occur again in the future. However, that is a discussion for another day. For now, this fire has to be put out first. 

Whether the government's action is justifiable or not, however, for every cause there is an effect. In response to the government's refusal to release the names of those hospitals, members of the public have taken matters into their own hands.

The public's response ranges from the benign, such as recommending that people apply Vaseline inside their noses and buying up tens of thousands of masks (that might or might not work), to the dangerous, such as using social media to create and disseminate their own list of hospitals that they suspect are under quarantine. For all intents and purposes, this list does not seem to be entirely accurate.

When people are afraid, they will seek safety wherever they can find it. And for understandable reasons, the public does not feel safe when the government is keeping tight lipped about this. Therefore, it is only natural that some members of the public have begun to panic. Again, it is not entirely rational, but when was the last time the masses were ever rational in the face of a contagious and potentially deadly disease?

The government could have taken control and ended this panic. If it had decided to publish the names of those hospitals, it would have been able to provide authoritative information that could have put all those false rumors and silly homeopathic medical advice to rest.

On top of that, if it is ever revealed that any of those people under quarantine or patients suffering from MERS contracted the disease because of the government's failure to publicize this information, the government is going to find itself being sued by a lot of angry people.

The government could still act now and allay the people's fear. Instead, the government chose to arrest two people for spreading false rumors about MERS.

Until this virus runs its course, members of the public are going to do whatever they can to feel safe. Unless the government chooses to change tact, any panic that might (or might not) result will be the government's fault.

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