KID JUNK AND A MARGIN OF ERROR
For the first few years of “parenting,” I kept a spreadsheet of the monetary value of the damage caused by our two boys. Just to make sure I wasn’t hallucinating.
Once the sum tipped north of a thousand dollars, I opted for a gratitude journal instead: I’m grateful the damage wasn’t structural this time! I’m grateful the microwave melted rather than igniting the kitchen! I’m grateful the ER was open—again!
So. Much. Gratitude.
And thus it is that I sometimes wonder when the offspring—these little assets that behave like liabilities—will have some economic utility. You know, that moment when they will contribute to the GDP of our little cottage rather than actively trying to burn it down.
Of course, you can accuse me of wishful thinking, but you’ll at least understand why I seek out opportunities for the offspring to develop something like economic utility through activities that are something like entrepreneurship.
For example, I discovered a few years ago that they could dehydrate, package, and sell sliced apples with nearly no help from me. The math is simple: I buy apples for X, they spend time in product development, marketing, and door-to-door sales, and then collect revenues of much less than X—which they keep and misidentify as profit.
Having perfected this business model, we repeat: what I lose on each sale, they make up in volume.
Most recently, I enrolled the boys in our city’s Kid Entrepreneurship Fair. The model, again, is simple: parents reserve a tent (not free), the micro-entrepreneurs make Kid Junk (not free), and then—on the big morning—they attempt to sell Kid Junk to people who show up, which consist largely of the parents who paid to reserve the tents.
Imagine tables brimming with necessities like Mario Kart figures made from melted plastic gunk, knitted bracelets, fake beards made of yarn, magic wands (just spray-painted chopsticks—they can’t fool this guy!), homemade treats of dubious provenance, and so much more.
We parents walk around, nodding approvingly, knowing that it’s just one short trip to the landfill for all of it, treats included.
My younger son simply presided over a box of cheap donuts that I bought at the grocery store. The donuts cost around 80 cents each, and he sold them for $2—at least those he didn’t eat.
Not bad arbitrage—Wall Street would jump at returns like this.
His first customer was a boy who wasn’t much taller than the table, putting the glazed temptations at exactly his eye level. “You could get these cheaper at the gas station,” whisper-warned his dad, who was trying to resist making decisions for his son as the two of them walked from tent to tent.
“I don’t care,” said the kid. “I just want a donut.”
“Well—ugh—okay,” winced the dad, “It’s your money.”
He and I both knew it wasn’t the kid’s money—just like the donuts weren’t my kid’s donuts.
We parents are all implicated in the Great Ponzi Scheme of Parenting. To get a return on investment, future generations must keep getting duped into investing and eventually into paying our nursing home bills. Clever. Very clever.
Captain Donut raked in the cash and, before the Fair was over, ran around haphazardly spending much of “his” earnings on a miniature piñata, enough candy to make my pancreas throb, and a glut of Kid Junk. Ah, lessons learned!
Meanwhile, my older son—the moody artisan of the two—hawked custom stickers and temporary tattoos (both of which he designed) as well as “stress balls,” which is a code word for a limp balloon filled with cornstarch and water.
If you didn’t know what Kid Junk is, now you do.
Some of the older kids, or those with more competent educators as parents, probably understood the difference between revenue and profit. Not to be an MBA-spoiler, but the gist is this: revenue and profit are not actually the same thing!
Revenue is the money that comes in. Profit is what’s left after you’ve covered your costs. Expressed as a percentage of revenue, your profit becomes profit margin. If, for example, a dollar of revenue trickles down to 70 cents of net profit (i.e., after costs), you’d have a 70% net profit margin, and 70 salivating MBAs on your doorstep. If the dollar generated only 7 cents of profit, by contrast, you’re probably operating a commodity business like a grocery store—and the MBAs will shop there but, thankfully, without drooling.
Of course, if my kids were counting the full, true costs of their businesses, they might realize they’re operating “at a loss” or with “negative margin,” which is MBA-speak for “there’s a hole in the boat.” Indeed, if my boys ever sat still, they might intuit that they’re living in a “false economy” that only exists because Liz and I are willing to bankroll something like character development.
I’m no stranger to false economies; my parents subsidized my development until I could join, in full fellowship, the Great Pyramid Scheme myself.
This willingness to make bad investments on behalf of our children is, I think, what we mean when we talk about helping our kids “get ahead.” We foot the bill for their learning curve so that they can thrive when they finally leave the nest—at 12, if all goes well. We could attribute our willingness to make bad investments to poor parental judgment, to a sprawling ambition to climb the class ladder, or maybe—dare I say it—to love.
But love is weird in our post-industrial world.
We’re decades now into the assumption that society should be run “like a business.” I think this is usually meant to evoke ideas of efficiency and effectiveness, which sound much better than inefficiency and ineffectiveness, no doubt. I don’t know if these b-school bingo buzzwords were on the lips of our 18th-century ancestors, but certainly as the Industrial Revolution transformed our world throughout the 19th and 20th centuries into a mechanized, urbanized, commercialized marketplace, we began to adopt these industrial-grade metaphors blindly and broadly. We rely on time zones based on legacy railroad schedules, we work hours based on factory paradigms, and we think of the US President not just as the “chief executive” (literally correct) but as the big CEO (metaphor).
Society-as-business teaches us to focus on margin. After all, as my late grandpa said, “it’s not what you earn; it’s what you keep!” Margin—paid out to business owners as dividends, accumulated over time into assets—is what makes people really rich, and what allows some of society’s marginal members to see the rest of us from space. And what explains why the marginalized stay on the sidelines. They might receive wages, but not dividends; they build other people’s assets, but not their own.
Running things “like a business” means constantly, purposefully increasing revenue and decreasing costs—that’s what maximizes margin, after all. Within limits, that’s just good sense: charge customers what they’re willing to pay, and be efficient about your own costs.
But chasing margin for its own sake—maybe even loving the margin, or at least the chase—leads past the limits of good sense pretty quickly. In the name of margin, MBAs outsource manufacturing to far-off places, where the labor is artificially cheapened and the environmental impacts are unregulated and out of sight. In the name of margin, we collectively accept—even if begrudgingly—planned obsolescence, the nutty idea that goods should be made cheaply enough to require being replaced regularly (see every item at Home Depot, my secondary residence), thus keeping the consumer spending wheel ever turning.
And this—like Libertarianism—is all fine and good as long as you have a limitless supply of natural and human resources and live in a consequence-free world where people don’t do things like issue subprime mortgages. But we don’t, which is tough news for children and Libertarians.
Having heard more than enough about “optimizing” and “maximizing” profits, I once asked an economist whether there were functions and models for “sufficiency.” In other words, when is enough (margin) just plain ENOUGH? Where are the boundaries and limits?
“Oh—err—that is a value judgement,” he replied. “There’s no math for that.”
I’m not suggesting an alternate, altruistic, utopian reality without trade or commerce. That’s silly. I believe in a free market allocation of goods and services and in economic specialization of labor.
The problem isn’t the marketplace; it’s the math.
Calculating margin is easy enough to teach to the kids at the Entrepreneurship Fair. And to Libertarians.
The moral math is trickier because the questions that matter don’t have easy answers. For example, I would be the official Mascot of Gloom if I stopped all the kid entrepreneurs to ask:
Is what you’re selling useful? Is it necessary?
Does the damage caused by the production of a thing outweigh the benefits of producing it?
All things being equal, are you in love with the idea of margin—or are you centering yourselves in love for your people and place and the future of both?
Do your parents and elders love you enough to help you “get ahead” but not quite enough to model and teach restraint and modesty?
These heretical questions clang in my MBA ears, but they’re not only fair to ask; they’re essential. Our entrepreneurial forerunners had a Free Pass because the world seemed to have a limitless supply of resources, just like Libertarianism seemed to be a viable political philosophy. But things are different now, and the sticky questions won’t go away—not for my generation, not for my kids’ generation.
I guess I am the official Mascot of Gloom, after all.
As I was wandering around the Fair, thinking a little more about metaphysics than marketing, I found my dad—entrepreneur and grandpa par excellence—sitting on the grass next to the rows of tents. Having propped up the false grandkid economy yet again, as all good grandads do, he clutched a half-eaten, overpriced donut in one hand and a stress ball in the other, pumping it in time with the country band playing at the other end of the park.
“I guess the purveyor of stress balls over yonder never clarified whether they CAUSE or RELIEVE stress,” I joked, gesturing to my kids’ tent—just an instant before the balloon popped, splattering starchy goop everywhere.
“Probably CAUSE,” we agreed, then turned towards the food trucks. If we’re embroiled in Ponzi parenting and Enron economics, at least let there be nachos.