

How Entire Industries Become Unethical - thesyndicate
http://bhargreaves.com/2010/08/entire-industries-unethical/

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VengefulCynic
It seems to me that the industries that trend to the most unethical (airlines,
commercial real estate, cell phone carriers) also have the highest barriers to
entry. Unfortunately, this only leaves cumbersome instruments like government
regulation and unpredictable changes in the marketplace to impose ethics on
industries that appear most likely to trend unethical.

~~~
billswift
Government regulation is what creates most barriers to entry. In general, the
most unethical industries and professions are those that are most tied in to
government in the first place. Especially where government provides the
barriers to entry - professional and occupational licensing being just the tip
of the iceberg.

~~~
praptak
_"Government regulation is what creates most barriers to entry."_

Maybe the government regulation as practised by cronyist goverments.
Seriously, I don't think that a hypothetical government enforcing standards
for square feet measurement would create a huge barrier to entry into the
property business.

~~~
VengefulCynic
As soon as there's a law about how to calculate square footage there will
either be an agency to do the calculate the square footage, an agency to
enforce it, or both. Oh, and some sort of tax/fee levied against commercial
land-lords and the possibility of lawsuits all around. And that's assuming
that the law doesn't require auditing and/or some sort of compliance
documentation. I don't think you're really allowing for how onerous even
"simple" regulation can be when lawyers and bureaucrats get ahold of it.

~~~
aasarava
Weights and measures are already regulated in the U.S. This is why, when you
pay for a gallon of gas, you can be sure you are getting an actual, standard
gallon of gasoline. This in itself doesn't seem to create a barrier to entry
for gas stations and protects the consumer.

~~~
swolchok
It seems to me that you _can't_ be sure unless someone is auditing the weights
or measures actually in use. Consumers can do a rough audit using their gas
gauges, but it's not particularly precise.

~~~
olefoo
In the US at least the state DOT's do go out and check on the pumps and check
both that they are calibrated for liquid measure and that the gasoline falls
within the acceptable temperature range (because warmer gasoline occupies a
greater volume).

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noonespecial
Used car dealers, real estate agents, building contractors, even pool cleaning
services, whatever: Whenever I hear something or see something questionable or
confusing in a contract or agreement that's explained to me as "boiler-pate"
or "industry standard", I now just assume that its institutionalized
dishonesty designed to screw me and give it an extra careful look.

~~~
joe_the_user
Like the subject of the article, I think this is a kind of low-grade
dishonesty. Annoying but basically how people a living.

I'd see really high-grade dishonesty in the entertainment industry, the
gambling industry, in defense contracting or oil and extractive industries.

These are the industries that occur to me who wield monopoly power and/or buy
governments.

~~~
abalashov
Why is this perfectly reasonable, civil comment being downvoted?

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ryanjmo
>>>The airline industry is also clearly trending in this direction, as is
higher education. Once an industry is at the bottom of an ethical slope, it is
ripe for disruption by young companies that can sell through an honest,
straightforward process.>>>

Sometimes I hope that companies like YC will disrupt the higher educational
system in the US.

Going through YC is a much more strait forward process than education. The
process is essentially join YC and work your ass off to _make_ yourself a job.

This makes a lot more sense to me than, pay a bunch of money for college,
learn a bunch of random junk, get a degree after a set period of time, then
show that degree to people who will hopefully be impressed and _possibly_ give
you a job.

~~~
ryanlchan
While I do think that higher education needs an overhaul, the larger problem
is that HE is too often misunderstood. It's not a place where you learn skills
that explicitly help you get a job; that's called vocational training, and a
whole bunch of places do that extremely well. Hell, if all you're looking to
do is work, you probably don't need college at all. Zoho's been hiring kid
straight out of high school, with no discernible difference in productivity
with their college educated counterparts ([http://blogs.zoho.com/general/how-
we-recruit-on-formal-crede...](http://blogs.zoho.com/general/how-we-recruit-
on-formal-credentials-vs-experience-based-education)).

HE is a place where you go to interact with people and ideas fundamentally
different from what you know, receive mentoring on how to consider such ideas,
and how to create those ideas on your own. It does not claim to make you a
smarter individual, and its value is largely dependent on your own drive to
make the experience a success. In essence, it is _exactly_ the same as
YCombinator - even in the obfuscated and oft frustrating admissions processes,
which is what I believe the article refers to.

~~~
krakensden
What you are describing is a finishing school for the rich, which is what
higher education used to be, a long time ago. That is no longer true.

If you want a white collar job in the US, you must go to college. Yes, there
are some outliers, but having a degree is damn close to a hard requirement.

Pretending that is no longer true and indulging the liberal arts fantasy just
makes the problem worse. There are too many kids who come out of college with
debt and a degree in not having people take them seriously.

~~~
_delirium
Turning universities _completely_ into vocational schools seems like it'd have
a number of downsides though. The idea that students should be well-rounded
and that it's good for society for educated people to have some basic core
knowledge isn't only a "liberal arts fantasy", but also a "science fantasy".
If you're training people strictly vocationally, not only humanities cores,
but also science cores should go, or at least both should be greatly cut down
to only those students who specifically need a particular class for their
future careers (e.g. maybe CE students will still take intro physics as a
prereq for semiconductor physics, but CS students would no longer take Physics
101, or Bio 101, or Chem 101, or any math classes not strictly needed for
their CS training, etc.). If you wanted to be really hardcore about it, you
could even assess classes based on their predictive earnings power, so if
Physics 101 doesn't produce measurable gains in its graduates' earning power
within 10 years, axe it.

~~~
chopsueyar
Why can these students not have equivelent "Physics 101, or Bio 101, or Chem
101" within a highschool curriculum?

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wcarey
Rather than an ethics problem, this seems like a unit of measure and
communication problem.

The comparison to higher education is apt. Prices at community colleges (and
many universities) are set in dollars per credit hour. Credit hours, though,
aren't the same as clock hours. I taught a three credit hour class that met
three times weekly and lasted fifty minutes a session. The school, naturally,
advertised this discrepancy well in advance of taking payment. (I do wonder
whether there's any case law about that.)

It seems that office managers are setting prices in dollars per real-estate
square foot, which is a different unit of measure from the commonly understood
measure of area. Maybe they should advertise "real-estate square feet of
office space" instead of "square feet of office space" to eliminate the
confusion that comes from overloading that phrase?

(Whether this sort of linguistic imprecision and flux is a good idea is a
separate argument, to be sure. This sort of shenanigans increases the burden--
and therefore the cost-- for people trying to purchase a good or service.)

~~~
chopsueyar
Credit hours are "points towards graduation".

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lkozma
This seems to be due to asymmetric information between seller and buyer. The
buyer can not measure exactly the true area, which only the seller knows
(buyer doesn't have access to the standards, the criteria that have been used,
doesn't understand them, doesn't have time or is physically not allowed to
measure it.)

~~~
tptacek
No. The buyer absolutely can measure the exact area, and can probably do so
with a children's plastic ruler, since as near as I can tell nobody rents
office space anymore without looking at a PDF of a floorplan first.

~~~
lkozma
Makes sense, but then I don't understand how owners get away with the
practices they describe in the article.

~~~
tptacek
Because rsf includes building common spaces, which tenants are in fact
renting. This is not complicated.

Yes, it does appear plain that this "common spaces" business is a fig leaf
that covers annual rent increases. And yes, that's dishonest. But it's of no
practical import, since every tenant knows their rent is going up one way or
another once their lease expires.

We're really making a big deal over whether "rent increase" is called "rent
increase" or not.

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yxhuvud
I'd sue in a minute if someone tried this [ _]. Seriously. They will not be
delivering the area you pay for.

[_] Well ok, I would measure the area myself to find that the area actually
differed from what I was paying for.

~~~
glhaynes
Seriously, why isn't this litigated so that it becomes a uniform part of
commerce/law?

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ohashi
So in short, it's a slippery slope but no one step looks particularly bad to
the participants, but after a while, everyone else see's you playing in the
mud at the bottom.

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tptacek
Apart from the semantic goofiness, how is this worse than the landlords simply
raising the rent every year (which is clearly not unethical)?

~~~
djburiedalive
What's not worse about it?

If a landlord raises the rent on a 400 square foot space, they're simply
asking more money for it the same space. If a tenant wants to pay that price
for 400 square feet, that's his choice.

On the other hand, if the landlord claims it's 420 square feet, no matter how
much he charges per square foot, the tenant is paying for something that
simply doesn't exist.

~~~
tptacek
Landlords can phrase things in terms of $/rsf, but the lease specifies a
monthly flat rate. It can't change until the lease expires. What am I missing
about the bind this puts tenants in?

I get the semantic dishonesty, but not the practical issue.

~~~
praptak
Searching for offers, as explained in the article. The nonexistant square feet
put the offer undeservingly high in the sqft/$ order which is what many
tenants search by.

~~~
tptacek
That's silly. It's unethical like SEO is unethical: annoying, but hardly
damning. There must be something more to it than that.

~~~
praptak
Yeah, but the SEO might cost you a click while such an offer might cost you a
physical visit to a crappy office.

~~~
tptacek
Again, this is pretty silly. If an agent led me into a bait-and-switch
situation (ie, something advertised as 1400 rsf turns out to be a closet), I'd
simply never use them again.

In practice, though, total moot point: the last time I looked for office space
(earlier this year), the first agent I called sent me scaled floor plans for
over 100 places. There were rsf numbers to go with them, but the dimensions of
every office were right there.

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mleonhard
The hard drive industry also has this problem. They adopted an incorrect yet
defensible definition for 'MB', 'GB', etc. The result is that consumers and
engineers have to multiply the advertised MB by 95%, GB by 93%, TB by 91%, PB
by 89%, EB by 87%, etc. This will only get worse as storage sizes increase.

~~~
mcosta
In this case they are using for its profit the difference in GB and GiB. They
do not make the GB smaller each year, or add the caches to the total size.

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scotty79
[http://www.worldlingo.com/ma/enwiki/en/The_Market_for_Lemons...](http://www.worldlingo.com/ma/enwiki/en/The_Market_for_Lemons#Milk_in_India_in_the_1970s)

Probably in this case it would be enough to require inclusion of quotient
between exclusive and total space in all advertisements and agreements.

There should be some bounds on advertisement. Can commercial lie about facts?
Can it promote alcohol? Can it promote medication without obligatory warning?

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donaldc
I think the real problem here is that the owners and leasers of an office
space are the ones who are responsible for reporting the "square feet". The
system would work just fine if an unbiased third party did the measurements.

~~~
VengefulCynic
Unfortunately, there's no incentive for the landlords to do this. That just
leaves legislation or the sudden emergence of ethical competition. Oh, and
don't forget that most of the larger commercial land lords have lobbying arms
(at a local level at the very least) in order to oppose just that sort of
thing.

~~~
donaldc
This need not be legislated. If commercial renters were sufficiently biased in
favor of places with an objectively determined square footage rating,
landlords would provide it regardless of the lack of a legal requirement. The
key is getting demand started.

This is currently an inefficient market, and more information would
substantially improve it. And objectively measuring square feet is not
particularly difficult or expensive.

What will probably happen is, eventually the misrepresentation of square
footage will get so egregious that there will be a movement by commercial
renters toward some sort of third-party measurement. The landlords will go
along, because they want to rent their office space.

~~~
eyecon
That's a reasonable suggestion if you're willing to wait a couple of
generations (or potentially forever) for any improvement in the situation.

The first complication with this suggestion is that in cases of exploitation
of information asymmetries like this, you don't know what you don't know. It's
nice that this issue is getting a little public scrutiny here now, but one has
to wonder how long it's been going on? And getting an issue like this more
widely recognized, to a point where demand for transparency would be self-
sustaining, is likely to require a lot of someone's time an effort to
bootstrap. If a subset of buyer/leasers were to take this on openly, real
estate owners would almost certainly seek to punish them directly, in addition
to mounting their own counter-education campaign >>> politicization.
Alternately, some third party might sense a commercial opportunity here, e.g.,
to provide public education and neutral measurement services -- but that's the
same sort of business model that makes "trial lawyers" so popular...

It's unrealistic to assume that commercial renters are going to be broadly
responsive to individual demands for transparency before the overwhelming
majority of real estate seekers permanently embrace transparency as a make-or-
break requirement for buy/lease decisions.

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known
I think <http://en.wikipedia.org/wiki/Megacorporation> are doing more harm
than good to mankind in the long term.

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callmeed
Don't forget to add title insurance to the list

<http://www.forbes.com/forbes/2006/1113/148.html>

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chopsueyar
Is this all commercial real estate in the world, or just NYC?

