Good for Balthazar for Getting Rid of its Bathroom Attendants

Henry Blodget caused a bit of a stir last week when he penned a diatribe against the bathroom attendants at the New York restaurant, Balthazar. Here’s a sample of it:

I always forget that Balthazar makes a guy stand in the tiny bathroom all day, so whenever I open the Balthazar bathroom door after breakfast, I am hit by the same series of unpleasant emotions: Annoyance, guilt, pity, uncomfortable invasion of personal space, and then… extortion.

I go through this internal dialogue and series of emotions every time I enter the Balthazar bathroom. And it makes me hate Balthazar and never want to come back. And then, over time, I forget the Balthazar bathroom experience, and remember only the dining room and meal. And then, eventually, I go back.

But this is a terrible practice — this “bathroom attendant” thing.

It is never helpful.

It is never anything other than uncomfortable and degrading.

It is never a “service” that I look forward to or enjoy.

So I am hereby appealing not just to the bosses at Balthazar, but to restaurateurs and hoteliers all over the world, to eliminate it.

Lo and behold, Balthazar took his advice. Owner Keith McNally announced today that he will be relieving the bathroom attendants of their duties over the next few weeks. In the end, he said, he agreed with Blodget so the bathroom attendants will be no more.

In finding this out, Blodget reacted on Twitter with remorse and wished that McNally had hired them as waiters instead. But this doesn’t make any sense. If McNally agrees with Blodget and does not see a purpose for the attendants, then he should get rid of them. If he has an opening on his wait staff, then he should fill it. But hiring extra waiters for the sake of hiring isn’t a good business strategy.

It’s certainly sad that those workers have lost their jobs, but our economy works best when companies take advice from their customers and make changes to their businesses accordingly. Capitalism dictates that companies have the ability to fire workers it deems expendable and workers can leave jobs for better ones. McNally made that decision. He should not feel compelled to continue employing them just because he eliminated their positions.

There is a larger point here as well. We’re into President Obama’s second term and the economy is still barely recovering. These firings wouldn’t be as painful if the workers knew they had a high chance of finding a new job in the near future. Unfortunately, our government (read: Republicans) has done everything in its power to lower those odds. Sequestration is a moronic policy that is significantly reducing growth. The government shutdown harmed the economy and fiscal brinksmanship does so well. Bipartisan agreement to let the payroll tax cut expire is holding back the economy too. These are just the ways Congress is actively harming the economy. It should be actively helping it by passing infrastructure bills and immigration reform. The Balthazar bathroom attendants would have a much greater chance of finding a new job if Congress wasn’t actively trying to stop them from doing so.

It’s a sad state of affairs that eliminating pointless jobs will cause such an uproar. These positions simply unnerved customers and guilt-tripped them into tipping. They should be eliminated, but the workers should also be able to find new employment in positions that use their skills better (anyone can turn on a faucet and hand out paper towels) and provide a greater benefit to society. The abomination here isn’t McNally eliminating those jobs or Blodget’s post that led him to do so. It’s the government’s inability to help Americans get back on their feet and recover from the Great Recession. Direct your anger there.


FOMC Expectations Show The Non-Taper Worked

The FOMC will release its October statement at 2PM today and the widely held expectation is that the Fed will stand pat and continue its $85 billion in bond purchases. Despite the overwhelming belief that the Fed would taper in its September meeting (it didn’t), the exact opposite belief is now conventional wisdom this time around. Why did everyone’s expectations about Fed policy take such a dramatic turn?

Not because the economy suddenly crashed. Equities are still rising and interest rates have fallen in the past month as the market has pushed back the timeline for the taper. The jobs report was underwhelming, but not catastrophic. Consumer confidence fell, though this wasn’t surprising. The government shutdown hurt the economy, but much of it will be made back in the upcoming quarters and we also avoided a default. The shutdown has also delayed the release of some economic data.

All in all, it has been a mediocre, slightly below average last month of economic news. But based on market expectations last time, slightly below average data would still lead the market to expect the Fed to taper. Since that’s not the case, then it’s not the data alone that has caused Fed watchers to adamantly believe that the Fed won’t taper this time. It’s because the Fed regained its credibility and realigned the market’s expectations with future Fed policy.

The Fed cannot commit to any action it will take in the future since it does not know the future state of the economy. But it can give the market a baseline of how it will react if certain economic conditions come to pass. That’s what Bernanke set out to do in June when he said that the Fed would begin tapering in the fall if the market continued to improve at a moderate pace. Over the summer, that improvement slowed, but the market didn’t adjust its expectations to take into account this slowdown. It assumed that the baseline that Bernanke laid out was a set path of action, despite his repeated admonitions not to take it that way.

In fact, this blind belief that the Fed would taper caused interest rates to rise which weakened the economy and gave further incentives to the committee to continue its bond buying. By pricing in the taper, the market helped create the economic conditions for the Fed to do just the opposite.

Through all of that, the FOMC sent a message in September: Don’t assume that the Fed won’t adjust its policy based on the underlying economic data. Finally, Fed watchers and the market are catching on. The 180-degree turn in expectations is a direct result of the Fed convincing the market that it’s data-dependent and for them to use the Fed’s forward guidance as just that, a guide not a set path. The unanimous belief that the Fed will not taper today is evidence of that policy’s success.

Ted Cruz’s Iowa Speech Reveals the Limits of the Grassroots

On Friday, Sen. Ted Cruz (R-Tx.) headlined Iowa’s annual GOP fundraising dinner, speaking for 45 minutes without a teleprompter or notes. It was Cruz’s third trip to Iowa, likely in preparation for a 2016 presidential run.

Much of his speech was centered on Obamacare and the government shutdown, which he still believes was a success despite receiving no concessions from President Obama and angering many people in his party.

“One of the things we accomplished in the fight over Obamacare,” he said. “is we elevated the national debate over what a disaster, what a train wreck, how much Obamacare is hurting millions of Americans across this country.”

That’s not actually true. The shutdown overshadowed the launch of the government exchanges, which have had massive issues during the first couple of weeks and have seen only marginal improvements since. Once the shutdown finished and debt ceiling deal was complete, the media’s attention turned to Obamacare and the administration has been on the defensive since. Cruz’s strategy provided a distraction from Obamacare during what may be its darkest hour. That’s not exactly elevating “the national debate over what a disaster” it is. In fact, it’s the opposite.

But Cruz is right about one thing: the grassroots support around the country is impacting American politics.

“For everyone who talks about wanting to win elections in 2014 — particularly an off-year, nonpresidential year — nothing, nothing, nothing,nothing matters more than an energized and active and vocal grassroots America,” he said. “I’m convinced we’re facing a new paradigm in politics. It is the rise of the grassroots.”

At the fundraiser, Cruz pointed out five issues that the Tea Party base has successfully influenced:

  1. Gun control and the Manchin-Toomey Bill
  2. Sen. Rand Paul’s (R-Ky.) filibuster over drone policy
  3. Comprehensive immigration reform
  4. Bipartisan disagreement over Obama’s Syria strategy
  5. The government shutdown

Looking at each one of those issues, it’s clear that Cruz has a point. Despite most Americans being in favor of universal background checks, pressure from the small but powerful gun-rights groups (most of whom are Tea Partiers) convinced lawmakers to oppose it. Paul’s filibuster made national headlines and provoked a new conversation over America’s drone policy. Immigration reform is also favored by the majority of Americans, including citizenship for the 11 million undocumented immigrants currently residing in the United States, but the odds of any legislation passing look slim thanks to the Tea Party. Obama’s decision to ask Congress for approval to attack Syria may not have resulted from grassroots anger, but the slim chances he had of receiving a force authorization were certainly a result of bipartisan opposition to his proposals. Finally, the government shutdown was the direct result of the Tea Party’s fury at Obamacare, forcing GOP lawmakers to go along or be labeled a RINO.

In each situation, the grassroots Tea Party base, despite representing less than a quarter of the electorate, had a significant impact on the policy debate. The Tea Party has earned this power by developing a vocal, angry foundation that it can mobilize to have an outsized effect on elections. Cruz is right. The grassroots truly is powerful.

However, what the junior senator has not grasped is that there is a limit to this power. In the end, the Tea Party still represents a small part of the electorate and their scorched-earth tactics have earned the derision of much of the nation. The problem with having enough power to block popular legislation is that you make a number of enemies by doing so. Cruz & Co. make even more enemies when they choose tactics that have no chance of success.

In the other four issues he cites, the conservative base achieved their goals. They scuttled universal background checks, immigration reform and a strike on Syria and brought drone policy to national attention. The government shutdown was different. It was bound to fail from the beginning, but Cruz didn’t care. Now, the Republican Party has its lowest favorability ratings of all time and Cruz’s favorables with non-Tea Partiers have plummeted. He’s solidified his position as cult hero amongst the Tea Party, but at the expense of alienating the Republican establishment, crowding out media coverage of’s struggles and damaging his credibility as a strategic thinker. Cruz is right that the grassroots has become a powerful force in politics, but the government shutdown revealed the limits of that power. Likewise, Cruz has become an imposing figure in the Senate, but the past month demonstrated that he faces limitations as well.