You can get it wrong and still you think that it’s all right
November 29, 2008
Ask me to make the toast… or ask me to make the coffee. Just don’t expect both at the same time. I’m a simple guy… or maybe it’s a guy thing in general. In any event, I’m not well in touch with my multi-tasking feminine side, if I have one, that is. Hunt, kill, bring home the bacon, in that order. Rinse and repeat if necessary.
I wonder if this anthropological limitation offers any insight as to the sorry state of our world today. Too many men in positions of power… and too many women who strive to resemble the male of the species as they jockey for position in this dog-eat-dog game. Seems there’s not much room for the kinder and gentler world of accommodation, of sensitivity, of searching for the golden middle of compromise. Seems also that George Jr. has long forgotten his father’s expression of hope “to make kinder the face of the Nation and gentler the face of the world.”
Perhaps we are facing a new world of opportunity. With new, at least symbolically, hybrid leadership, perhaps the rednecks and bleeding hearts can meet somewhere in the middle. Life is very short, indeed. Can we really work it out?
It used to be that a vocational education filled you up with facts and technical skills by which to carry you from point of entry into the workforce through to the time you left the same company on the day you retired. The ‘company man’ is now dead … dead and long ago buried. Nowadays, the best education is one that prepares you to leap from one moving platform to the next. Just as Madonna has repeatedly re-invented herself to stay in the limelight, our children must be ready to transform themselves constantly. The rules of life keep changing, with no signs of letting up any time soon.
The family unit, for one, is unlike anything our grandparents could have imagined. To be certain, what we see now as a family will be nothing like that of generations to follow.
The workplace, too, is rapidly changing. For increasing numbers, employment is nothing like it was for our parents. By one account, union membership in the American private sector was 36% in 1953. The pendulum is now swinging hard the other way. That figure has declined to under 9%. Companies are inclined to hire part-time rather than full-time when it saves on the costs of benefits. I won’t be surprised to see employment as we’ve known the concept to disappear altogether. We may all be self-employed again, fighting to justify our existence by good work. Now there’s a novel concept!
The capitalist is also a victim of change. Kicking and screaming, money changers and manufacturers are in the process of being dragged through the streets, en route to who-knows-where. As much as they try, and as much as they call on friends in high places, these folks cannot forego the journey. We’ll find out soon enough, but it looks like they can’t even slow it down.
So what is this process? How did it start? Who can we blame… and what can we do about it? Perhaps we should start by blaming the Greeks who imposed their rule on indigenous peoples, spreading their empire in all directions 2,700 years ago. Follow that with the Romans, the Mongols, the Ottomans, the Portuguese, the Spanish, the Brits, the Dutch, the French, and of course, the Russians and Americans. Colonialism, regardless of the mask, is an economic force, with one state imposing a position of advantage over another. In the end, though, there’s no time for fussing and fighting over who’s to blame. It’s just one stop in a long line of economic forces playing out over spans of millennia.
Before you start hearing strains of the wicked witch (of the West of course) crying out, “I’m melting, melting… oh what a world, what a world!”, consider this: History is a continuum of changes, varied by region, evolving and declining with swings of equilibrating response. Just as one era appears to carry dominant sway over the entirety of humankind, it suddenly implodes on itself, giving way to the next.
As a breeding ground for complacency, success is one of the best predictors of failure. Colonizers, by definition, expose their more advanced tools and techniques to lesser developed cultures. Coupled with the motivation to be free, these tools and techniques become the instruments of a new society, inevitably independent of its former oppressors. This new upstart is too often perceived as the ungrateful child who bites the hand that feeds. It’s all a matter of perspective.
Witness the many civil wars, wars of independence, and pre-emptive strikes the world over. These conflicts are always packaged in ideology. Political labels and banners are extremely useful battle cries through which to rally support. Freedom is by far the most frequent and most successful such cry. Whether it be Marx and Engels, “Workers of the world unite; you have nothing to lose but your chains” … or George W. Bush, “We will stand together and ensure that the future of Iraq is a future of freedom.” In all cases, one must be careful not to smother those whom one would liberate with that flag of freedom.
This flag of freedom is a false front at every turn. There are only three reasons for conflict between states: self-interest; self-interest; and self-interest. Be not fooled (once or twice) by the rhetoric of aggressors. Political ideology is merely a posturing façade for the gain of economic advantage. It is not so much that freedom and democracy are threatened. What is more threatened is the dominance of the few over the many. Even this change, however, will turn on itself in a cruel duality. While more and more countries declare their independence from a diminishing number of colonizers, within these new states a small minority will again rise to control, leaving the masses still in service, if not servitude. The only changes will be the names of the guilty parties.
Please do not understand me to be a detractor of democracy. I’m all too familiar with Winston Churchill’s words:
No one pretends that democracy is perfect or all-wise. Indeed, it has been said that democracy is the worst form of government except all those other forms that have been tried from time to time.
If you’ll pardon only a slight digression, Sir Winston also said:
The best argument against democracy is a five minute conversation with the average voter.
Lest Churchill be easily dismissed, I’ll call on one a little closer to home:
A democracy is nothing more than mob rule, where fifty-one per cent of the people may take away the rights of the other forty-nine.
Thomas Jefferson
… or John Adams:
Democracy… while it lasts is more bloody than either [aristocracy or monarchy]. Remember, democracy never lasts long. It soon wastes, exhausts, and murders itself. There is never a democracy that did not commit suicide.
I’m tempted to wonder where we stand on that historic timeline. Also from Adams:
Great is the guilt of an unnecessary war. Let’s not go there today.
… and:
Power always thinks... that it is doing God's service when it is violating all his laws.
… and finally:
When people talk of the freedom of writing, speaking or thinking I cannot choose but laugh. No such thing ever existed. No such thing now exists; but I hope it will exist. But it must be hundreds of years after you and I shall write and speak no more.
As I reflect on these snippets from history, especially this last from John Adams, I will add that for much of the past eight years, I have held my tongue… not an easy feat, I assure you… on recent events in the United States. As a business traveler who regularly crosses the Canada-U.S. border, I have been genuinely hesitant to share my concerns about developments to our south. Absent the recent election, I would never consider publishing a piece like this, for fear of being refused entry. That I should even contemplate such a risk is a frightening thought, indeed. For whatever else, good or bad, may come from the new Obama Administration, I do anticipate a lifting of the veil that has shrouded free speech in and about the United States in recent years. If you are American, and would think me foolish in this perception, consider also that perception is reality, and that I am far from alone in this perception.
Understand me not to be dismissing democracy in favour of some other system of governance. For myself, at present, I would choose no other. That’s not to say that it’s the right system for all. This is not my position to say. In keeping with the theme of this essay, life is not a simple, black and white, experience. Life is a hybrid. Politics is by no means exempt from the gray zone. All I’m saying is, let’s not attribute to democracy more than is really there. At its best, it allows an informed people to have some small measure of influence over how their society is governed. At its worst… there’s a chance that we may fall apart before too long.
What we are witnessing, worldwide, is resistance to an uprising of former colonies, empowered often by yet unexploited resources. Much of Africa, Korea, Iran, Iraq, all of South America, Saudi Arabia, the Ukraine, Georgia, Indonesia, not to mention Alberta and in due course Newfoundland all fit into this category.
Ideology is invariably the outward genesis for new nations and new world order. The forms and stages of new order in these former colonies vary widely, but the reality is that this transition from colony to independent state… sometimes very powerful state… is driven by, and only by, economics. Taxation without representation is one good example, and a regular case in point. Those who have been convinced otherwise have been sorely and sadly misled by the beautifully resonant, and powerfully hypnotic, Gregorian chant of the politician. As for taxation without representation, this is but one more case of: Pay me now (1776) or pay me later (2008?).
One of the most important changes underway in the world is a widening recognition that economic borders are more meaningful than political borders. If you accept the foregoing, this recognition is incidental. Political borders were always economic borders. The real change is that there is now another form of economic power that does not respect these politico-economic borders; namely, the multi-national corporation.
As a legal entity, in its purest form, the corporation has but one purpose – increase shareholder wealth. There is no room here for variation. Lots of colour and texture creep in from the margins, but boiled down to its essence, self-interest is what remains.
As in all things, however, there is much variability in how corporations work. This variability is a function of two things: context and perspective.
Remember the first day of high school biology? We looked at the purpose of any living thing. To survive and to propagate the species. Hence, the profit motive of a corporation. Too much consumption and too much propagation, however, leaves the eco-system overpopulated and unable to sustain itself. Implosion is the only natural consequence. Again, success is a good predictor of failure. Opportunity is followed in sequence by: early adopters; second arrivals (generally the most profitable position); a massive chase; the starvation of many; and a period of collapse and consolidation. Darwin rules.
Corporate context bears no resemblance today to anything that existed even a short number of decades ago. Corporations in the West have gone through a number of transitional periods. In recent times, they’ve completely saturated domestic markets and with the pressing need to enhance shareholder wealth, have adopted a model of perpetual growth. Big is not just better. Big is the only way. The need for new markets have created, developed, and promoted our newfound state of globalization. Nothing wrong with that, intrinsically. The by-products of globalization, however, have dramatically affected the marketplace as we have known it. Increasing competition for both domestic and foreign markets has created an entirely new framework for operating a business. Production and distribution models have been transformed virtually before our eyes, and continue to morph with every passing blink. Witness Dell Computer and its build-to-order production model. Place your order online and Dell’s network of suppliers and assemblers from 34 countries kick into action. Holding little inventory, Dell is able to build and deliver the latest technology for competitive price anywhere in the world at previously unimagined speeds. Place that same order tomorrow, and the configuration may be entirely different, depending on changes to a host of variables. The world-wide free flow of information has changed everything. Dell Computer is like the FedEx hub-and-spoke system (a revolution in itself) shot into hyperspace.
Here’s the thing. Globalization of production and markets has entirely flattened the world. Tom Friedman’s excellent book on the subject lays it out quite nicely. Matched with expanding access to education and to the free flow of information, there’s not much you can do that someone else in the emerging world can’t do… at a fifth of the cost. Hmmm… I guess there really was something in the church practice of not teaching people to read. They might start to think for themselves.
I feel another digression coming. Written language did not exist until 6,000 years ago. Vowels were added by the Greeks at about 1,000 BC. Spaces between words did not appear until 900 AD. The printed word has existed for less than 600 years. Gutenberg was no friend to a church in pursuit of total control. How long the church fought translations of the Bible into languages understood by the laity.
As with the introduction of the printing press, globalization’s placement of the tools and techniques of modern international commerce in the hands of (former) colonies has created the potential for step-changes in quality of life for literally billions of previously deprived people. Of course, with that transformation comes an equal and opposite transformation. Prior economic advantage held by those of us fortunate enough to have been born in the West is now in the process of rapidly slipping through our fingers. By using lesser developed regions as a means of production, and by developing those regions as new markets for our products, we’ve successively eliminated all points of differentiation between us and them. As long as they enjoy advantages in production, principally through differential wages, they will continue to make meaningful gains on our standard of living. What’s more, because their numbers are so much greater than those in the ‘developed world’, the pace of this dissipation in economic advantage will only accelerate until it approaches the point of indifference. Finally, and again because of the sheer size of the developing world, our standard of living in the West can only go down. Let the talking heads tell you what they will. This is a reality which cannot be denied.
Mutually beneficial trade between jurisdictions – individuals; villages; regions; and nation-states – is a function of something called comparative advantage (Economics 101 again). We’ll grow the grain and you can milk the cows. Traditionally, economies of scale, climate, proximity to transport, and availability of labour all come into play. Today, education and the flow of information bear heavily on this schematic. These are increasingly the great equalizers as described by Friedman.
The Western military-industrial complex now finds itself in the unenviable position of trying to suck and blow at the same time. Colonialism just doesn’t work anymore. Lou Dobbs’ incessant rants about outsourcing of jobs is but one of the few last remaining gasps of protectionism in a world no longer in our control. Just as we and our children mature to the points where they have the power to place us out of the way in nursing homes, all the military might in the world cannot stop what has already moved past the point of no return. The Western world can no longer operate in a vacuum that does not take others’ decisions into account. This is reality.
I was intrigued by the comment from a European who lamented that, because the entire world would be affected by the outcome of the recent U.S. election, the entire world should have a say in that outcome. Easy to dismiss such an idea out of hand. At the same time, we live in a world so unlike the one in which our society was founded that its foundations may no longer hold. Jury’s out… I’m still thinking on that one.
Perspective in decision making needs to include reference to time horizons. Corporations that look to quarterly (or even shorter) timelines are doomed to short-term life spans. Big is not always better. What always worked before does not necessarily hold today. Only 71 of the companies first appearing on the Fortune 500 list in 1955 remain there today.
Enduring success is a concept placed seriously at risk in the face of empirical data. How many companies have followed the lead of Johnson & Johnson? In 1982, when faced with cyanide tampering of its popular Tylenol brand, the company recalled 31 million bottles of product, suffered a loss of more than $100 million, and saw its market share tumble from more than 30% to just 8%. With its quick response and responsible care in the interest of the market (reinventing the form and packaging of this product), however, the company garnered remarkable goodwill value and quickly recovered its entire lost share of the market. How many companies have followed this lead? How many governments? How many, instead, have taken the short view, and sacrificed the greater good of long term viability?
In current terms, consider the U.S. Administration’s response to automakers’ request for a bailout to mimic the silly business now at play on Wall Street. Let me be clear that I see no logic in short term propping up of businesses that cannot operate profitably in a free market. I do not support subsidies, not of culture or milk or eggs in Canada, nor of finance in the United States. Do the job and it’s yours. Don’t do it and it will go to someone else. Will this stance hurt? You bet it will. I’m a supporter of neither regulation nor deregulation. At the same time, deregulation of the financial sector has placed us all at the mercy of those who have no moral authority to lead. We may lose everything we have as a result… in the short term. In the end, however, by letting the incompetent rightly fail, those who follow may enjoy the benefits of a system that possesses integrity – a concept almost entirely lacking in financial circles today. Or… is there a golden middle by which to lead us out of this mess? I don’t know the answer to that question.
Now, to the automakers’ request for $25 billion – a sum that may carry them only as far as February of next year, when they’ll be back in Washington crying, “please sir, I want more.” So, what was the response of the Administration? ‘You cannot have new funds. We’ve already allocated money to aid you in efforts to make more fuel-efficient cars. Use that money’ (although the authority to redirect these funds is not now in place). When push comes to shove, those in positions of power repeatedly fail to take a stand. Dependence on oil will persist as long as it’s easier to do so than to do the right thing. Those who profit from oil, along with those who profit from the reconstruction of war-torn oil producing nations, will continue to block the path to an inevitable future.
Artificial structures, regulations, and monopolies, supported by military might, serve only to prevent the ‘free market’ from playing its rightful role. These impediments to the free market eventually break down, giving way to traumatic events. Much like earthquakes caused in transform boundaries of tectonic plates, stress accumulates to a breaking point where much energy is released in a violent manner.
I just returned from a business trip to Abu Dhabi, one of the powerful centres of the Middle East oil world. As the largest of seven emirates in the U.A.E., this is also the name of the capital city. It is a most beautiful city, with many palatial structures. I much prefer it to Dubai, where tall is the order of the day. The Emirates Palace Hotel is a sight to behold, stretching more than a kilometre in length, and finished only in the highest of luxury. By 2030, the city’s population is expected to rise from 900,000 to more than 3.1 million. Created by oil, the wealth of Abu Dhabi is profound. The GDP per capita of the U.A.E. ranks third in the world, behind only Luxembourg and Norway.
How ironic it is that Abu Dhabi is now embarking on the creation of a carbon-neutral city named Masdar, set for completion by 2016. Sustained by “clean, renewable sources such as solar power”, this city is targeting zero waste, emission-free transport and to save the “equivalent of $2 billion in oil over 25 years.” Ironic indeed.
As the United Arab Emirates, one of the world’s largest producers of oil, is investing $22 billion in a car-free city that will be home to 50,000 people and create more than 70,000 jobs, the United States (a net importer of oil) is prepared to cancel its modest commitment to improved fuel-efficiency for cars in the name of a very temporary deferral of what is potentially the total collapse of its automobile industry.
Government intervention in the form of stimulus designed to promote consumption reflects a state of complete denial on the part of those in power today. Peter Schiff calls it right when he says you can’t spend your way out of debt. You’ve got to stop spending and start saving. The United States is not operating in a vacuum. It is not a closed economy. As long as debt is foreign sourced, spending is doomed as a solution. Eventually, foreign creditors will cut off access to such spending. At that point, the entire house of cards will come tumbling down. The argument that ‘you’re too big to fail’ seems not to hold much water these days. Just as more calories in than out results in obesity, heart failure, and death, an imbalance in the mix of consumption and production has only one possible outcome.
In some respects, countries no longer exist. They are merely shells of artificial barriers designed to protect possessors of wealth from those who have none. As certain as the Rock of Gibraltar is hollow, what we have known as strong and vibrant Western society is nearing its point of implosion. Whether there is someone to blame or not may be moot. Perhaps it’s more fruitful to understand the dynamic of international interdependencies contributing to this demise. Perhaps it’s just a natural progression of the world into its next stage of history.
The world is not black and white. It’s increasingly hybrid. Those who would have you accept broad brush labels of: left and right; capitalism and socialism; supply and demand side economics; regulation and deregulation; and right and wrong are either lying to you or they just don’t get it. The answers to our many problems do not reside in pigeon-hole answers, but rather in blended, fluid, adaptive response, incorporating the best from many positions and viewpoints. There is no one best answer. What’s more, and what’s more important, today’s answer may only last through today. Tomorrow will bring an entirely new set of challenges. That’s not neat and it’s not easy, but this, too, is reality.
Perhaps there remains a golden middle amongst all of these competing and convenient labels. I don’t know if we can find it, but I believe/hope it exists. In the end as always, only time will tell if I am right or I am wrong. Good luck to all. We’re going to need it.
With respect,
Kevin Graham