A Short History of Why Good Stuff Happens to Bad People
- David Simon, creator of The Wire and Treme, said in a recent interview with Bob Edwards that America is a “prisoner of short-term gain”. I thought this a most elegant summation of the country’s evolution into the ethical swamp that appears to threaten its very existence. He further indicated that our collective inability to deal with Katrina and its aftermath was best seen as a marker of the end of our “can do” self-image. When asked the answer to the question posed in the first episode of Treme, “What nation does not rebuild its major cities?”, he noted the obvious truth. Only failed nations.
- Some thirty-five years ago, while teaching business management in one of my earlier incarnations, I happened upon an article that gnawed at me until I finally jumped from the thriving business teaching ship due to the sinking feeling that I was a linguistic leper infecting students in a tower of Babel. (You’ll understand why I use that mixed metaphor soon. Still, it will not justify that sentence.) While not too ill yet, I was a carrier, dispersing a simple societal virus. (Ok, I like metaphors, so beat me with a simple declarative sentence.) Insight always begins with a thin light in a dark room, which eventually illuminates the rather nasty things one has been, heretofore, blindly bumping into.
- Oh yeah, the article. It had been discovered by Harvard Business School researchers (lovely irony) that MBA programs – lead by Harvard Business School – had somehow (they didn’t mean to) been teaching their students that one’s managerial career path should be measured in approximately five year increments. So there! That’s it. The insight that should have led me to cry that the sky is falling early enough to avert several catastrophes and the decay of the American dream. (I like hyperbole too. (And a parenthetical or ten.))
- Of course it sounded rather harmless on the face of it, especially c. 1975. I had neither the wisdom of age, advantage of hindsight, nor even a small soapbox from which to proclaim the truth to the ten’s of those who might have listened. This probably happens a lot in history, but it isn’t recorded in history because it doesn’t create history. So I am quite safe from the accolades of future observers, as I am a tad late in coming forth with THE TRUTH. However, as with most big truths, say getting cancer, the initial indicator is something like an innocuous little bump that might be nothing or might metastasize and kill the host. Not an appetizing analogy I’ll admit, but the best metaphor for this situation, especially if one’s lifestyle has contributed to the unfortunate worst-case outcome.
I’ll oversimplify (after all, oversimplification is the essence of current news and politics) this small insight’s powerful impact via the gospel of short-term gain (GSTG) with the following short parable.
A. The Garden
- In the beginning there was the industrialrevolution. Industrious entrepreneurs (nee managers/owners) created businesses, and that was good. They then hired employees and said “make ye things employees and entrepreneurs will buy”. These were called customers. The entrepreneurs kept the big money – after all it was their idea – but the employees got enough to reach toward their middle-class dreams and buy the stuff they made. Toss in a little innovation and a few productivity increases, and more money is created and the world is a mostly happy place. Even when the owner dies, the kids pick up the ball and keep running the company. If nobody gets too greedy, everybody wins. Short-term gain is not really substantially different from long-term gain. The circle is unbroken, as a Sunday school hymn I remember notes.
- Now remember that these “four” groups are one big happy (or not) family. The owner/managers may have even cared about the customers for reasons other than the filthy lucre that could be extracted from them (after all, they and their employees were the customers). Those were the olden days. The company had to survive and grow short-term and long-term in order to make sure all these people were happy forever and ever, amen. If the owner/manager/employee/customer arrangement worked well then a new microeconomics is born, which gives birth to a new macroeconomics and the “great invisible hand” would lead us justly to a democratic/capitalistic utopia – the promised land before the next promised land. But that’s a different gospel. Economic morality and ethics aren’t the same as… Well, I’m not so sure on that point.
B. The Corporation
- Then the corporation slithered down the tree of knowledge and…wait up, I’m off in the wrong gospel again. So what is a corporation anyway? Lets skip the legal parts that read like the IRS Tax Code and get right down to it. A corporation takes what was a family owned business and separates it into stockholders, trustees, managers, and employees (and customers, but they don’t count, just their money). Now the GSTG evolves with the mighty corporation whose conception helped lead to America’s enormous economic success. Lovely concept really. The industrial revolution allowed those who followed Horatio Alger’s path from rags to riches to mega-rich monarchies. The future “too big to fail” corporations, however, needed infusions of large amounts of capital to continue feeding the “plants” – pun intended since these plants soon became big buildings that produced nothing at all. They were called brokerage houses, banks and insurance companies. Wait up, thats later. First, the big corporation became business king. Don’t worry about small business. From tiny acorns, etc.
- Later in this socioeconomic-evolutionary process, strong corporations started buying weaker corporations. Sometimes, just so the Harvard MBAs could show their five-year prowess, the smaller corporation got bought, gutted and resold for unrealistic short-term returns. FlipACorp 101. Seems oddly familiar as one sees smaller players trying to flip a house and count on greed to cover the lack of true value being infused into the home (or corporation – whatever – houses and corporations are just derivatives like pork bellies and sunlight when you toss it all into the finance sausage where none of us want to look). Now the worm really turns. (Always liked that one.) Owners get separated from trustees. Trustees from management. Management from employees. And all from customers. Divide and believe. The GSTG triumphs.
- Ya see it now? All for one and one for one. Owners/stockholders (a great thumb on that invisible hand – and basically unaware of all except their 401ks or the leaves in their swimming pools) tell the trustees to give them more money. The trustees tell the managers to give the stockholders more money. If things get tight, or the GSTGers just want too, wages get scarce and/or employees get canned. If employees don’t have the money, the don’t buy the stuff they make. Then everybody screams for the government to quit regulating them and give them a bailout. But now wages are lower and the managers have the money to give to the stockholders to make the trustees happy and employee/consumers get their taxes used to save their bosses and rich owners butts. Hey, that even chaps my ass.
- However, I should be fair to all and blame everybody. The consumers want the cheapest crap they can get. They’ll buy from Wal-Mart and blame the local supermarket for gouging them. Being believers in the GSTG, they want stuff made in Taiwan. The employees want $40/hour to change lightbulbs, so the union gets busted. The manager wants a bigger house, so he gives himself a bonus, lays off employees, keeps wages low, puts off maintenance, makes cheaper crap overseas, and moves ever five years to a higher paying job having increased profits at the last place, which can now go to hell in a hand-basket.
- Did I mention somewhere that I am not and optimist? And, of course, I put myself in the employee/consumer/401k owner groups as well. I blame upper management and rich trustees and stockholders.
- So what to do about all this. If you are a believer, pray. If not, get yours and get out. Oh, and don’t forget, this GSTG applies to congress, the president, students, and everyone who lives in modern society. Think about how much you have put into savings for your retirement then tell me you are a non-believer. We do not defer rewards easily.
- Sorry, gotta run. I think I hear the Fed-Ex truck down the street.