Why economic language has a lot to answer for

From the Economist’s cover piece on “The next China” a couple of weeks ago:

The strikes, stoppages and suicides that have afflicted foreign factories on China’s coast in recent months have shaken the popular image of the country’s workers as docile, diligent and dirt cheap. … As pay goes up the country’s domestic market will become more lucrative. Foreign firms that came for the workers will stay for the shoppers. China will become more of a workshop for itself and less of one for the world.

There’s been much in the news this year about how Chinese labor costs are rising, but for me this was a good reminder that “labor costs” – even those located in some far-off land – are also people with aspirations and needs.

I happened to read it around the same time as Bob Herbert’s NYT op-ed on how “the carnage that occurred in the workplace [during the recession] was out of proportion to the economic hit that corporations were taking.” How’s this for striking:

At the end of the fourth quarter in 2008, you see corporate profits begin to really take off, and they grow by the time you get to the first quarter of 2010 by $572 billion. And over that same time period, wage and salary payments go down by $122 billion. That kind of disconnect, said [economics professor Andrew] Sum, had never been seen before in all the decades since World War II… In short, the corporations are making out like bandits. Now they’re sitting on mountains of cash and they still are not interested in hiring to any significant degree, or strengthening workers’ paychecks.

Obviously, this is what happens when you think about workers simply as “variable expenses.” I am trying to be a nuanced thinker, but sometimes you just have to get mad.

Links for 20-22.3.10

  • 100 Best Business Books of All Time: I rather like the chapter headings, themselves instructive.
  • MoMA acquires “@” (their only public domain acquisition ever): and it makes sense! fascinating.
  • Why the Internet should win the Nobel Peace Prize.
  • 20% time not just for Googlers – why and how to make it work for you.
  • “If you stay open to everything, it makes it difficult to do your thing.” – One of my two favorite teachers from school days, on Sunday in Dolores Park. This was in reference to figuring out the use of IT and social media in the classroom, but it certainly applies to everything.
  • Forget Malthus – the real threat is over-consumption, not over-population. “A woman in rural Ethiopia can have ten children and, in the unlikely event that those ten children all live to adulthood and have ten children of their own, the entire clan of more than a hundred rural Ethiopians will still be emitting less carbon dioxide than you or me.”
  • Edgeconomist Umair Haque: “Go great to good. Today’s great challenge isn’t making the same old toxic junk more efficiently — it’s making stuff that’s not toxic junk in the first place.” Why? There are “seven ways going great-to-good is better for your bottom line.” I like his dubbing of transparency and accountability as “ethical accelerators” – a much better way of describing accountability, collaboration, innovation, etc. than I used.
  • Frog Design on the new economies of trust and meaning (vs transactions and materials) – wonderfully pulls together strands from Umair Haque’s, Shoshana Zuboff’s i-space, NESTA on trust, CHris Anderson on the freeconomy and our own Volans. Why does meaning matter? For one, it means creating value from something other than material stuff.

Collaboration, production, transparency, networks…

Shoshana Zuboff in BusinessWeek:

I spent a quarter-century as a professor at the Harvard Business School, including 15 years teaching in the MBA program. I have come to believe that much of what my colleagues and I taught has caused real suffering, suppressed wealth creation, destabilized the world economy, and accelerated the demise of the 20th century capitalism in which the U.S. played the leading role.

…a return to real prosperity and long-term growth [will] require a rebirth of business based on new rules for a new era. The old rules that most B-schools have preached were invented a century ago for supplying mass consumers with affordable goods and services. They are poorly suited to the values of today’s new consumers, who want help to live their lives as they choose, with personal control, voice, and a practical sense of connection.

She proposes three rules:

1. Race to I-Space. Operate from the perspective of the individual consumer – not the product, and certainly not the company. [She notes that business school students are trained in the "administrative point of view." The manager's job was to oversee and control what was inside organization space, or what they were trained to view as "my company" - a world of boundaries and adversarial relationships.

2. Advocate, Don't Alienate. Speak not of your products and selling them to your customers, but ask your customers what they need and how you can help.

3. Collaborate and Federate to Compete. Collaborating and "federating" means learning to manage what you don't control or own, in other words, building economies of trust. You cannot serve individuals on their own because these needs don't conform to existing boundaries. "The emphasis shifts from contracts and legal sanctions to trust and transparency as companies work together, aligned with their customers' interests—sharing core values, business practices, infrastructure, and systems."

Paul Krugman in Friday's NYT re Goldman's record quarterly profits :

Goldman is very good at what it does. Unfortunately, what it does is bad for America. ... Let’s start by talking about how Goldman makes money. ... The business of moving money around, of slicing, dicing and repackaging financial claims, has soared in importance compared with the actual production of useful stuff.

Tracing both ends of the supply chain, from forest to landfill.

Helveta ... is tracking a million trees in southeast Asia, Africa, and South America ... gives every tree in a plantation above a certain size its own barcode. When a tree is chopped down, workers use a handheld computer to scan processing and export data into Helveta's database. Helveta's system can't stop determined criminals from selling illegal timber on the black market, but it does make it more difficult for them to sell or export the wood, as any timber processed without tags is considered illegal.

MIT's Trash Track program ... will use electronic tags to track waste in its trip through the disposal systems of New York and Seattle. The initial goal isn't to track every piece of waste that passes through--it's to raise awareness of urban disposal costs and the impact of trash on the planet.

As the economy becomes more highly networked, it must also become more transparent in order to remain resilient, says an article on networks of trust on NESTA's website:

...connections between financial, health, government, education and other institutions have always existed but there has been little transparency about these relationships. She cites the recent financial meltdown as a clear consequence of the highly networked but non-transparent economy.

... the challenge of creating a new transparent networked economy [is] “a gargantuan problem”… the answer won’t be found by looking to the past. “Organisations are connected and interconnected in ways for which there is no precedent in human history. The solution has to come from people on the ground. It certainly won’t come from academics – the disciplines haven’t even been created for the problems we’re now facing.”

Good point

From Time’s “10 Ideas Changing the World Right Now” special’s sixth section on Africa: Business Destination:

Aid even manages to silence those it is meant to help. “African governments become accountable to Western donors,” says [Andrew Rugasira, a Ugandan entrepreneur who founded Good African Coffee, the first African coffee roaster to supply direct to British supermarkets], “and Africa finds itself represented not by Africans but by Bono and Bob Geldof. I mean, how would America react if Amy Winehouse dropped in to advise them on the credit crisis?”