Posts tagged: capitalism
Fascinating, bracing article by Steve Denning in Forbes based on Roger L. Martin’s new book, Fixing the Game:
Martin says that the trouble began in 1976 when finance professor Michael Jensen and Dean William Meckling of the Simon School of Business at the University of Rochester published a seemingly innocuous paper in the Journal of Financial Economics entitled “Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure.” […]
The principal-agent problem occurs, the article argued, because agents have an inherent incentive to optimize activities and resources for themselves rather than for their principals. Ignoring Peter Drucker’s foundational insight of 1973 that the only valid purpose of a firm is to create acustomer, Jensen and Meckling argued that the singular goal of a company should be to maximize the return to shareholders.
Eye-opening, common-sense argument.
Every month, thousands of Indians leave their Himalayan tribes and coastal fishing towns to seek work in business process outsourcing, which includes customer service, sales, and anything else foreign corporations hire Indians to do. The competition is fierce. No one keeps a reliable count, but each year there are possibly millions of applicants vying for BPO positions. A good many of them are bright recent college grads, but their knowledge of econometrics and Soviet history won’t help them in interviews. Instead, they pore over flashcards and accent tapes, intoning the shibboleths of English pronunciation—”wherever” and “pleasure” and “socialization”—that recruiters use to distinguish the employable candidates from those still suffering from MTI, or “mother tongue influence.”
In the end, most of the applicants will fail and return home deeper in debt. The lucky ones will secure Spartan lodgings and spend their nights (thanks to time differences) in air-conditioned white-collar sweatshops. They will earn as much as 20,000 rupees per month—around $2 per hour, or $5,000 per year if they last that long, which most will not. In a country where per-capita income is about $900 per year, a BPO salary qualifies as middle-class. Most call-center agents, however, will opt to sleep in threadbare hostels, eat like monks, and send their paychecks home. Taken together, the millions of calls they make and receive constitute one of the largest intercultural exchanges in history.
Journalist Barry Estabrook has won two James Beard Awards for his writing about food. His newest book, called Tomatoland, is about … er … the tomato. More importantly, it’s about what it takes to grow food that can meet full-year, everywhere, low-cost demand and how the changes we’ve made to agriculture have both helped us and hurt us. You can read an excerpt, about growing tomatoes in Florida, at On Earth magazine. It’s a prime example of the kind of trade-offs Estabrook is talking about. To get a glistening red tomato in the depths of winter, you have to grow the fruit in a place and using techniques that pretty much ensure the tomatoes you do get won’t taste nearly as good as you want them to.
From a purely botanical and horticultural perspective, you would have to be an idiot to attempt to commercially grow tomatoes in a place like Florida. The seemingly insurmountable challenges start with the soil itself. Or more accurately, the lack of it. Although an area south of Miami has limestone gravel as a growing medium, the majority of the state’s tomatoes are raised in sand. Not sandy loam, not sandy soil, but pure sand, no more nutrient rich than the stuff vacationers like to wiggle their toes into on the beaches of Daytona and St. Pete.
Why bother trying to grow something as temperamental as a tomato in such a hostile environment?
The answer has nothing to do with horticulture and everything to do with money. Florida just happens to be warm enough for a tomato to survive at a time of year when the easily accessed population centers in the Midwest, Mid-Atlantic, and Northeast, with their hordes of tomato-starved consumers, are frigid, their fields frozen solid under carpets of snow. But for tomatoes to survive long enough to take advantage of that huge potential market, Florida growers have to wage what amounts to total war against the elements. Forget the Hague Convention: We’re talking about chemical, biological, and scorched-earth warfare against the forces of nature.
The tomatoes are always harvested when still green and hard so they have a long shelf life.
. “No consumer tastes a tomato in the grocery store before buying it. I have not lost one sale due to taste,” one grower said. “People just want something red to put in their salad.”
Unusually thoughtful article in TechCrunch (it tends to mostly be news/press release stuff) about the third-world “moral cost” of inexpensive first-world consumer goods. Some interesting thoughts and suggestions, although it concentrates almost solely on wages and working conditions, while ignoring pollution and environmental issues.
From the time I was in college, every person who really wanted to become rich - and I mean rich - went into investment banking. In the 1980s, this was the apex of career goals. No one I knew quite understood how these bankers went on to make exponentially more dough than anyone else could, but most of us didn’t much care. The idea of working with all those money-grubbers when I could eke out a living writing or reading or acting and speaking seemed horrifying to me. And I didn’t envy their money, and still don’t.
After all, the amounts they get become meaningless after a while. A human being can only consume so much before it becomes absurd or soul-destroying. Their vast and disproportionate wealth I thought of as a hideous prison for them. […]
Now I realize, of course, that their own moral wasteland became so vast that it threatened to eclipse all those struggling to make an honest living. And that changes the equation, doesn’t it?
Andrew Sullivan captures much of my feelings regarding the economic collapse in this essay.
Barry Ritholtz points at an article noting that in the recent job losses, retail sales jobs are being hit especially hard. The quotation he includes concludes:
Barry wonders:Some economists say many of those jobs will never come back as Americans wean themselves from the easy credit that’s fueled their consumption for the past 25 years.”
If the US consumer is no longer the engine driving global economic growth, what will replace them? Can China or India become mad gadget loving consumerists? Or, are we on the path to a much slower growing global economy — at least for the foreseeable future?I wonder: What is the proper economic model for the future? Is it time to re-think the capitalism model of continuous growth, and perhaps switch to something more sustainable?
