Rooting Problems

Gardening has been a big part of civilization for over ten thousand years.  Since all of us rely on it to live, it’s hard to overstate how important agriculture is to humanity.

No surprise then that, when a weed or other undesirable growth appears in our garden, we make great efforts to eliminate the problem weed.  We also know that we have to pull it out by the roots, otherwise the problem weed comes back.

Hence the term, getting to the root of a problem.

Business deals with problems all the time.  These problems are very tangible within industry where machines are used and built.  Problems show up in a physical form, and can be annoying, or catastrophic.  Large firms have collapsed because of some problem that wasn’t caught until too late.

For that reason, most companies use a system that actively looks for problems before the customer sees them.  And when that problem shows up, the company starts asking questions.  Who, what, why, when, where, are all part of the mix.  But there is one question that rules them all.

What is the ultimate source of this problem?  What is the root cause?

Some companies ask “why?” as many times as it takes.  Some companies “drill down.”  In all cases, management understands that unless you find the deep reason mistakes are made, they will happen again.  This system works, and the most successful companies adhere to these principles tightly.

Why don’t we do the same thing as people regarding social and behavioral problems?

Pick a problem, any problem.  Abortion.  Gun violence.  Drug use.  Electing dictators.  Confusion over truth and lies.

Now, think about how we currently “handle” the problem in society.  Here in the USA, they are usually ignored, with the barest superficial form of action being taken in order to stave off public unrest.  Until the next time.

No one asks the hard questions, and certainly no one dares go beyond those to even harder questions.

Abortion:  Why does a young woman get pregnant in the first place?  Where is the father?  Where are the other family members?  Will society take care of this child once it’s been born?

Gun Violence:  Why must the entire US population be allowed to carry lethal firearms?  Are the current restrictions sufficient?  (Babies can’t buy guns, and you can’t take them into Congress for some reason.)

Drug Use:  Why are users and their pushers always caught, but never the boss, bosses boss, or higher?  Why are the corporations that ultimately make many of these drugs immune from retribution.  Why can’t low-lethality versions be designed and de-regulated for general use, obviating the need to import deadly versions?  Why are so many people using them anyway?

I don’t want to keep boring you, but you get the point.  Ask questions.  Dig.  Then dig deeper.  You may not like what you find.  But when you eventually pull that weed from your garden, you can rest.  You’ll know it shouldn’t be coming back.

 

FUN Science time

Did you know science could be fun?  Yes, science.

Archimedes did it.  Einstein did it.  Now we can do it, too.

I’m talking about doing a thought experiment.

In fact, not only a thought experiment, but a thought present for YOU.

Let’s make you rich.  Really really rich.

No, not as rich as Gates, or Buffet.  Richer.

Not as rich as Bezos or Zuckerberg.  Richer.

Not even as rich as the entire USA.  Richer.

This is a thought experiment.  We can go where it’s impossible to go.  We can go to the very extremes of possibilities.

YOU

OWN

EVERYTHING.

As of this moment, there is no income, no particle of wealth, absolutely nothing of value that you don’t own.  The queen’s jewels?  Yours.  The queens toilet and toilet paper?  Yours.

That donkey raised from a pup by that Himalayan monk no one has seen for several decades?

Yours.

The question for us behavioral scientists is this.  What happens next?

If economists were any good at what they did, they could answer this.  But they can’t.

In reality, you’re going to spread the wealth.  After all, you’re going to want to eat.  You might even want a companion.  All of that costs something.

People who have “your stuff” might feel that you are far enough away that they don’t have to pay you for it.  That Himalayan monk?  Chances are you’re never going to meet him.  Good luck getting that donkey back.

Of course, the incentive for anyone else to work will be diminished.  But they have to eat as well, so there’s a chance that a shadow economy will emerge, based on bartering and some other items considered valuable.  Your items of course, but how will you know?

Slowly, surely, your own wealth will be spread around, so that some kind of work will begin again.  But how quickly?

The problem is that you also own everyone’s assets.  So even if someone works in a restaurant to feed you and others, you will receive the profits.  Which means, ultimately, you get even richer.

Enough fun.  How about comparing our experiment to today?

Today’s world does have a Gates, Buffet, Bezos and Zuckerberg.  These people do have incredible levels of wealth and income compared to select individuals of the past.

How does this impact the rest of society?  Is it a good thing?

There are those who tell me that rich people are good for the rest of us.  But in the beginning there were no “rich” people.  What does that mean?

It means we need to think about this, more, better, and deeper.  And it means we need to do more thought experiments.

Careful though.  They can be too much fun!

 

Business Lessons

There are many things you need to have your own successful business.

Money is a good start.

You also need enthusiasm, your own and that of your friends and relatives.

You’ll need optimism, and perseverance for when things get tough.

 

I’ve been blessed in that my family had all these things, and more.  I’m going to touch upon little things here and there that you’ll also need to think about, that aren’t normally covered.  In our case, many of these things were mistakes.

We can learn a lot from the mistakes of others, but for some reason, most business people don’t like to admit them.  They think it makes them look weak.

Since I’m more of a teacher than a business person, I don’t mind.  Here’s the mistake.

Remote working locations.

Not remote as in someone telecommuting from their home.  No, this remote has to do with how our offices were set up, or not set up as the case may be.

As a young growing manufacturing company, we occupied rental units.  Each rental unit was about 1000 square feet (about 100 square meters).  Each rental unit had a front door, a back door, a bathroom, a garage door in back, and some office space in front.

Our little business grew, and we started in one rental unit.  The next year we needed two units.  Over the next few years we needed four units, and a few years after that we had five unit.s

Here’s the problem.  Only a few people could work in the office space of the first unit.  As we hired more people we had to put them in offices in some of the other units.

It’s taken me twenty years to figure this out, but the further away people were from everyone else, the more likely it was for them to “go rogue” and do something harmful to the company.  It was also more likely that they would goof off and try to get away with being lazy.  We put lots of other measures in place to catch them, but the fundamental truth was this.

We were spread too thin.  Many people like being secluded, closing their door, and doing what they want to do at the expense of the company, their coworkers, and the customers.

So, next company I start, everyone works in the same space, whether they like it or not.

Everyone watches everyone else, because we are all in this together, whether they like it or not.

I hope this helps you, too, you budding entrepreneur.

Good luck.

 

Killing Assumptions: Billionaires Create Jobs

A friend wants me to read his favorite book, part of a series that has to do with “Killing” the character of both people and countries.  This one is entitled Killing England.

I’m not looking forward to reading it, because the supposed writer (probably a true background writer) isn’t known for rigor.  I’ll review it here, soon enough.  But it got me to thinking.  We should focus on killing other things besides someone’s character.

For instance, we should reveal “economics” for what it truly is, economombo.  Mumbo jumbo.  Statements and constructs that are invalid, irrelevant, and counter-productive to society and science.

Let’s start with something very simple.  It’s a statement I’ve heard many times, even repeated by my Aunt as a fundamental truth.  And she’s as far from being an academic as you can imagine.  Here it is:

Billionaires create jobs.

Her logic follows this path.  A billionaire buys a business or industry.  The value goes up.  Everyone gets richer.  Therefore all the employees and shareholders are better off.  Profits go up.  So there’s more investment, and this creates new businesses, new industries, and therefore … MORE JOBS.

First off, why would my aunt say something like this to begin with?  I may have observed that some billionaire was trying to consolidate an industry (there are many examples, here’s one), and she retorted with her statement, essentially justifying why government shouldn’t stand in the way.

Of course, she’s forgetting why anti-trust laws were put into place way back when.  She’s also very enamored of wealth in general, even though she doesn’t personally benefit.  But let’s focus on her stated assumption.

First of all, the “value” of a company is usually given in terms of the market value.  In theory, the people trading stocks do so perfectly, only looking at the long term profitability of the company.  In reality, there are a lot of people trying to make money on stocks, willing to sell them if they need the money.  So the stock market value is a good measure of people’s willingness to bet on something.

Secondly, just because the value goes up doesn’t mean there are more jobs.  In fact, one of the reasons a company’s stock price goes up is because they eliminated jobs.  This is particularly easy when you consolidate an industry.  If you buy four companies, each of which has a president, an accounting department, R&D, and a factory floor, how can you save money?  Eliminate 3 presidents, 3 accounting departments, all four R&D departments, and think about consolidating those 4 factories into less space.

Third, what about that billionaire’s willingness to take on new investment?  Certainly that creates jobs.  Except for one small thing.  Billionaires are famously averse to risk.  They like betting their billions on sure things.  That’s why they buy companies, and don’t invest in R&D.  That’s one of the reasons they stay billionaires.

Next time you meet an economist, see what she says.  And have fun.

 

Shivanomics

The time has come, as it must for all things weak and unproductive.

The old tree becomes dry, hollow, and falls to the ground, fertilizing the next generation of flowers.

The old man leaves his home feet first, enabling a young couple to move in.

Who is at the bottom of all this change?

The pantheon of Hinduism has a great character for this, the god Shiva…

… the destroyer.

For you must destroy in order to create anew.  Get rid of the old, bring in the young.

The time has come for that to happen to one of the oldest behavioral studies we have:

Economics.

Economists have failed us in so many ways that it’s difficult to describe.  In simplest form, consider these damning accusations:

1. No economic model has any predictive value.
2. After so many years and dollars of investment, there is yet to be a single (actual) statement that can be considered a LAW of economics.  Not one.

It’s best if we leave this simple.  And here’s the simple solution.

Shiva.

Yes, the destroyer must come and eliminate all things economic.  All tenured positions, all funded chairs, all areas of grant funding.

Shiva must visit the Nobel committee and get them to rescind the award, saving it for something more meaningful.

Shiva must erase every professional in government, banking, and finance house that carries the title of economist.  Shiva must come with her large eraser and make every journalist, every commentator, and every column that refers to economics go away.

That is what must happen for the situation to improve.  For now we spend so much time, energy, and money asking experts for their insights, and they have none.  For this they are never punished.

And for that, we must plead to Shiva.

It’s time to study Shivanomics.