There is a Maori expression:
” He aha te mea nui? He tangata. He tangata. He tangata. “
” What is the most important thing? It is people, it is people, it is people. “
So, what is the relevance of that? Well, try this out for size then.
” When there is more than one of you in your organisation, you are in the people business.
You are not in the food business, a service industry, the widget business, the medical profession, or whatever other business you may think you are in.”
” You are in the people business – always remember that! “
Now I am not coming at this from some woolly “love the people and hug the trees” sort of perspective. I am coming at this from the perspective that no-one is an island, and none of us exist except in so far as we are part of a society. If you break that society you will fall with it. United we stand… etc, etc.
But I don’t think most people have a good appreciation of the true extent of that. And for far too many there is an active disengagement and wilful blindness. Specifically, I am saying there is no economy without people. The economy IS people. If you exclude people from the economy you reduce it and weaken it… and eventually you kill it.
But more and more of the economy is structured to do just that. By out-sourcing, or automation, or whatever, we have created structural unemployment. I know the reasons why it is happening and the answers are not easy, but it is a cancer that will kill us if we leave this trend to continue.
The economy is people producing and consuming. People working, earning, investing, eating, shopping is what an economy is. It is a circular system. If you break the “sacred” circle, the “evil and darkness” will get in – so to speak. Perhaps a better analogy is a spinning top that is out of balance. It will wobble more and more until it throws itself off its axis and tumbles.
Business is people, people are business, the economy is a people business. It has to balance, it can’t exist without being a unified whole.
Throwing people out of work diminishes the economy. And in light of the fact that governments have tried and failed repeatedly to create employment, or create the conditions for employment. Then we are going to have to seriously re-examine our systems of government, employment and economics. The cracks in our present systems are getting far too extensive to ignore or paper over any longer.
So where to start?
If everyone previously has tried and failed to solve the employment/wealth/prosperity problem, what is there new to solve things now?
Let me see if I can answer that obliquely.
I understand that for a business making widgets, for instance, there are pressures to control costs and to be competitive. Also there is a price point that needs to be met in order to have a workable business plan. Additionally there is the problem that often the input factors are a moving target. It’s hard, there are no guarantees and there are big risks.
You would wonder why anyone bothers. Part of the answer is because there can be big rewards too. But even in good times, something like 90 of new businesses fail within two to five years. That shows how hard it is (or how bad organised most businesses are).
Could things be made easier for new businesses? Yes, most definitely, but I will leave those issues for another Post.
What I want to concentrate on here is business and people. Basically a business has capitol and income – to pay for all the expenses – and to make a profit. If you set up a business it needs to pay its way. It needs to pay off its capitol expenditure(or borrowings), it needs to pay its taxes, utility bills and rent, its stock and materials inputs, and the income/return to the business owner. Then too it has to pay for its staff – its wage bill. Of all of those, the only one that has any real flexibility is the wage bill. That is the only area the boss has any real control over. The rest are pretty much locked in stone. Incidentally, these factors are also the reason why scale is important, why big business is the only business that can push back on the total costs and preserve their margin – and survive and prosper. Unfortunately they also have the most leverage over pay and conditions.
So if the personnel and wage cost are the easiest or only way to save money and control costs, then cutting back on staff and pay is what will happen, there is no other real options.
But, but, but…
If you fire all the workers and only pay subsistence wages, who is going to buy your widgets? Henry Ford understood this and was happy to pay his employees more on the expectation that then they could and would then buy his cars. In fact this dynamic has been understood for a long time, but no-one seems able to square this circle anymore, to be competitive but still pay well.
On the other hand, would you really want to employ tens of thousands of people making widgets anymore anyway? If you could do it with two people why would you want to use two thousand? There were plenty of industries in the past that did just that, their employees used to pour out of the factories at knockoff time in human tidal waves. It was certainly a visual spectacle and kept a lot of people in employment. That was good insofar as it spread the wealth around, but it was also pretty hopelessly inefficient. It only looked good compared to what had come before that. So that isn’t an option for the future, we can’t just put people back in the factories and expect that will give us full employment and a vibrant economy again. Things have moved on, our societies and economies will need to too.
Particularly as we are already in a situation where our productive capacity in many ways already outstrips our capacity to consume. For a whole variety of reasons we don’t need or want hundreds of millions more cars, planes or plastic bags; suburbs, shoes or shopping malls. Enough already. Industry, in terms of manufacturing, needs to be rationalised in all sorts of ways and that is inevitably going to mean the manpower to run it as well. We simply are not going to be able to afford to waste so much of our resources on this sort of thing. Farming has reduced itself down to around 5 percent of the workforce, and manufacturing will have to do similarly.
Which leaves us with a LOT of people left over to find something to do with. But critically – you can’t just kick them to touch and say they are redundant. They are not. They ARE your market, they ARE the economy, and they MUST be integrated properly back into it.
One of the catch cries in the recent past has been the “Services Economy”. Although that has gone pretty quiet lately. The ‘services’ economy has been shown to be minimum wage jobs slinging Lattés and burgers, or servicing tourists and shoppers. But if most people are only on minimum wage, or the economy turns down and they are all getting quietly laid off, who exactly is supposed to be buying all these coffee’s, burger , bed-nights and bullshit? While there may well be a need for a service based economy, that particular business model has been shown to be bankrupt.
The other avenue that has also been tried and found wanting is government, the public service. One way or another, all around the world we have had governments effectively trying to prop up their national economies, by being the employer of last resort. Government bureaucracy headcounts have exploded. Twenty seconds thought would have told you that is completely unsustainable. You can’t tax people to pay them to then tax them again etc, etc. As governments only take money from one sector to give to another (and waste a percentage in the process), then anything over circa 10-15% involved in that process will only end up hurting more than it helps. What it has done to date though is create the simulacra of relatively high paying jobs in an economy where there are precious few otherwise. We are also faced with the problem that far too many of the highest paying jobs in the private service sector are in things like the Law and Finance, where all they really do is create parasitic drag rather than growth or prosperity. We pay people hugely – to do things we don’t really want them doing – Duh!
So where does that leave us, where are the jobs and the work that needs to be done that actually produces something positive?
Well, its not, farming, manufacturing, retail services or government. Likewise scratch a bunch of parasite occupations that need to be actively discouraged.
And that leaves what???
He tanagata, he tangata, he tangata – it is the people, it is the people, it is the people.
We are in the people business, we need to find a way to structure our society and economy to utilise and enrichen people.
For instance, currently we incarcerate huge numbers of people every year for crimes. OK, fair enough, those people were a menace. But what do we do with them once they are locked up? They certainly cost a huge amount to feed, house and manage, but what do we do with them while they are in custody? Do they come out the other end of the system as reformed, productive members of society? Or do they come out just the same as when they started. Only to feed straight back into the courts and prisons once again. Isn’t it actually an admission of the failure of family and youth care, and the education system, that such large numbers are in prison in the first place? What sort of society produces that sort of result?
In how many ways do our social structures fail? Alcoholics, drug addicts, and gamblers. Vandals, thieves and fraudsters. The unemployed, the disabled, the psychotic, the scared and the suicidal. How can our society and economy work when our people don’t?
How exactly do you go about dealing with all these issues, and how you go about paying for it, when many governments and government agencies have tried and failed already? I am not going to try and pretend I have the whole answer or the blue print for that. It is going to have to be a continuing evolutionary process.
But – the social arena is where I am saying the answer is going to start to be found.
Actually, this doesn’t have to be managed from central government. Schools and education can be released to work at grass roots level as private enterprise. It doesn’t have to be a monolithic, uniform, and centrally controlled State enterprise. Education can be run by private enterprise in large part, and it can employ a lot of people too. Where they are needed and wanted, not where the department of education decides it is most convenient and proper. Prisons too can be a very different beast. Let those organisations that think they can provide a better option and result, tender for the chance to look after and reform a bunch of inmates. Maori organisations have been calling for the chance to do that for years. Let them try, they simply can’t do any worse than we do already. In fact, let anyone who reckons they can do a better fist of anything have the opportunity. Of course there would be appropriate monitoring, and it wouldn’t just exploding into existence overnight. But lets at least start moving in a better direction.
Aged care, health care, custodial care, education, any voluntary community services, they are all jobs, they are work and they could be paying jobs at that. Albeit we would have to find a way to restructure how money flows through our economy. So that it does go towards the things that we need done in a proper civil society. What is more, these are human things that need human interactions and provide humane job satisfaction. Think of the sort of things we most basically need people to do for other people and then think about how that might be a paid job. One of these that I am interested in but haven’t to date figured out a good answer to, is child care and rearing. Society needs a constant production of new babies and children, we need mothers having and raising their (and our) children well. It needs to be supported properly, even paid for somehow. I know a lot of people are very critical of the Domestic Purposes Benefit, but I think that is largely misplaced. So a young woman gets pregnant and goes on the Dole. Seriously, that need not a tragedy, not if she is supported well. The benefits far outweigh the costs in the long run. Looking after our young couldn’t be a more essential job. Everything from Plunket to sports teams are an important part of that work, and it is work, why can’t it be a paid job.
Basically what it means is that government is going to have to give up its obsession with total control over every aspect of everything. Regulation would come within the governments orbit of course, but this also doesn’t need to be done the way it has been. There are strong arguments that government control and monopoly of so much of society and our economy is the reason for so much of our problems in the first place, Not only does it do the wrong things often, it does it badly as well. Directing time and money away from were it would have gone otherwise. What it does might not be a total dead loss, but I would argue that in the order of 50% is. For something that adds up to approximately 40-50% of our economy, can we afford to be wasting, one way or another, 50% of our effort and resources.
If manufacturing has found so many ways to improve efficiency, who would argue that government and the public sector has as well. Patently the trend has been the other way. How much would our economy be transformed by channelling 20-25% of our wealth and resources back into genuinely productive endeavours.
No it wouldn’t be an easy change to make, on many levels, if only because it would involve changing people minds and habits (something we are notoriously reluctant to do). On the other hand it isn’t impossible or even impractical – I am arguing it is even manifestly essential.
Wresting control of our lives and the economy away from governments and the mega corporations is no small order, but we already know what the cost is of not doing so. Large organisations have a life and imperatives of their own, people come a pretty distant second in that system. We need to make people the centre of the equation, not simply the dollar or the organisation. The dollar is not the economy, people are.
He tanagata, he tangata, he tangata