Saturday, February 8, 2014

Truth and Reconciliation

Those of you who are managers may have been offended by our last two posts, Stupid Management Tricks and Ambition? Or All In?. If so, we want you to know that we wish you well. We just think that you wield too much power over your employees.

We know that some of you are wonderful managers who are beloved by your employees. Hey, can we come work for you? On the other hand, some of you are not wonderful managers.

If you are familiar with South Africa's Truth and Reconciliation Commission, you know that it was set up to deal with the effects of apartheid as part of the end of apartheid. We think it was a very wise approach because the purpose was not to identify and punish the guilty, but to bring the truth into the open. They recognized that trying to punish most everyone in an entire society guilty of discrimination, human rights violations, and violence was an impossible task, one in which the truth would get lost among all the lies. The attempt itself would become an open sore on the society, leading to many more years of violence, and give rise to witch hunts.

Instead, the Commission just asked for the truth. Those who testified could apply for amnesty and receive no punishment for their actions. Victims were identified and compensated. This approach rapidly led to peace and to the end of apartheid. Reconciliation was accomplished very quickly, in our view.

In the same spirit, it is not our purpose to criminalize managers or rich people. It is our purpose to get them to see what they do in a new light. Some of the things they must do, the things they would rather the public not know about, are no longer necessary.

For example, take the period of the Great Recession in the US. Some of you were managers in that period. Some of you knew about coming layoffs and concealed that information from your employees. In answer to their anxious questions, you outright lied to them. Perhaps you even painted a rosy picture of the future for them. After all, morale had to be maintained.

Then you laid off your employees. In tens, hundreds, even thousands. There you were, knowingly dumping them into a terrible job market, knowing that many of them would lose their homes and not be able to support their families. Perhaps their families would break up. No one we want to know would feel good about that.

You had to do it because you were ordered to do it. It was your job and your responsibility. They told you it had to be done. But if you are a decent human being, you did not like it and you wish it had not happened.

The trouble is that it was not necessary. These days most human suffering is caused by humans. For example, here is what John Maynard Keynes said at the beginning of the Great Depression:
"This is a nightmare, which will pass away with the morning. For the resources of nature and men's devices are just as fertile and productive as they were. The rate of our progress towards solving the material problems of life is not less rapid. We are as capable as before of affording for everyone a high standard of life ... and will soon learn to afford a standard higher still. We were not previously deceived. But to-day we have involved ourselves in a colossal muddle, having blundered in the control of a delicate machine, the working of which we do not understand. The result is that our possibilities of wealth may run to waste for a time — perhaps for a long time."
We generally agree with Keynes here, especially regarding our times and the Great Recession. We are now many generations off the farm and we are generally much better educated than people were in 1930. We all know the work that we have to do to keep everyone fed, clothed, sheltered, and in as good health as nature allows.

Despite that, we allowed our highest economic and political leaders to blunder (as Keynes said) in the control of the delicate machine. The competency and good will of our leadership was and is in question. How could the Great Recession happen? If it was not intentional, then why is the system so delicate? How is it that our highest leaders would allow digits on their balance sheets to lead to a huge economic mess and increased human suffering?

The explanation is that the natural result of capitalism is rich people, but rich people are not devoted to capitalism. They are devoted to keeping and increasing their riches. Once the rich become rich enough, Adam Smith's "invisible hand" suddenly becomes visible, and at that point, things are wide open. You can then pick your metaphor for how the rich destroy the system that made them. The heavy finger of the rich tilts the playing field in their favor—something that can only be expected. They just take advantage of their advantages, but they have a lot more advantages than we do. They change the game in their favor. They distort the markets in their favor. The rich cheat, if you will, although in general we do not think of it that way. See our post The Guilty Innocents.

It seems obvious to us, therefore, that the way to make the system more robust is to separate the rich markets from the poor markets. Make the competition balanced in every market. The rich can only destroy the markets in which they compete.

Naturally, splitting up markets and currencies is not a capitalist thing to do. It must be done by governments. Some might not like that, but we ask you. How much less capitalist would that be compared to what we do today? When governments borrow trillions (from the rich) to keep the private banks from collapsing?

Coming back to management and today's managers, we think it would be a lot less stressful for well-intentioned managers if laying people off meant just lost income, not also lost livelihoods, loss of homes, and possibly the breakup of families. The whole employer-employee relationship would be less tense than it is today. Especially during economic downturns, employees would never feel themselves under the almost life-or-death pressure to keep their jobs. Employers would not have to deal with those emotions.

For those of you managers who enjoy having an almost life-or-death whip hand over your employees, we do not have much use for you. We think you are bad managers. We are not out to punish you, but we want to take the whip out of your hand.

For those of you managers who are well-intentioned and sympathetic toward your employees, we want you to be able to exercise your leadership rather than a whip that you are uncomfortable using. We think that under our system, the employees of bad managers will migrate to you and your benign leadership. Ultimately bad managers will have no more employees and be driven out of the system, improving life for everyone.

Finally, managers would be able to both hire and fire faster and easier. We think that under the current system, the consequences (or costs) of firing someone is too severe for both the employee and the employer. This feeds back into the hiring process, where taking someone on must be weighed carefully against the possibility that you will have to let them go. If workers could change jobs faster without fear of personal financial destruction, they would find their best-fit employment more quickly. There should be major economic advantages to that for our entire system. Economists these days talk about the problem of "sticky wages" in economic downturns. Perhaps we have a solution to that for them here at

The way capitalism should be.

Socialism for the socialists and capitalism for the capitalists.

TheOtherSideOfCapitalism (

Copyright © 2014 TheOtherSideOfCapitalism

No comments:

Post a Comment