Today’s macho managers preen themselves on being “tough guys” and hard-nosed negotiators (including the women amongst them). They’re always out to wring another few dollars from every deal, even if it means squeezing suppliers unmercifully and cutting costs to the bone. They don’t care about fairness: profit is all that matters and the other person’s loss is their gain. Read the full story
Psychopathic captains, promotion by intrigue and treachery, no job security, and a ruthless financial short-termism. Does that sound familiar?
(This is a guest post by John Fletcher. John is an Englishman now resident in Europe, with a long career in the public sector in several countries. He has spent a good deal of time in working environments outside the Anglo-Saxon world, and has written and lectured on organizational issues.)
When the finance company Bear Sterns went belly-up a few weeks ago, my first thought was, “what’s that?” I had never heard of it before; nor had most people, I suppose. But my second thought, on reading that apparently fourteen thousand people were going to lose their jobs as a result, was, “Fourteen thousand people? What an earth can they all be doing for a living?”
It was the collapse of Bear Sterns that made many people realize, for the first time, that there is an immense shadow financial system in the world economy employing hundreds of thousands, maybe millions, of people, and largely devoted to trading in all sorts of arcane financial products with other people’s money. The fact that this system has grown geometrically in the last generation has had some significant, and unforeseen, consequences — and even for how we think of work itself.
Of privateers and pirates
When we try to make sense of this shadow financial system, it’s tempting to compare it to a casino. That’s understandable, but not really accurate. At a casino, nearly all the players lose nearly all of the time, which hasn’t been the case with the bond dealers of the world until recently. Perhaps there’s a better analogy, and one that is more worrying for what it suggests about many of the world’s economies.
The late 17th and early 18th centuries were the great age of piracy in the Caribbean. The pirates, operating, oddly enough, from the sites of some of today’s hedge funds, like the Caymans, preyed on respectable traders in precious metals, as their successors do today. Indeed, the comparison between the two is one that today’s traders seem positively to invite, with their vocabulary of dawn raids and buccaneering CEOs, their backstabbing, wealth-at-any-price ethos.
In spite of their “yo-ho-ho” Hollywood reputation, real pirates were parasites who preyed on anyone weaker than themselves. But they were a very small part of their economy compared to their equivalents today.
Economics textbooks try to persuade us that commerce works because far-sighted entrepreneurs recognize demands and respond to them. That may have been true, to an extent, in the past, but much of today’s economy is itself parasitic in nature, trying not to address a demand, but to create one. The new-style financial services industry — getting on for a quarter of the US economy — has been a particularly extreme case.
Whatever was true in the past for old-fashioned lending banks and insurance companies, the industry today is one huge pirate flotilla, ripping off the world economy by selling people debts they can’t repay so that they can buy things they don’t need. As a result, there are factories, shopping malls, and residential areas today in danger of being as gutted by pirate financiers as any port ever raided by Blackbeard three centuries ago.
Some disturbing comparisons
What are the consequences for an economy where so much is owed by so many to so few? Can people really be happy working for organizations which exist to rob and pillage? We don’t know much about the personnel management and career development practices of pirate ships, but we can assume they weren’t particularly enlightened. Reports from the time speak of psychopathic captains, promotion by intrigue and treachery, no job security and a ruthless financial short-termism — a short life and a merry one, as the famous pirate Bartholomew Roberts put it.
In the end, it wasn’t just government intervention that closed the pirates down; it was also that there was nothing left to steal. Shipments of gold and silver from the New World had slowed almost to a trickle. Similarly, the financial services industry today has no more money to lend, and people can’t take on any more debt anyway.
But whereas there were, at most, only ever a few hundred pirates, their modern descendants must be numbered in many, many thousands — and many are now faced with the task of finding a legitimate job as their industry collapses.
If the financial services companies are forced to walk the plank in the next few years, it’s going to be sudden death for most of the new pirates of the Caribbean. What — and who — else will they take down with them?
According to Knowledge@Wharton (“In the Game of Business, Playing Fair Can Actually Lead to Greater Profits”), the conventional, macho confrontational system of management is likely costing your business money.
When the finance company Bear Sterns went belly-up a few weeks ago, my first thought was, “what’s that?” I had never heard of it before; nor had most people, I suppose. But my second thought, on reading that apparently fourteen thousand people were going to lose their jobs as a result, was, “Fourteen thousand people? What an earth can they all be doing for a living?”
