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I have, for my sins, worked for the majority of my working life in a large, rapidly "modernising", rapidly globalising business.  Management theory goes through a lot of fads and phases, but the following policies where explicitly developed and followed throughout this period.

  1. Use technology to automate whatever processes could be automated - in order to improve consistency of quality and reduce labour costs

  2.  Use computer systems to standardise and rationalise business process - to achieve economies of scale and negotiation leverage in procurement

  3.  Outsource all non-core activities to specialist firms - who can generate savings through their own economies of scale and exclusive focus on those activities - e.g. catering, security, transport, maintenance, admin support services etc.

  4.  Reduce "headcount" of core employees (and associated salary and pension costs) by outsourcing all seasonal, periodic peak, and project and exceptional work requirements so that the long term employment/pension commitments of the firm are minimised

  5. Continual refine and reduce the definition of "core" so that in the end even production and key administrative tasks are globalised and outsourced to cheaper labour countries.

  6.  Retain only IP (intellectual property) and brand equity as core competencies/activities and outsource the rest of at all possible.

  7. Outsource risk wherever possible - by setting up subsidiaries or contracting to third parties

The effect of these changes has been to reduce the core workforce to perhaps 10% of the peak - despite ongoing increases in the volume of production/sales.  Initially the outsourcing affected only low skill, peripheral jobs, but increasingly managerial and professional jobs were automated or outsourced as well.

The benefits for the business were the almost total focus on high margin, knowledge intensive activities which leveraged the core competencies, brand assets, and unique selling points of our products.

The impact on society is that very few elite workers can now look forward to a career in extremely well paid  and high skill and relatively secure employments.  However even senior managers are being employed almost exclusively on short term rolling contracts and most have to effectively reapply for their own jobs on a regular basis - as part of twice annual reorganizations which marginally effect how jobs are scoped and defined.

Ultimately this leads to extreme insecurity for all, with everyone looking after their own personal, short term interests - often at the expense of the longer term interests of the business as a whole.  Loyalty to the business - i.e. long service personnel - come to be seen as dead wood who need to be moved on.

The smart guys (and increasingly gals) are ruthlessly self centered in everything they do, make sure that mistakes are perceived as someone else's fault, and move jobs/company rapidly to prevent their short term thinking and mistakes from catching up with them.

Those who play this game successfully get very rich indeed.  The vast majority find themselves having to make very long term personal commitments - marriage, children, mortgages etc. - whilst having only short term security.

Everyone is working an awful lot harder than they used to - and most enjoy the work a lot less - although it has to be said that many of the rigidities of the older hierarchical systems also stood in the way of younger, more gifted, and more entrepreneurial individuals fulfilling their potential.

This "anglo disease" model of business is in stark contrast to some of the more stable business models still found in Japan and continental Europe, but it still seems to be the dominant model world-wide - particularly in global corporations.

There are a lot more opportunities for able, well qualified younger people today, but they also have to work a lot harder, sacrifice a lot more of their social life, and many will ultimately end up in low paying "outsourced" jobs with poor pay and few prospects.

Some will be lucky and find some very well paid niches as self employed or small business entrepreneurs, but the general level of insecurity is much greater for all.  All of this works fine when there is near full employment and there are always other jobs to apply for.  But in the current climate many will simply fall off the employment conveyor belt with few prospects of re-employment - and a lot of debts incurred to fund the long term life decisions which had to be made on the way.

The "anglo disease" has seen a huge transfer of power and wealth to the super wealthy.  Peak oil has also seen a huge change in the balance of power and wealth in favour of Oil/ressource rich nations.  Both will result in the virtual demise of the formally secure middle classes, and the creation of a vast working class with almost no long term job security.

The social and political implications of this are huge - the individualization of society and the creation of "dormer towns" with virtually no community life. The outsourcing of childrearing and care of the aged, and a political instability which will put enormous pressure on Governments to deliver economic growth sufficient to deliver additional jobs in the face of all the headwinds to employment cited above.

There will be an increasing class division between relatively secure and well paid/pensioned public sector workers and increasingly insecure and impoverished private sector workers - all the time obscured by "statistics" which show average private sector incomes growing when in fact it is the wealthy and those few in secure elite employments who are achieving all the growth.

The "privatize the profits" and "socialize the losses" model of economic development is happening at the individual level as well - and resulting in increasing inequalities at every level of society.  Qualifications inflation will make the going tough even for the highly skilled and educated.

Don't get me wrong.  The ancien regime had many crass inequities as well.  However the social supports for those who fail seem to be getting less and less.  It's everybody for themselves now.  Social solidarity went out with the Unions and the socialists.  Remember them?

"It's a mystery to me - the game commences, For the usual fee - plus expenses, Confidential information - it's in my diary..."

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Thu Jul 10th, 2008 at 07:39:25 AM EST
excellent comment, Frank.

top-notch, concise, and precise summation of anglo disease symptoms.

this is the progress and development the third world is falling over themselves emulating.

makes you wonder...

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty

by melo (melometa4(at)gmail.com) on Thu Jul 10th, 2008 at 08:03:03 AM EST
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In the USA add in the dolorous effects of the "for profit" medical insurance racket, health care system and ad driven drug sales by Big Pharma.  In many areas, those  in small businesses do not have access to quality medical insurance.  Instead, they get to pay the same as those who do, but get only a maliciously gamed shell of a policy which seems to work until one needs it.

Government employees at almost all levels have "primo" medical insurance, job security, relatively high wages and excellent retirement benefits. This is one reason for the push to "privatize" public sector services where possible. (Another reason being to provide opportunities for well placed elites to suck money out of taxpayers pockets.) In the private sector it is much as Frank describes.  The "core" portion of large and medium companies has shrunk dramatically.  Better be in it or get a public sector job.

The only path I see out of this disaster is to delegitimate the justifications for the current system and put in place tax structures and social and economic policies that favor substantial investments in projects that provide real value to society and that pay a living wage.  Rebuilding our energy and transportation infrastructures would be a start.  If the current "financialization" fiasco continues to collapse as spectacularly as has been the case for the last year, the entire parasitic financial sector could be self eliminating. The challenge is to prevent most people's lives from being destroyed in the process.  This is made all the more daunting by the fact that the relevant supposed regulatory agencies, The Fed, SEC, etc., seem concerned not with the public well being but with protecting the interests of those financial institutions and those who run them.

In the 19th century labor protests regularly met with violence from police and state militias. This continued up through the Great Depression.  One wonders if we have regressed to that state--yet.

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu Jul 10th, 2008 at 12:23:13 PM EST
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