Friday, January 16, 2015

The Whole Story

When you don't know the whole story, you base your decisions on the bits you understand. More power lies with how you spend your money than how you cast your vote. The same political parties seem to ebb and flow in power. Capitalism responds quite quickly to demand. Google recently announced that they would stop marketing Google Glass. Not enough people wanted it. Nokia has been hammered. Blackberry. Kodak. For all the bemoaning of corporate power, companies that don't respond to evolving customer desires die. One issue with things getting bigger is that we don't understand all the bits of the story. What we say we want is also not always reflected in our behaviour. The Economist recently wrote an article about the declining service levels in 'cattle class' international flights. People complain about service but always buy the lowest cost tickets and accepting deteriorating service. Sarah recently shared an article about the price pressure being placed on dairy farmers. The benchmark real cattle class is clearly going to be doing the same thing as the flying human cattle class, except without the ability to complain. Price is like fat and sugar. If you are genuinely interested in the whole story you need to step back and take everything into account.

I don't claim there aren't vested interest, and companies do have some ability to eek out a living on life support. Often this life support comes through anti-competitive regulations with a touch of irony. The Tobacco Industry is a case in point. By not allowing advertising, it becomes very difficult for new players to enter the market. By loading taxes on cigarettes, the incentive for tobacco companies to compete on price goes away. When tax is by far the biggest part of the price, customers won't even notice if huge cuts in profit are taken to try and seduce them. So Tobacco companies are profitable. And there are lots of people who still want to smoke despite knowing the health effects. 

I don't like conspiracy theories. The world is too complicated in my view for any handful of individuals to effectively secretly administrate and orchestrate the woes in the world. I also think sometimes we don't 'pull a Rob' and realise how lucky we are. When we don't try and understand the whole picture, and take some responsibility, we can sometimes direct our righteous anger in a way that is a little embarrassing when we realise it. An example of this is the complaints about poverty in the US. The world in general has become much more equal over the last few decades. The narrowing of this gap is in a large part due to through companies brutally shifting jobs to where they can get the labour cheaper. Brutal for those losing jobs. Another way of framing this is that jobs were shifted to where they were needed most. I am not saying poverty is not a problem in wealthy countries. I am just saying that if you use a definition of poverty as below 60% of the median income of a country there will always be people in poverty. This definition is the agreed international measure used throughout the European Union. If you have liberal values believing in equality and you think as a global citizen, there is a lot to be 'pleased' with. 'Pleased' because obviously we would want to solve all the problems in the world if we could. Solving the bigger problems seems a good way to start though.


All this is complicated, and I know there are layers upon layers of unsolved issues that I haven't touched on, don't understand or don't even know about. Most people I have met aren't intentionally malicious. Most people I have met do respond to the most obvious and understandable incentives though. That doesn't always reflect their big picture desires. Why I am optimistic is that I think we are getting to the point where we can afford to take more time to step back, and it is much easier for us to speak to each other.

Exciting times.


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