Shrinkage

Adaptability.

JN from PRTM was my Canadair RJ 200 seatmate the other day and we talked about the way things are. It's not very often I meet young people in my line of work with so much piss and vinegar and I like his attitude. He is the Type A I used to be before I met the first horseman of the American male apocalypse. They are, by the way, Heart Attack, Custody Battle, Felony Conviction and IRS Audit. These are the things that don't kill you, but warp you. They're also the things that help you to understand what it is that money cannot buy, like an easy way out. He's not exactly in my direct line of work, but parallel and to the right. Whereas I am a technical specialist, he is a more traditional sort of management consultant.

What fascinated me about our conversation was that he reminded me about the way in which the single-minded creature that is the corporation seeks to grow or die. And although I wanted to get some of Goldman's zombie language in, I had an enjoyable time just listening which is something I do a bit more of these days. And since I am becoming an old man, as is nicely described by such in Laurence of Arabia, I focus on things other than the quickening driving energy of war, like what to do if you lose. More importantly, I suppose, how to give all that piss and vinegar some direction under circumstances that might otherwise warrant suicide. You need to have suffered a heart attack and lived to be particularly good at that. The economy, like truth, serves no man. It serves itself. The economic man, like the truthful man must study it closely to benefit. Our economy has cascaded and metamorphosized into something drastically other than it was and so now it is devastating to the grow or die corporations. They're dying. And a single-minded positivistic capitalist, if he is to be the economic man, now has to live in a different sort of truth.

The way corporations, but especially the wiley captains of capital manage through economic contortions is through adaptability. They aim to model for success in downtimes by being several steps ahead of the flock, the flock being the ordinary non-economic man. But the types of corporations that are dying are those that cater to the non-economic man. General Motors for example. When your business model depends upon a consumer to get bored with his vehicle every 6 years and therefore buy 19 million new units a year, you will die when the consumer decides to purchase only 14 million units. I'm going to drive my car into the ground. 

As I make sense of my own Peasant Principles I tended to have forgotten the distance between myself and my own ambitions. I was convinced that I would get my MBA from Sloan or CMU and it suddenly dawned on me when JN talked about what such a character would expect or reject after 10 years of experience. I'm dealing with some of that issue - what work I might pick and choose? Whereas so many millions want to run a successful business, not so many want to use the best technology to do so. A guy with a specialty like me is less fungible a commodity than your generic MBA. I forgot all about that. Then again like most people, I have made a virtue out of necessity - I am accommodated to my station and take pride in what I can do very well, even though economically, I recognize that connected MBAs can make googobs more moola with half the mental effort. I am particularly painfully reminded of this as I watch my favorite motorsports and the Wayne Carini show. What are the chances that I get to buy the collector car of my dreams if I don't play the OPM game? (Other People's Money). 

But we both recognize you can't IBank your way or hedge fund your way out of economic crisis. Fast money isn't always smart money. And sometimes smart opportunistic money isn't even all that smart. And so that's the difficulty we have out here in the Civilizing Slice - the actual brainy productive subset of the the people who work for actual smart money. Just directing money flows does not make for a prosperous economy no matter how much trickles down from the most ethical and prescient of money men and market makers. JN says 18 months is the cycle of false prosperity. David Goldman says we're headed toward zombie banks in the US, and I kinda think the notion that hedge funders and investment bankers will play carry trades and relocate to Switzerland might be correct. 

Meanwhile out here in operations-ville, what do we do with Anglo American capitalism? Apply a little Yankee ingenuity? Buckle down with a little Puritan work ethic? Yes and yes. But more of the second, I think. We have to deal with the basic idea that we are human beings and not sharks. We can reboot. We can stand still. We can live without growth. We can survive in an economic downturn. Like George Costanza, we should be able to return to the party and explain our shrinkage. 

There is an essential difference between an economy of luxury and an economy of necessity. I don't know how economists make the distinction, but I certainly would like to know. Nothing should be too big to fail because nothing is too big to shrink. It's the idea that you can build something that never shrinks is what causes the problem. And I think that goes to the core of the danger that we face.