Good and Bad Things – Transforming the Economy

As with everything under heaven there are good and bad things when we speak of their impact on the economy. it is easy to determine if they are good or bad based on their impact on all stakeholders. Good things benefit all stakeholders and bad things do not. Good things are win/win and bad things are win/ lose. The problem with most economies is that they are set up to do more bad things than good. Things that create the zero sum game results( winners and losers) are not conducive to progress and a strong and functional economy. While the zero sum game works for sports it does not fit the needs of an economy. Lets look at two strategies that exemplify both sides of this coin.

Private Equity is a win/ lose strategy. The investors (one of the stakeholders), and possibly a few top executives, are the only possible winners. It is a strategy of forced short term results that usually end up stripping resources from and to other stakeholders so that the investors will always win. This is therefore a zero sum game with specific structures in place to insure that the investors win. They win at the expense of all other stakeholders so this is not a strategy that is ‘fit’ for a vibrant economy. It is almost too predictable which means that many will inevitably lose. It is a fear based form of economic suicide.

Gainsharing is a win/ win strategy. Gainsharing was developed during the depression as a method for providing some hope of wage increases based on productivity increases. As productivity increases the gains are shared by both the owners of the resources(the investors) and labor. It is a win/ win as both stakeholders and the general economy benefit as progress is made. It is therefore a true partnership where the parties share equally in the creation of the gain and the results of the performance increase. It creates trust and strength instead of fear.

To transform the economy we need to seek strategies that pass the win/ win criteria. It is as simple as that. If strategies pass this test then they can add value. If not they will strip value and trust out of the equation leading to lack of motivation and hope. We can use this simple criteria to transform our economy to reach the next level of the American Dream.

 



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