Sunday, February 22, 2015

When Competition Kills

At some start-ups, Friday is so casual that it’s not even a workday (Washington Post)
Treehouse is closed every Friday. The 80-and-counting employees work a 32-hour work week Monday through Thursday. On Fridays, employees are expected to be home, with their families, having fun, doing something, anything, other than work.

That’s exactly how founder and chief executive Ryan Carson, 37, has been working since 2005. These days, on Fridays, he gets his two young sons off to school and spends the day hanging out with his wife, Gill. “It’s like dating again. We go to coffee shops. We read books together. I really feel like I’m involved in my kids’ lives and my wife’s life,” Carson said. “This schedule has been absolutely life-changing for me. I can’t imagine anything more valuable.”  
Sounds pretty good right? What's the problem?
Books, business journals and news stories abound detailing the insanely long hours tech workers put in, sleeping under desks, napping in broom closets and missing parents’ funerals and children’s births. Yahoo CEO Marissa Mayer has said she worked 130 hours a week at Google. And in a post that went viral, Michael Arrington, founder of TechCrunch and now a tech investor, wrote: “Startups are hard. So work more, cry less, and quit all the whining.”
“As far as I’m concerned, working 32 hours a week is a part-time job,” Arrington, said in an interview. “I look for founders who are really passionate. Who want to work all the time. That shows they care about what they’re doing, and they’re going to be successful.”
Others cite the need to best the competition and meet investors’ demands.
While Mike McDerment no longer works himself into the ground like he did when he moved into his parents’ Toronto basement to launch his start-up, he still views long hours as necessary. 
“It’s really about survival,” said McDerment, CEO of FreshBooks, a cloud-based accounting software firm. “It’s this kind of us-against-the -world mentality. You’re competing with multibillion-dollar companies that want to crush you out of existence. You have to work your ass off just to survive until tomorrow.” 
Treehouse founder Carson says he worked around the clock when he was starting out as a Web developer for a start-up in the United Kingdom. 
“I remember trying to sleep under my desk for 20 minutes, and feeling delirious and frustrated,” he said. “And then, getting to the end of that and realizing it was all for nothing. We were building a Web site for some tobacco company. That’s when I realized, this is where it goes, if you work hard and never stop. It’s like being on the treadmill and not even understanding why you’re there.” 
Indeed, Shikhar Ghosh, a Harvard business school lecturer, studied 2,000 tech companies that started up between 2004 and 2010 and found that 90 to 95 percent fail. “Failure is the norm,” he has said.
"Us against the world?" Twenty-minute naps under your desk? Delirious and frustrated? Companies that want to "crush you out of existence." Working just to "survive another day?"

Gee, that sounds fucking awful. It sounds more like Mutual of Omaha's Wild Kingdom, red in tooth-and-claw, than running any kind of business providing goods and services. What is the point of this again?

Is any of this really necessary? What the fuck has happened to the business world? And why does anyone think this is a good thing? It didn't used to be this way. Who benefits from this state of affairs? Based on the above, certainly not the workers or the owners. I don't really need anything these people are selling. So if it's not benefiting the workers, owners, or consumers, why exactly is working in business such a sheer hell?

Its seems like this competition economy isn't making people better off, it's destroying us. We're working ourselves literally to death just so we can get another fucking iPhone app? Maybe they can make an app to monitor employees' deteriorating physical and mental health.

And it's not just the business world, it starts in schools:
Anjan Chatterjee, a professor of neurology at the University of Pennsylvania, who has published several influential papers on the ethics of smart drugs, tells me that he sometimes makes jokes about it. “When I was young, students would use drugs to check out. Now they’re using them to check in.”

He’s witnessed the rise, in the last 10 years, of a generation of American students doping themselves up on various medications they believe will give them a competitive edge. “It’s even in high schools now, especially in the more affluent suburbs. Students call them ‘study aids’; they don’t even think of them as drugs. There’s an entire grey market on campuses. But then, the current estimate is that a third of all students have a prescription for some sort of psychoactive medication anyway: antidepressants, or medication for ADHD, or for anxiety, so the availability is quite high. Often, they’ll just sell on the medication in the library.”

He believes that cognitive enhancement – or cosmetic neurology, as he calls it – is likely to become viewed as normal over time, in much the same way as cosmetic surgery has been. If it’s available, people will avail themselves of it. And his intuition “is that this use of drugs is not the cause of this sense of competition. It’s a phenomenon of it.” Smart drugs are part of a “parcel of broader cultural trends” that tap into something that is already within our culture. “And this is what does give me pause. It’s this relentless pursuit of productivity, and material productivity in particular that seems to be at the root of this. Going after drugs is a symptom of that underlying impulse.”
Students used to take drugs to get high. Now they take them to get higher grades (The Guardian)

The ultimate answer is, of course, that it is an arms race that benefits exactly no one. The example here is from Darwinian evolution as the excerpt below details. Everyone would  be much better off if we called off the escalating competition and took it easy, which would have no real downsides. The question is, will this happen in our winner-take-all, loser-gets-nothing, economy, or end up with people drugging and microchipping themselves into 24-hour-a day always-working psychosis and decrying others as "weak" and therefore worthy of elimination?
[Adam] Smith never believed that the invisible hand guaranteed good outcomes in all circumstances. His skepticism was on full display, for example, when he wrote, “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.” To him, what was remarkable was that self-interested actions often led to socially benign outcomes.

Like Smith, modern progressive critics of the market system tend to attribute its failings to conspiracies to restrain competition. But competition was much more easily restrained in Smith’s day than it is now. The real challenge to the invisible hand is rooted in the very logic of the competitive process itself.

Charles Darwin was one of the first to perceive the underlying problem clearly. One of his central insights was that natural selection favors traits and behaviors primarily according to their effect on individual organisms, not larger groups. Sometimes individual and group interests coincide, he recognized, and in such cases we often get invisible hand-like results. A mutation that codes for keener eyesight in one particular hawk, for example, serves the interests of that individual, but its inevitable spread also makes hawks as a species more successful.

In other cases, however, mutations that help the individual prove quite harmful to the larger group. This is in fact the expected result for mutations that confer advantage in head-to-head competition among members of the same species. Male body mass is a case in point. Most vertebrate species are polygynous, meaning that males take more than one mate if they can. The qualifier is important, because when some take multiple mates, others get none. The latter don’t pass their genes along, making them the ultimate losers in Darwinian terms. So it’s no surprise that males often battle furiously for access to mates. Size matters in those battles, and hence the evolutionary arms races that produce larger males.

Elephant seals are an extreme but instructive example.10 Bulls of the species often weigh almost six thousand pounds, more than five times as much as females and almost as much as a Lincoln Navigator SUV. During the mating season, pairs of mature bulls battle one another ferociously for hours on end, until one finally trudges off in defeat, bloodied and exhausted. The victor claims near-exclusive sexual access to a harem that may number as many as a hundred cows. But while being larger than his rival makes an individual bull more likely to prevail in such battles, prodigious size is a clear handicap for bulls as a group, making them far more vulnerable to sharks and other predators.

Given an opportunity to vote on a proposal to reduce every animal’s weight by half, bulls would have every reason to favor it. Since it’s relative size, not absolute size, that matters in battle, the change would not affect the outcome of any given head-to-head contest, but it would reduce each animal’s risk of being eaten by sharks. There’s no practical way, of course, that elephant seals could implement such a proposal. Nor could any bull solve this problem unilaterally, since a bull that weighed much less than others would never win a mate.

Similar conflicts pervade human interactions when individual rewards depend on relative performance. Their essence is nicely captured in a celebrated example by the economist Thomas Schelling. Schelling noted that hockey players who are free to choose for themselves invariably skate without helmets, yet when they’re permitted to vote on the matter, they support rules that require them. If helmets are so great, he wondered, why don’t players just wear them? Why do they need a rule?

His answer began with the observation that skating without a helmet confers a small competitive edge—perhaps by enabling players to see or hear a little better, or perhaps by enabling them to intimidate their opponents. The immediate lure of gaining a competitive edge trumps more abstract concerns about the possibility of injury, so players eagerly embrace the additional risk. The rub, of course, is that when every player skates without a helmet, no one gains a competitive advantage—hence the attraction of the rule.

As Schelling’s diagnosis makes clear, the problem confronting hockey players has nothing to do with imperfect information, lack of self-control, or poor cognitive skills—shortcomings that are often cited as grounds for government intervention. And it clearly does not stem from exploitation or any insufficiency of competition. Rather, it’s a garden-variety collective action problem. Players favor helmet rules because that’s the only way they’re able to play under reasonably safe conditions. A simple nudge—say, a sign in the locker room reminding players that helmets reduce the risk of serious injury—just won’t solve their problem. They need a mandate.

What about the libertarians’ complaint that helmet rules deprive individuals of the right to choose? This objection is akin to objecting that a military arms control agreement robs the signatories of their right to choose for themselves how much to spend on bombs. Of course, but that’s the whole point of such agreements! Parties who confront a collective action problem often realize that the only way to get what they want is to constrain their own ability to do as they please.
The Darwin Economy – Why Smith’s Invisible Hand Breaks Down (Farnham Street)

Welcome to the Brave New World. But what do I know, I'm just Darwinian roadkill.


  1. People object to rules they had no hand in making, and have no real way of changing if they show to have untoward consequences. In other words, there's rules, and then there's rules. Some are top-down, even despotic, and some are consensual. The hockey player rules sound pretty consensual. A big difference.

    As for destructive competition? It began in the Paleolithic.

  2. Another great post, you are doing God's work!

  3. Remember: These people are boasting.

    Also: They are measuring inputs, not outputs. How hard you are working does not matter if you are not producing, or producing useless things. Or the wrong things. (Website for a tobacco company! Jesus! Go on welfare, already!)

    Large companies have the advantage of government-backing: The rules are set up in their favor. That is what all those lobbyists are for. A small firm can rarely go successfully into a toe-to-toe fight. Find your niche!

    Markets are always created by somebody, and managed by somebody. The free market is not even economic theology, but simple self-contradiction. Get over it!

    Economics is war by other means. Choose your fights carefully!



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