The Revolt of the Dilberts

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Most people
in history have not been loners. No one says as a child, "I
want to grow up to be a hermit." Yet modern industrial society
has produced tens of millions of couch potatoes: the ultimate loners.
Telephones began the process: two-way communications. Radio accelerated
the process: one-way communications. Television secured it.

There has been
a price paid by each of us for the ease of moving from community
into the cocoon of our homes. Do you know the last names of the
families two doors down or across the street? When was the last
time you got together with each other for dinner? Or even a barbecue?

Across the
street might as well be across the globe, socially speaking.

Our occupations
give us some communication with others. But the existence of the
cubicle points to the same cultural phenomenon: isolation. There
is a reason why Dilbert became the comic strip of the 1990s. We
may still read Blondie, but that strip is left over from the 1930s.
Do you know the name of your mailman? Does the equivalent of Mr.
Dithers know the names of employees with the status of Dagwood?

There are various
lodges and clubs like the Masons, the Lions, and the Odd Fellows.
They are all odd fellows these days. My grandfather was an Elk.
I have no idea what this meant, or why he joined. He never encouraged
me to join.

Can this process
continue? I don’t think so. We are seeing a reversal in the free
market. The revolt of the Dilberts has begun.

PRODUCTIVITY

You want to
be more productive in your work. Greater productivity usually means
higher pay. It also means a greater sense of accomplishment.

How can you
become more productive in your occupation? The typical answers are
these: additional formal education, additional time spent in private
study, weekend seminars and conferences, more systematic budgeting
of your time, more feedback from superiors and subordinates. These
are all input-related.

There is one
reform that does not require greater individual inputs. This reform
is known to be immensely fruitful, though expensive to implement:
breaking down large organizations into small teams. The Japanese
have pioneered team production on the floor of large factories.
Instead of individual specialization, teams specialize.

In the non-profit
world, the contemporary phenomenon known as the megachurch relies
on small groups to make it work. A megachurch is usually defined
as a congregation with a thousand or more members. They have identifiable
interest groups within the overall program: age groups, singles
groups, special-interest service groups. A sense of community is
maintained through participation of like-minded people within an
organization of like-minded people.

Cubicles can
work for certain firms, such as telemarketing firms. But the Dilberts
of the world show that they work more effectively in team settings.
The division of labor has limits.

The guru of
team production in profit-seeking and non-profit organizations was
Peter Drucker, who died in 2005. He saw that teams make people more
productive.

The most intellectually
productive period of my career took place in the 1980s. I was living
Tyler, Texas, which was then a city of about 75,000. It is 90 minutes
east of Dallas. So, it had a small-town atmosphere, but it was close
enough to a major city to give access to those large-capital cultural
enterprises that make urban life the preference for most people:
universities, concert halls, and so forth.

I was a member
of a small church where some very creative people belonged. Several
of them were authors. They were innovative thinkers. We were able
to discuss new ideas and insights on a face-to-face basis. This
was important for our intellectual advancement.

I find that
the absence of any similar group effort in my life has made my work
more of an extension of previous insights. This is in part due to
age. But old men in a competitive intellectual environment are forced
to keep pace. The division of intellectual labor provides new material
from outside the familiar boundaries.

The college
prior to World War II was such an environment, and had been since
its creation in the twelfth century. But as academic specialization
advanced, and as tax-funded student bodies grew into millions due
to the misnamed G.I. Bill of Rights (1944), this collegiality disappeared.
Clark Kerr, President of the University of California system in
the 1960s, dubbed the new institution the multiversity. He was correct.
The cost of academic specialization is fragmentation. There is no
longer a shared universe of discourse on campus. Only in a handful
of expensive small private colleges, such as St. John’s College,
which focuses on the "Great Books," does the older tradition
still prevail. Robert Nisbet’s book, The
Degradation of the Academic Dogma
, surveys this process.

Today, the
existence of members-only websites and teleconferencing software
is re-creating that small-group atmosphere. It is possible for like-minded
people to interact with each other in closed-membership sites. These
on-line communities can be as small as a dozen people or as large
as several hundred or more, if the site allows multiple forums and
chat rooms.

REAL
ESTATE COSTS

The enormous
increase in real estate prices in certain cities has made it imperative
that companies devise ways to recruit employees in heartland America,
where housing prices are a third or a quarter of what they are an
large coastal cities. Younger workers cannot afford to buy homes
in these high-cost cities. They must indebt themselves heavily for
decades, which reduces their mobility when the regional housing
bubble finally ends, as it is now ending. They cannot sell their
homes in search of better opportunities without taking a loss.

Existing employees
live in expensive homes. This entitles them to borrow on their equity,
thereby locking themselves into higher payments. It also allows
local tax authorities to hike property taxes based on higher real
estate assessments. They are rich on paper. But if they stay on
the local job, they cannot get their hands on this wealth except
by debt.

A creative
company’s management understands that replacing employees in the
future will become more expensive in boom cities. They will have
to be paid higher wages to enable them to purchase homes. Meanwhile,
companies that employ Chinese laborers and other Asians are underbidding
them. So are companies based in the heartland. The squeeze will
increase over time.

Existing senior
managers bought their homes cheap. They have no intention of moving.
Yet they face growing pressure on profits because of their geography.

To overcome
this, they must learn to manage at a distance. But this requires
skills that senior managers have not developed. Free market hierarchies
have historically involved face-to-face relationships. Teleconferencing
overcomes this in theory but not in practice . . . so far.

The cost of
real estate is going to force the decentralization of corporate
operations. Without decentralization, corporate attrition on the
coasts will re-direct productivity to the heartland. Those companies
whose managers cling to high-cost corporate real estate will see
their market share erode.

BEYOND
COMMUTING DISTANCE

Here is an
example of the process of attrition. The Ludwig von Mises Institute
is a non-profit educational foundation located in the university
town of Auburn, Alabama. The town is two hours from Atlanta. You
can buy a nice middle-class home in Auburn for $150,000. It is a
clean, attractive town. The university provides most of the cultural
events that educated people like. Yet they can drive to the Atlanta
airport in less than two hours because the airport is on the south
side of town.

The Mises Institute
can hire bright Ph.D.s for less than think tanks in New York or
Washington, D.C. can. It can offer a better lifestyle for its employees.
Most people who can afford to move into the suburbs do so. Between
2000 and 2004, most large American cities experienced net out-migration.

The presence
of a large university within walking distance of the Mises Institute’s
headquarters is another major magnet for scholars.

It costs less
to house students for its week-long seminars.

It ties up
less of its capital in its real estate.

I was on the
Board of Trustees of a comparable organization in the early 1990s.
The organization had millions of dollars tied up in its aging physical
facility. It could have moved to a college town in the heartland,
or even four hours away from its existing location. It could have
sold the facility, pocketed millions, and used the money for recruiting
new supporters.

I recommended
that the organization keep its P.O. box address in the old location
for public relations’ sake, but move the actual operations to a
college town. Instead of buying a building large enough to house
students for its seminars, it could rent dorm space cheap in the
summer.

My pleas fell
on deaf ears. The board was filled with old timers who were not
entrepreneurial, which is the fate of most board on non-profit organizations.
They clung to tradition.

The organization
still exists in its old location, but it is essentially invisible
today. Its management did not see the Internet coming. Its seminars
are not attended by the best and the brightest students. It does
its work in the same old ways, but the same old ways were geared
to the 1950s. It is in attrition mode. The Mises Institute has replaced
it as far as readers are concerned.

THE QUEST
FOR COMMUNITY

That was the
title of a
1953 book by Robert Nisbet
. Nisbet became the most famous conservative
sociologist after 1964. Of course, there were only half a dozen
known conservative sociologists back then.

He argued in
his book that the modern world works against community. It undermines
traditional authorities. It scatters people. Families live far apart.
Face-to-face relationships are mostly economics-based and are therefore
subject to erosion by the competitive free market.

Men want community.
In the twentieth century, totalitarian political parties offered
a sense of community to isolated individuals.

Today, those
parties are gone. They were gods that failed. In their place are
regional college sports teams, city-wide professional sports teams,
and armed resistance movements, or what has been called 4th-generation
warfare.

Peaceful team
efforts today come in two forms: sports teams and work teams. There
are organized teams of specialized athletes. Then there are Little
League, soccer leagues, and other local team sports that provide
some sense of community for that minority of families with athletic
children in the restrictive age brackets.

Work teams
are the business world’s response to the loss of community in the
adult world.

For the rest
of us, the book title by Harvard political
scientist Robert Putnam
sums it up: Bowling
Alone
. This book extends Nisbet’s insights. More than ever,
teams have disappeared. Here are some statistics about our habits
of interaction.

  • Attending
    club meetings: down 58%
  • Family dinners:
    down 33%
  • Having friends
    over: down 45%

But there is
a countervailing phenomenon: virtual community.

VIRTUAL
COMMUNITY

Newsletters
link people to each other indirectly.

They know that
others are reading the same material.

Websites allow
forums and chat rooms. This increases the sense of community.

We are familiar
with the old saying, "If the mountain cannot come to Mohammed,
then Mohammed must go to the mountain." But the digital mountain
can come to Mohammed today. This is forcing major changes — mostly
unwanted — on organizations that must adjust to this new situation.

It is one of
those oddities that the oldest and most bureaucratic organization
offers a workable model. The military has always had a central command,
but it has also had decentralized regional operations. A rigid top-down
system of authority ensured obedience of subordinates in distant
locations. The senior staff knows that its orders will probably
be obeyed, even though there is no face-to-face communication.

To make this
system work, local officers in the field have to be given flexibility
during combat. There is greater flexibility in wartime than in peacetime.
This is why the U.S. Army put up with George S. Patton only while
the Germans were still shooting back. He could not survive in peacetime.
After Germany surrendered, Eisenhower put him in charge of a virtual
army — of typists.

The free market
produces a bottom-up chain of command. Money flows upward from consumers.
The free market is constantly adding competing firms, constantly
forcing adjustments. Companies that do not adjust to the new realties
of virtual communities and on-line ordering are not going to survive.
A company that maintains high prices on the assumption that buyers
cannot find a lower price on Froogle or some similar search engine
is in attrition mode. It is not long for this world.

CONCLUSION

Is your employer
actively seeking to implement programs that extend authority to
teams? Do employees get the sense of participating as team members
in an organization that serves a larger, meaningful purpose? Is
the company taking advantage of the Internet to establish intra-agency
communications and participation? That is, does the company have
an intranet?

For investors,
these issues should be guiding lights. Some companies, such as 3-M,
are legendary for fostering entrepreneurship. The Post-It note is
a lasting testimony to this corporate culture: an invention of one
of its employees. The company spun of a new branch run by the inventor.

The fate of
Ford and GM points to the attrition phenomenon. They have not matched
the team production structure of the Japanese automobile producers.

Anything
you can do to participate in team efforts will benefit you. The
more meaningful the effort, the greater the personal benefit.

November
15, 2006

Gary
North [send him mail] is the
author of Mises
on Money
. Visit http://www.garynorth.com.
He is also the author of a free 17-volume series, An
Economic Commentary on the Bible
.

Gary
North Archives

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