The point is missed

Museum of public mistakes and unfinished projects

Bad farming and recession

with 2 comments

Ok bad times are coming they say, recession is on it’s way. Well that’s the laws of economics, not much we can do about them. Or is it? Before I continue I want to be clear about that most of the fields I touch on here are generally not fields I posses any special expertise in (not that it shouldn’t be totally clear to those of you who do but…). I used to think of economic recession as mass-psychosis: media starts writing about bad times ahead, stupid people like me write blogs and talk over lunch about whether it will or will not happen. As a consequence of that people become wary and start buying less and less “you never know”, “the experts say…”. There you go, self-fulfilling prophecy.

I still believe that there is truth in that but I would not mind being corrected by anyone who actually knows. From what I understand the cause for recession is a bit of a mystery even for the pros :) Anyway, as a software guy in the consultant business I found myself in the center of the last recession and now that the word is out I started pondering what we as a business may be doing to cause them.

The farming theory

Ok, assuming that recession occurs because people stop buying stuff, one reason for people to stop buying stuff would be that they don’t have any money. If this is the case then it makes sense to do whatever is in our power to make sure that our customers do not stay without money, right? More concretely we should not take our customer’s money without giving them something of value back (of course not, that would be stealing). Even more concretely we should not charge our customers large amounts of money for crap that they can’t use even if the crap happens to meet their specification. Delivering crap is not professional, period.

This fits well with my limited understanding of farming. From what I understand, if you take too much from the land without giving back nutrition it depletes the soil and it will have to rest for a period of time (I have no idea how long). In order to prevent this farmers use crop rotation, fertilization and other techniques. In short, in order to harvest from the land you have to pay attention to the land’s need to make your relationship with the soil sustainable.

Farmers live with their land, love their land, pay attention to their land’s needs and are rewarded from doing so with with sustainable predictable harvests that they can make a living from. I bet that many a farmer through the very long history of farming learned the hard way how stealing from your own lands will eventually bite you.

What can we learn from farming?

The ocean theory

Back in the days we used to think that the sea was an inexhaustible source of wealth. Anyone who talked to a diver about the size of tuna these days know it’s not true. Fishing is one of those areas where we seem to be loosing our balance, we are taking up more than the sea can support and. Perhaps we lack that intimate relationship that a farmer has with his land. At least on the industrial level.

Are we taking up too much from our customer’s ocean?

The locust theory

Locust are sometimes known to swarm, scientists have figured out that the density of grasshoppers determine when it’s time to swarm. When they swarm they devour everything in their way causing great disasters. Sometimes I think of the dot com bubble as a swarm of locust forming from whoever could write “computer” in their resume following the smell of money straight into recession.

The Easter Island

The Easter Island is an example of a collapsed ecosystem:

Jared Diamond disregards the influence of climate but still gives an extensive look into the collapse of the ancient Easter Islanders in his book Collapse. The disappearance of the island’s trees seems to coincide with a decline of its civilization around the 17th and 18th century. Midden contents show a sudden drop in quantities of fish and bird bones as the islanders lost the means to construct fishing vessels and the birds lost their nesting sites. Soil erosion due to lack of trees is apparent in some places. Sediment samples document that up to half of the native plants had become extinct and that the vegetation of the island was drastically altered. Chickens and rats became leading items of diet and there are contested hints that cannibalism occurred, based on human remains associated with cooking sites, especially in caves.

Could it even come to the point that we use all resources to the point that we have no other choice than to eat each other? In the IT-industry? Not literally of course, but we do seem to have a tendency to back-stab ourselves into recession. It all seems to be very human and very industrial. Perhaps we need to look back and learn from the people who knew how to live with nature?

“We do not inherit the earth from our ancestors, we borrow it from our children.” ~Native American Proverb

We need to figure out how to live and prosper with our customers in a sustainable post-industrial(?) way before the next recession!

Cut the crap – when overcharging snowballs

My wife had the patience to listen to my ramblings and even googled a little and came up with this in the context of contractors:

What causes recession?

The reasons behind economic downturns remain largely unsolved. However, there are several traditional explanations to the phenomenon.

The traditional explanation ?

The traditional explanations postulate that recessions are caused by events that have an economy-wide impact, such as an:

  1. increase in interest rates
  2. decline in consumer confidence.
  3. Firms reduce output and lay off workers, which further decreases demand, and the economy slows even more. “
#1 and #3 does not sound like the first step on our way to recession, rather like something that happens when it all starts snowballing. #2 on the other hand sounds like something that can happen as a consequence of overcharging for crap. But, it would not be able to cause recession if only a few vendors behaved that way. The vendors overcharging for crap must reach a critical mass before it all spirals down.
How do things end up this way? The broken window principle? If X can sell their crap for gold so can we, and we could charge more than X…
One possible scenario for a recession could be
Broken window principle -> critical mass reached -> decline in customer confidence -> avalanche effect -> recession

As one possible scenario it makes enough sense to me to mind crap being sold. Of course, I could be wrong…



Written by johlrogge

September 5, 2008 at 7:50 pm

2 Responses

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  1. Thanks, Joakim. A great motivation for why we should give a damn.

    There is another proverb in this context: You reap what you sow. If you develop and sell crap, your life will be crap (sooner or later).

    Jocke Holm

    September 8, 2008 at 6:11 pm

  2. Thanks for your comment, I’m glad someone thought my ramblings worth wile.

    Proverbs are great embodiments of wisdom so it comes as no surprise that they make sense when you see them as did the one you offered. To me “you reap what you sow” has to do with what you input in your relationship is what you can expect back.

    I find so many parallels on business relationships now that I start looking for them. My latest favorite example is “renewable sources of energy”, kind of a hot market and a lot of research goes into that area. Related is energy efficient building, like bedrock heat for instance, oftentimes in cold climates you “recharge” the ground with solar-energy during the warmer periods. How is that for a longterm investment in that “relationship”.

    Anyway, I’m rambling again… Thanks again for your comment!

    johlrogge

    September 8, 2008 at 9:25 pm


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