WHERE DID ALL THE MONEY GO?

The Pacific island of Nauru is the smallest self-governing island in the world.  In the sixties and seventies, it began to create huge wealth for its people through allowing other countries to mine its phosphate.  As the island is one huge lump of phosphate this will, of course, render it ultimately uninhabitable, but that’s capitalism for you.

Anyway, the most interesting thing about the story of Nauru’s economy is how its inhabitants reacted to their new found wealth.  As each family’s land took its turn to be mined, that family would receive substantial royalty payments.  As you might expect, they would typically blow huge sums of money on cars and consumer durables, even if they didn’t really need them (yes, that’s capitalism for you indeed). 

But what would then happen is that their friends, relatives and neighbours would come round to admire their possessions.  And Nauru custom dictates that if someone admires something of yours, you must give it to them. Within weeks, the royalty-earning family would have less than when they started, and would have to troop round their friends’ houses admiring fridges and cars until they had recouped enough of their loss to survive.

I came across this story in a book called The Company Savage by tribologist Martin Page.  The book demonstrates how such tribal phenomena can be found enshrined in the behaviour of Western economies, through the human impulse to divest oneself of what one has, balanced by the equally strong impulse to take what one doesn’t have, even if one does not need it.

You may have experienced this yourself.  Having obtained a mortgage beyond your means to buy the best flat or house you can, you get promoted at work.  Rather than use the extra money to reduce your crippling mortgage, you simply buy a bigger house, or take out a loan to get a bigger car.  Even if you follow the prudent path, after a few months you will realise that the extra money doesn’t seem to have materialised.  Somewhere along the line, you will have rid yourself of your spare wealth, with the help of others who have been only too happy to take it from you.

At a corporate level, the NHS is but one example of this phenomenon in action.  I am struck by the discrepancy between the government’s claims that more and more is being spent on the NHS and the hand-to-mouth stories recounted by its managers.  Tribologists would tell us that both accounts are certain to be true.  Like countless tribes around the world, as wealth arrives, the NHS find ways to spend it as quickly as possible.  As you invest money in a new type of body scanner, so suddenly huge numbers of patients will appear who need to be scanned with it, at £X,000 a pop.  

Has anyone actually seen the fruits of the mania for cost-cutting that has infested the average organisation – public and private – over the last 15 years or more?  Where does the money saved actually go?  Simple: the organisation finds a way to get rid of it, aided by people who appear when the time is right to claim it as theirs.  Make half your workforce redundant - and spend the money on IT consultants to put right the problems caused by the cheaper computers that replaced them.  Build a flexible, low overhead organisation – and the increased complexity means you have to hire more expensive top executives to run it.

Tribologists can also illuminate that other phenomenon that excites much public frenzy, the Wasteful Senior Banker (sorry, bankers, I know you’re not the only ones to fritter away your money, it’s just you’ve become a Jungian Archetype for our age).  I’m talking about those tabloid stories of £40,000-worth of champagne being sprayed around bars in one evening.  You may be interested to know that certain Native American tribes call this ‘potlach’ – If one obtains wealth one doesn’t really need, one is obliged to throw it away to prevent bad luck.

You may not feel this is mitigation enough for such shameless excess.  But you don’t need to be a tribologist to reframe it. However disrespectful you might find the behaviour, the money is now no longer theirs: just think how many livelihoods are ultimately supported by this perverse form of largesse. (And what do you think would have been different if they’d drunk the champagne?  It would still have ended up going down the drain, just a few hours later.)

If you’re feeling uncomfortable with any excess wealth in your organisation, you will be pleased to know I have set up a series of Potlach workshops to help you with it.  All cheques to the usual address.

 

© Phil Lowe, 2005.  All rights reserved.