All of the Profits, None of the Responsibility!

"A corporation is a legal person created by state statute that can be used as a fall guy, a servant, a good friend or a decoy...A person you control... yet cannot be held accountable for its actions. Imagine the possibilities!"

This is not a criticism-- it is an advertising pitch for Wyoming Corporate Services. Reuters reports that the company "serves as a little Cayman Islands in the Great Plains.

"In the U.S., (business incorporation) is completely unregulated," says Jason Sharman, a professor at Griffith University in Nathan, Australia who is preparing a study for the World Bank on corporate formation worldwide. "Somalia has slightly higher standards than Wyoming and Nevada."
 
Eye opening reading.

Autonomy and Responsibility: The Netflix Approach

The Telegraph has a great article today on how Netflix has scrapped its vacation policy and now allows its employees to take as much time off as they need as long as their work is covered and their managers know where they are. Some excerpts:

As the company explains in its "Reference Guide on our Freedom & Responsibility Culture", a 128-slide PowerPoint presentation that has spread like samizdat literature on the internet: "We should focus on what people get done, not how many hours or days worked..."

...ever more companies are realising that autonomy isn't the opposite of accountability – it's the pathway to it. "Rules and policies and regulations and stipulations are innovation killers. People do their best work when they're unencumbered," says Steve Swasey, Netflix's vice-president for corporate communication. "If you're spending a lot of time accounting for the time you're spending, that's time you're not innovating."

...In his new book, Cognitive Surplus: Creativity and Generosity in a Connected Age, New York University scholar, Clay Shirky, argues that when we design systems that assume bad faith from the participants, and whose main purpose is to defend against that nasty behaviour, we often foster the very behaviour we're trying to deter. People will push and push the limits of the formal rules, search for every available loophole, and look for ways to game the system when the defenders aren't watching. By contrast, a structure of rules that assumes good faith can actually encourage that behaviour.

So if you think people in your organisation are predisposed to rip you off, maybe the solution isn't to build a tighter, more punitive set of rules. Maybe the answer is to hire new people.

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Going Forward with No Plan

There are a lot of how to books out there that claim to get your life in order or help you found a successful business. What most of them have in common is a list of 7 or 12 or 50 simple steps that, if you follow, will supposedly guarantee a better result. But as poet Robert Burns noted after watching mice shout "Who Moved my Cheese?" Those plans gang aft agley.

Today on Free Range Humans, Marianne Cantwell shares an interview with Ian Sanders who is on a mission to spread the gospel about "unplanning your business."

A consciously unplanned business--or life for that matter-- is flexible enough to respond to change.

This was the guiding principal of The Guthrie Center in Great Barrington, Massachusetts, a not for profit founded by folk singer Arlo Guthrie. Ten years ago (how time flies) I interviewed Guthrie for a book I wrote on the history of the building that began as the Trinity Church, morphed into the setting for the song and film Alice's Restaurant and later became a community center.

"A lot of people, when they set up an organization to save the world are convinced that if you only do what I know, everything will be fine," Guthrie said. "Well, that's just another guy with another plan to save the world. If I knew [what the community needed] I would just go do that. What I want to do is be responsive. It means I don't know in advance what needs to be done. What I want to do is set up something where, if somebody needs something, they can call up and say, 'I need this,' and I'll have a group of volunteers and say, 'Who can take care of this?' And someone will say, 'I can.'"

Having a plan may be great, but knowing when not to follow it is even better as Ian Sanders explains in this clip:

Broke is Beautiful Quote of the Day

Visionary entrepreneur Paul Hawken knows why Octavio has launched a successful enterprise and will keep it growing. In Growing a Business, he points out, “With low overhead, frugal means and fragile budgets, you can’t buy your way out of problems. You have to learn your way out. The creativity and tenacity you have to develop will make it hard for you to be put out of business.”

From Joyfully Jobless

The Grateful Dead Studied As Example of "Passion-Based Pay Off"

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Red States and Blue States?

Are you on the side of "big business" or "big government"? Does wealth trickle down from the employer, who creates jobs or up from the laborer who provides the products and services?

Is the pursuit of wealth a boon or a danger to society? Is our nation better served by honest people from simple rural backgrounds or perhaps from those with a good education, for example a foundational knowledge of history, current events and the classics?

If you think these are questions that were born of the 1960s "culture wars," or trace their origin to Ronald Reagan; of if you think they are even more recent, created by Fox News or "the liberal media," think again.

I highly recommend an out of print book called The Self-Made Man in America: The Myth of Rags to Riches by University of Wisconsin historian Irvin G. Wyllie. Published in 1954, it is a well-researched (but not academic jargon filled) examination of how the ideal of the self-made man developed in the 19th century. The philosophical debates argued by thinkers in the 1840s sound very much like a clash between Rachel Maddow viewers and a tea party protest group. Consider:

Critics of business insisted that these problems (crimes and excesses of the greedy) could not be solved without the aid of regulatory legislation and the active intervention of the state in economic affairs. Defenders of business, on the other hand, clung to the idea that good intentions, good private character, and the universal laws of moral retribution provided sufficient protection. Over against good laws, they proposed good men. The crime of the success apologist was not that he disregarded the question of public welfare, but rather that he was unbelievably naive in his conviction that the educated conscience was capable of protecting the welfare of all.

Sounds like this is a debate we're probably not going to wrap up any time soon.

Save the Environment by Wasting!

During World War II, our government distributed posters like this one to let the American public know that thrift was patriotic. (If you'd like to see more, visit Northwestern Unversity's World War II Poster Collection.)

For the past few decades thrift has taken a back seat to consuming as a show of patriotism. Remember when George W. Bush encouraged us all to go shopping after September 11?

A great illustration of this "save the nation through waste" philosophy in action was the Cash for Clunkers program. I liked the idea of a program that gave Americans both an incentive to support the auto industry-- I am from Detroit after all-- and to do so by buying more fuel efficient vehicles. On its face it sounded green and ingenious. The public loved it too. What's not to love about a great big discount on a major purchase?

I immediately changed my mind when I learned that the old, perfectly working "clunkers" had to be destroyed and crushed. With the exception of only a few components, they couldn't even be used for parts to maintain current vehicles. I could not figure out how this massive waste could really save the environment. (This is not even addressing the issue of the disposal of mercury switches in older vehicles that the pre-bankrupcy GM would have been responsible to clean up but the "New GM" insists it is not.) Surely the energy saved by the more fuel efficient cars would be offset by the energy it would take to make entirely new vehicles, and new parts for other older vehicles, rather than using existing working cars and salvage parts.

The Wall Street Journal just published an analysis of the Cash for Clunkers program and it concluded exactly that.

According to Hudson Institute economist Irwin Stelzer, at best “the reduction in gasoline consumption will cut our oil consumption by 0.2 percent per year, or less than a single day’s gasoline use.” Burton Abrams and George Parsons of the University of Delaware added up the total benefits from reduced gas consumption, environmental improvements and the benefit to car buyers and companies, minus the overall cost of cash for clunkers, and found a net cost of roughly $2,000 per vehicle. Rather than stimulating the economy, the program made the nation as a whole $1.4 billion poorer.

The basic fallacy of cash for clunkers is that you can somehow create wealth by destroying existing assets that are still productive, in this case cars that still work. Under the program, auto dealers were required to destroy the car engines of trade-ins with a sodium silicate solution, then smash them and send them to the junk yard. As the journalist Henry Hazlitt wrote in his classic, “Economics in One Lesson,” you can’t raise living standards by breaking windows so some people can get jobs repairing them.