The Alchemy of Modern Economics: The Fundless Society

April 25, 2017 Opinion , OPINION/NEWS

By

Vickie Zisman

I must admit that the subject of this post has simmered a long time, the trigger being a recent discussion in one of the LinkedIn groups: a laid-off 55-year old professional struggling to get back into organised employment.

I won’t go into all the comments and advice that the poor chap got – most of them were in the vein of a soothing moral support group. Not one participant left an email to send a CV to (and there are more than one exec who, I am sure, could help) – and this is basically what he needs. Not well-meant empathy and guidance as how to keep his spirits high, fill his (now) abundant free time with meaningful volunteer work, etc. In course of the discussion, a lot of info about abusive and sadistic employment conditions here in Israel came out.

For some time now, I have this nagging sensation that in recent years we have been witnessing a new type of economic alchemy which is forced on people. Again, I don’t know what’s going on in other places and am describing only the situation here in the “Holy Land”. I am talking about fundless economic activity.

The numbers have all been made public: the money that fueled the Start-Up Nation in the 90s seeped out and the local, Israeli, investors haven’t compensated for it. Apparently, they piggy-backed, in relatively small amounts, on the American partners’ $, and when Uncle Sam withdrew his nickel and dime, our Rich Man didn’t come forward to share the risk. To the present day, they remain very much risk avert. The “Start-Up Nation” was hurled into a whirlwind of acute funding starvation. This financial anorexia gave rise to a weird business phenomenon – endless consultants (formerly VC people themselves) instructing and guiding entrepreneurs how to jump-start companies without money. As plain as that. In the last 5 years (at least) I have attended several conferences, where those “start-up mentors” explained ex-cathedra, how to build a company on a “boot-strap”, bluntly and shamelessly admitting that there are none, nor will there be in the near future, any investments available for young companies. Moreover, they “wisely” advised to harness a team of groupies, who would be happy to work for equity – until the money starts to come in. Which is questionable in itself. All of the speakers were dead serious, although those who had some sense of self-humour joked that they are preaching the “gypsy horse” principle. ?

If one reflects carefully, this self-financing recipe doesn’t stop there – at the entrepreneur level. It actually admonishes and promotes wageless work.

And speaking of the latter – there is another phenomenon that connects to the above. What I decided to label “the cripple companies”. Those “boot-strap” ventures, if, indeed, succeed to kick off, continue to operate in a deficient mode. For example, they lack marketing and HR (refrain from hiring professionals in those fields, developing and executing strategy). It may be that this skewed logic can somehow be justified for young companies running on a low budget. However, there is no excuse for this practice in established organizations, with 20 employees and more. Moreover, it seems that many of the seasoned corporations, with a nice revenue sheet, deliberately forgo these ‘peripheral’ activities, the question being how really secondary they are to the ROI. I guess it’s all in the eye of the debater (I am a biased one, because am, in the apparently “redundant”, sphere of marketing).

But, the “logic” of the twisted situation doesn’t end there: I have recently learned from the aforesaid discussion on LinkedIn, that not only the “soft” peripheral operations are getting axed. One of the commentators enlightened us that hi-tech companies decided to waive QA as well, and then are ‘surprised’ time and again why customers are unhappy. A great wonder, indeed. We, as a society, seem to have truly embarked on the path of becoming the ‘gypsy horse’.

The third ingredient of this pungent alchemic potion is people who are expected to work for a pittance. Just to have a reason to wake up every morning. The modern day educated slaves. The aforesaid LinkedIn discussion, and many others, exposed the sad reality of older workers, working mothers and such who must take up abusive job offers, especially in sales and telemarketing, just to secure some sort of income. In these kind of jobs, one is expected to dig up their own salary, the formula being: base monthly! wages of around $500-$600 (half of the minimal wage in Israel) and the rest – bonuses from sales. However, the remuneration scheme is so prohibitive, that the employee has actually a zero chance to reach even a minimum wage ceiling, let alone a decent one.

These poisonous (and potentially – deadly) bubbles of the recession bring me to the conclusion that somehow we (the 90% ordinary folk) are expected to shoulder economic activity without money. And it’s not that the money has ended, all of a sudden. There is a nice Russian proverb for the skinflintlyness of the heavy moneybags (and yes, they are still filthy rich, despite some of them losing a bit of wealth): a dog on a haystack – can’t eat the hay himself and won’t let others eat it.

They simply sit on their piles of money, wailing and mourning the “recession”, not contributing anything to remedy the situation, expecting the improvement to materialise out of thin air. Or actually, out of OUR pockets. Loss of potential profits? Their great-grand-children are well provided for as is. They don’t need more.

Rest of us? Who cares? Really…..

 

P.S. –

 

“Methodological Note”: I see social networks as a great source of useful statistics (beyond standard M&S trends gauge), because members are not solicited for info and simply volunteer true detail. They can be a powerful leverage for change, if anybody bothers to draw conclusions and actually do something about it.

What is the “gypsy horse” idiom: based on a folk tale about a miserly gypsy who wanted to see how much hay he can cut out his horse’s daily ration and still keep it working. So every day he withheld some more until he reached the point where the horse dropped down and died.

 

 

 

 

 

 

 

 

Vickie Zisman

Historian by education. Corporate communications professional – by vocation. “Holy cows” in management & life slayer – by choice. Highly allergic to self-righteous hypocrites, universal moral preachers et al. Incurable, politically incorrect, cynic. Mad cat-lover. For further clarifications – you can always leave a comment on my blog, visit my Linkedin profile or connect with me on Twitter

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