An Experiment in Scotch

I sit on the Library Advi­sory Board for the City of Wylie and we had our monthly meet­ing last night. At one point in the dis­cus­sions, it came up that a rel­a­tively minor tech­ni­cal prob­lem had hap­pened at the library and that it had taken almost a week to fix. In dis­cussing this event, sev­eral of us sug­gested that any num­ber of peo­ple could have fixed the issue in a much shorter period of time. How­ever, as it turns out, they were (and are) not allowed to do such things because of what we call in the tech­ni­cal world “process”. Cer­tain pro­ce­dures and pro­to­cols have to be fol­lowed in such instances because they exist, not because they are useful.

This is one of many exam­ples of bureau­cracy that I’ve run into, not just on the library board but in life in gen­eral. Bureau­cracy thrives on com­plex­ity because it allows inef­fi­cien­cies in the sys­tem to be hid­den and avoided. These inef­fi­cien­cies not only frus­trate the peo­ple who have to deal with the bureau­cracy, they also nat­u­rally mean that bureau­cratic sys­tems func­tion at a much lower level of out­put than they could.

Clay Shirky wrote a fas­ci­nat­ing arti­cle on the com­plex­ity of busi­ness mod­els ear­lier this month. In it he argues that the future of media mostly likely lies not with the mono­lithic media con­glom­er­ates of today but instead with new cre­ators of media that do not rely on the built in com­plex­ity that cur­rent media com­pa­nies thrive on. One of the key quotes:

To pick a cou­ple of exam­ples more or less at ran­dom, last year Barry Diller of IAC said, of con­tent avail­able on the web, “It is not free, and is not going to be,” Steve Brill of Jour­nal­ism Online said that users “just need to get back into the habit of doing so [pay­ing for con­tent] online”, and Rupert Mur­doch of News Corp said “Web users will have to pay for what they watch and use.”

Diller, Brill, and Mur­doch seem be stat­ing a sim­ple fact—we will have to pay them—but this fact is not in fact a fact. Instead, it is a choice, one its pro­po­nents often decline to spell out in full, because, spelled out in full, it would read some­thing like this:

“Web users will have to pay for what they watch and use, or else we will have to stop mak­ing con­tent in the costly and com­plex way we have grown accus­tomed to mak­ing it. And we don’t know how to do that.”

You can see this type of atti­tude all around the world, not just in TV com­pa­nies but in record com­pa­nies, gov­ern­ments, Gold­man Sachs and the Catholic Church, just to name a few that have been in the news lately. Com­plex­ity thrives until it doesn’t and then we revert to sim­plic­ity, often in dra­matic, spec­tac­u­lar fash­ion. If you’re in the tech­ni­cal field, you hear hor­ror sto­ries about just this type of event any time 1 or more tech­ni­cians get together. Com­plex­ity seems to be the bane of actu­ally get­ting things done.

So why do we allow it to hap­pen? Ini­tially, increases in com­plex­ity tend to impart a com­pet­i­tive advan­tage on the entity being com­plexed. Mov­ing from a world where I have to pro­duce every­thing I need to live to a world where I can write code on the com­puter and buy every­thing I need is mostly good, espe­cially on an indi­vid­ual level. The prob­lems start occur­ring when the com­plex­ity reaches a level that par­a­sites can begin to extract value with­out being pun­ished or even noticed in many cases. Many times, even if they are noticed, they are prac­ti­cally immune to pun­ish­ment or rejec­tion because of the com­plex­ity of the sys­tem they live in.

Take for exam­ple the Rub­ber Rooms of the New York City Edu­ca­tion sys­tem. Here, teach­ers who have com­mit­ted infrac­tions rang­ing from incom­pe­tence to the molesta­tion of a school child live out amaz­ingly bor­ing days while wait­ing on arbi­tra­tion of their case, all the while earn­ing their full salaries and pen­sion ben­e­fits. Their aver­age length of stay? Three years. Even if the teach­ers are even­tu­ally dis­missed, they are enti­tled to their pen­sion. Here, one layer (or 30) of com­plex­ity too many has been added to a bureau­cracy and now the sys­tem is failing.

Or con­sider the saga of the NUMMI plant, a joint ven­ture between Gen­eral Motors and Toy­ota begun in 1984 in hopes of bring­ing the Toy­ota sys­tem of car mak­ing to GM to rein­tro­duce qual­ity cars. The NUMMI plant worked fan­tas­ti­cally but when the time came to intro­duce the model and meth­ods to other plants within the GM ecosys­tem, it didn’t work because other plants were not inter­ested in more effi­cient mod­els because it would poten­tially take away their power and prestige.

In the case of GM, the bureau­cracy estab­lished by the com­pany and their union even­tu­ally led to the com­pany becom­ing the largest bank­ruptcy in US his­tory, all paid for by tax­pay­ers. Once upon a time, GM was a shin­ing star of Amer­i­can cap­i­tal­ism but it ended up a dis­as­ter largely because of a huge, sprawl­ing bureau­cracy that fed on the com­plex­ity of the sys­tem. There is no guar­an­tee that it will ever recover.

Our finan­cial sys­tem is cur­rently a morass of com­plex­ity that is so inter­twined with our gov­ern­ment, another huge sprawl­ing bureau­cracy, as to be indis­tin­guish­able in many ways. We found this out the hard way when the near col­lapse of the finan­cial sys­tem threat­ened to bring down our gov­ern­ment and many oth­ers. The finan­cial sys­tem has become a par­a­site on the econ­omy, one that appears to be pro­vid­ing ben­e­fit but is fact suck­ing the very life blood out of its vic­tim. Once upon a time, banks existed to pro­vide the cap­i­tal and liq­uid­ity nec­es­sary to con­tribute growth and pros­per­ity to our eco­nomic sys­tem. Now many banks exist as the ends instead of the means, pro­duc­ing noth­ing other than out­landish prof­its and bonuses for man­age­ment and employ­ees, seek­ing rent from the Amer­i­can taxpayer.

The dif­fer­ence between many large com­plex sys­tems that have failed in the past and the com­plex sys­tems of our day is that we extracted a huge amount of value from the real econ­omy to keep the zom­bie sys­tems alive. Shirky ends his arti­cle with these thoughts:

When ecosys­tems change and inflex­i­ble insti­tu­tions col­lapse, their mem­bers dis­perse, aban­don­ing old beliefs, try­ing new things, mak­ing their liv­ing in dif­fer­ent ways than they used to. It’s easy to see the ways in which col­lapse to sim­plic­ity wrecks the glo­ries of old. But there is one com­pen­sat­ing advan­tage for the peo­ple who escape the old sys­tem: when the ecosys­tem stops reward­ing com­plex­ity, it is the peo­ple who fig­ure out how to work sim­ply in the present, rather than the peo­ple who mas­tered the com­plex­i­ties of the past, who get to say what hap­pens in the future.

While that may have been true in the past, our inflex­i­ble insti­tu­tions have instead been propped up at vast expense to the mid­dle class in a mis­guided effort to pro­tect our econ­omy from col­lapse. The prob­lem with that is no evo­lu­tion has hap­pened at all, no new ecosys­tems have arisen to take the place of the failed ones, sim­plic­ity has not come to the fore in the absence of the com­plex. Instead of new tra­di­tions and busi­nesses emerg­ing from the ashes, we are still beholden to the com­plex beasts of yesterday.

Com­plex sys­tems can only be allowed to exist inso­far as they pro­vide more value than sim­pler sys­tems of the same type. When they do not, the only thing that makes sense is to allow them to die, either qui­etly or loudly and with much fan­fare. But by prop­ping up the dead and pre­tend­ing they are still alive, we only man­age to stink up the place for the fore­see­able future.