One theme that has been emerging—or I am reading way too much into it—is institutionalization. In the casual posts I put on to my personal blog over at Vox, the theme has come up a couple of times: once in a post about oil consumption dropping (really), and once in the Yale Class of 2008 speech from the Rt Hon Tony Blair.
Uncharacteristically, the oil post was a little more serious and I had been thinking about reposting it here for a few days.
Some of us look at large organizations such as the UN and see not an effective group of people, but an impotent gathering bogged down in internal politics. Political parties themselves, once they are too big, seem to exhibit the same behaviour—watch as the New Zealand Greens are beginning to duke it out internally now. The institutionalization that is apparent in the media also gives rise to reporting sloppiness as journalists target sensationalism ahead of truth.
Masters’ and doctorate candidates might be interested in studying how to keep an organization dynamic and entrepreneurial in the face of growth—and how brands might adapt themselves to such a world.
The oil consumption post has a very interesting graph:
So if oil consumption is going down, and the law of supply and demand holds, why are prices at an all-time high? The Historian gives some decent horse sense on this—and it should remind us that the oil companies have a vested interest (and the MSM are too dumb) to keep the panic going.
According to this graph, which I haven’t looked further into: global demand on oil is decreasing. The US dollar is weak, so prices are high relative to that dollar—but high oil prices should have less of an effect on other countries who are converting their own currencies to US dollars to purchase crude. Let’s also not forget that OPEC is a cartel that sets its own prices, and the oil companies are setting their own prices, too, raking in multi-billion-dollar proﬁts per annum.
He also points out there is speculation—which means the bubble will burst at some stage.
It was really a comment that inspired this post: ‘The reason can also be from the institutional investors taking over the commodity futures market over the last 2–3 years.’
We have institutions to blame for this, just as we might point to other institutions that are keeping the human race from progressing in other spheres. They are geared to proﬁt, not social responsibility—and that money can only be squeezed, at least in the western world, from private citizens.
It’s why there is some wisdom out there that points to small groups being more effective given so many inhumane organizations, and we return then to the theme that the internet is a great equalizer and leveller in allowing those groups to emerge.
I would like to partly counter that by saying that large institutions can be run effectively if the core, the vision and the strategy are properly directed, either to service the public or some great cause.
Corruption and a lack of education are the enemies of these institutions, just as they are the enemies of a successful nation.
Richard Branson’s Virgin empire is an effective example of a good brand, because of its underdog position. This approach sees its staff adopt a ‘We try harder’ approach that one might associate with Avis. And it should be noted that it once worked for Avis, too.
Success breeds growth, which may explain why in some organizations, the rot sets in after a while. Virgin has been fortunate in some respects. But it has also been very skilful at choosing people with the right mindset. Others have been less fortunate, and we see the decay come in—and allegations of corruption made, such as against the UN.
In the 1970s and 1980s, it was the received wisdom (of the postwar technocrats) that governmental organizations were decaying and a new approach was needed. A generation on, with the rich–poor gap rather more sizeable than it was in 1980, it is apparent that that wisdom was either wrong or the rot has set in to the privatized organizations.
The New Zealand Government’s decision to renationalize the railway is, in such a context, not a bad idea in terms of inspiring new organizational behaviours. The danger is that the same party had been telling its citizens that the technocratic, monetarist approach is superior to the Keynesian since 1984. It almost seems to have picked up the railway because it was proved to be an unwanted asset of the technocrats, cast aside for the taxpayer to pick up the tab.
What the railway needs for success is a rebrand in a huge way: New Zealand needs to inspire its population with the idea of excellence in public service, as one might ﬁnd in Singapore or at Absolut Vodka. It will be quite hard to overturn the 24 years of indoctrination. But it is not impossible to reinstil those behaviours, ones that actually existed in New Zealand in the middle of the 20th century. (On a related note, the appeal of such a drastic change is also why Sen. Obama’s campaign has been successful, because people instinctively realize there is something rotten with the institutions of the status quo.)
It’s also institutionalization that is preventing the truth about oil prices to get out to the public. Last month I discussed alternative fuels and the Muldoon administration—and while my friend Jim Donovan put up very valid arguments against them, the fact remains that the media neglected to talk about the topic. Similarly, the domestic media has missed the above and some very simple facts.
Just last week I was listening to the radio—one of the foreign-owned stations that seem to populate the FM airwaves (probably Coast)—and the DJ gave one of the less intelligent commentaries about oil prices I had heard.
Petrol prices in New Zealand rise and fall based on American news—something that is not that relevant when it comes to how much we pay for oil. When there is a rise in the US dollar oil price, but the New Zealand dollar has strengthened over the same period, then that rise should not be felt at the pump as greatly.
Let’s assume oil prices are at US$120 a barrel and there is no inﬂation between 2000 and 2008. (Of course, it was less than $120 in 2000 and more than $120 now.)
In 2000, with the New Zealand dollar at an all-time low against the greenback, we would have had to fork out NZ$300 to get that barrel.
In 2008, with the New Zealand dollar having gone back to around 1982 levels against the greenback, the equivalent is NZ$154.
So for a New Zealand company buying oil, it actually costs less.
However, I am ashamed to note that once you factor in the real prices, we are looking at these ﬁgures:
2000 price of crude, US$27·39 (real, not adjusted), equalling NZ$68·48
2008 price of crude, US$134, equalling NZ$171·79
Pump prices—and I know I am ignoring reﬁning costs and a whole bunch of other stuff—are:
2000: NZ$0·97 per litre
2008: NZ$2·14 per litre
This actually means the rate of increase New Zealanders are experiencing is not as bad as the oil prices offshore based on New Zealand dollars, even if our prices are rising more quickly than Europe’s.
Whatever the case, I think it’s worth informing the public—especially on whom we might be able to blame these price rises. And that demand and supply have nothing to do with these high prices, because demand is actually dropping—so we can stop blaming the Americans for their big SUVs and the Red Chinese for buying new cars.
The targets are most likely the speculators, institutional investors, price ﬁxers, the corporations and the cartels.
And it seems to lend some weight to isolating a small country from these threats, globalizing where it makes sense—and in other areas, developing a better model in isolation to show the world how things might be done.
Finally, may I quote Mr Blair: ‘The world in which you, in time to come, will take the reins, cannot afford a return to twentieth-century struggles for hegemony.’
And hegemony is the worst form of institutionalization. It emerges because we, as humans, haven’t discovered how to get on, preferring to be superior to someone than allowing both parties to be equally happy. Earlier in the same speech, Mr Blair said:
A few days before that, I was in Jericho. If you look up from the town centre, to the left is the Mount of Temptation, where Jesus stayed 40 days and nights. To the right, you can see Mount Nebo where Moses looked down on the Promised Land. And right in front of you is the Valley of Jordan.
My guide, a Muslim, turned to me, and said, ‘Moses, Jesus, Muhammad—why in God’s name did they all have to come here?’
But in God’s name, they came, and for centuries, their followers have waged war in the name of prophets whose life work was in pursuit of peace.
The core message—the vision—was corrupted by followers, in that quest for power, borne from ill education and small minds.
Hence so many organizations fail after their founders pass away—the great mind is gone, along with the direction, and the scavengers swarm.
And why, as individuals, we ultimately hold the power to group with like-minded citizens, forming small groups to do the things that need to be done for justice in this world. Posted by Jack Yan, 11:08
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