A semi-fictitious history of value
In the beginning there were a lot less people. People migrated to fertile regions of abundant resources, usually besides a plentiful river, and usually there were enough resources to satisfy the needs of the people. When it got crowded, people moved to other fertile regions and this went on for a while. Meanwhile, more needs arose, and people invented bartering. The cowherd would trade milk for grains from the farmer. And this led to a richer quality of life. A shepherd could focus on rearing sheep and still get milk, grain and wood in exchange for his wool.
Leap forward many years, and man invented an abstract form of currency. Maybe it began due to seasonal demands - if grain was harvested and available only in a part of the year, then the farmer needed to have some means to sell it, and then get wool later in the winter. This was made possible in the form of coins, and later joined by notes to form money. So far, so good. Each person had an honest commitment to create the best quality of good to provide to get the most money, so they could afford the best for themselves and their families round the year.
Then came other abstractions of value, further removed from money, to make money. As different technologies became available to improve the productivity in each field of work, people began investing in others' skills. Thus was invented an early predecessor of the corporation. A wealthy investor would invest in farming equipment and land and have skilled farmers do the farming so as to produce more than a farmer would be able to afford at a smaller scale on his smaller piece of land. At this point, the investor still had an interest in ensuring the best quality of output from his land and workers, as that would earn him more money, and things were still reasonable.
Competition emerged as societies grew and multiple people provided the same service, and it became crucial to differentiate one's produce from the other's. This could be done by providing better quality than others or by providing the same good for a lesser price. There was only so much that one could do in increasing the quality, especially in mature industries. Only a small percentage of attempts at innovation succeeded, and cost of researching new innovations was exorbitant. Also, price cuts also had a limit before effecting huge losses.
Then, a brainwave came to the rescue, probably encouraged by newer and wider reaching faster means of communication (printing, radio, telegraph, tv, and more recently the internet). People were excited by the power of the new media, and were easily influenced by what they heard, read and saw. Advertising and other forms of marketing were born. Every available medium of the time was used to bombard the user with marketing messages. At some point, investors and executives at the companies realized that this was way more effective than either innovation or cost cutting. Investments shifted dramatically towards marketing and less and less was spent on innovation. The users were kept mesmerized by well concealed rhetoric and flashy glamorous advertisement. Brands took over the product. It became hard for the consumer to know what value really lay in a product, and they were systematically hypnotized into choosing brands instead of what they needed. Money was spent based on what they knew about the brand, and what they had heard about the product, and (granted, in an oversimplified view,) the ones with the most advertising budget won the customer. So this was the beginning of the downfall of value, but it had only just begun. The handful of customers who were able to lift their head above the din of the blasting marketing messages could see that things werent quite as good as they used to be. There were many more choices, many more new things, but none of them had the rigorous dedication to quality and providing value that had existed in the past. From the company's angle, now all that mattered was how frequently they could bombard the world with messages of innovation and messages of value, and deliver something that the world would relate to the messages. So, there was a rush to produce things in shorter and shorter times. While some pride our current times and the rapidity of churning out goods compared to the past, few seem to notice the enormous compromise in quality that it brings along.
Now there were hundreds of companies creating similar things, and everyone got wise to the marketing and rapid delivery formula. They needed other ways to get ahead of their competition and make money. Another ingenious idea hit the world, protection of assets - in the form of patents, copyrights, trademarks. The ingenious inventor of this idea probably thought: if I can get the law to support me, and prevent competitors from building anything I build, then I can reap the benefits of my idea without my competitors eating a free lunch off of it. Probably a reasonable thought, even when stated as above. However, it didnt quite stop there. This whole notion of protection of intellectual assets went overboard - people began to patent everything from words and phrases to wild herbs to the blue sky (not sure of the last one... yet) and that wiped out the ability of anyone to do pretty much anything new without violating some patent or copyright. Innovation and creation of value was almost dead.
Now, quality dropped so low that people were taking notice. They whined to the corporations, and the corporations who were now wizards in the craft of converting anything into money, found a way to make money off of that as well. The amazing solution was a support contract. Pay me oodles of money in addition to what you pay for what you buy, and I will fix your good even after you bought it. And then, for added good measure, the companies spent a lot of money marketing the support contracts as well. People were too dazed at this point to realize that the same company that did not want to spend upfront in providing high quality in the product would not be particularly interested in investing in excellent after sales support. They went out with a pleasant smile and paid , oh, I don't know, 20-40% more, for the same good. And what did they get when the good went bust? They got to call a toll free (yes absolutely toll free!) number. First off they are met by an automated system that proffers several advertisements, other ways to get help, and upto nine options, none of which match the problem at hand. If they were lucky, they would have a way out of the automated system, and if they had an IQ of over 6000, they would find it, and then, after a sunny afternoon spent listening to classical music interspersed with more ads, they would finally get connected to someone in a rural extremity of a yet unnamed country somewhere out there, where only the supervisor's supervisor would speak some dialect of english that they could understand. After a long delay answering questions involving personal identification including birthmarks in private areas, and (finally!) describing their problem, they would, in many cases, be politely directed to the fine print in the contract that excludes this particular issue. If they called hardware support, they would be told to contact the software company, and vice versa. They would then likely bang the phone down in frustration, and then have to call the phone company support to fix the phone, and the experience would repeat. Now, initially this was met with a lot of indignation and hullaballoo, but eventually people begin to accept at least at some subconscious level that they are decidedly inferior to the corporation as an entity in society.
Some people did whine and were hit with another brilliant rebuttal. Companies were now, routinely owned by people, and most of the large companies were owned by the public. So, if you did manage to bring this up to a company, this is what would happen: In an unstated, but pointedly implied moral argument, the company would shrug (assume for a moment that a company can, somehow, shrug, as well as argue), and argue that their first allegiance is to the shareholders, the common people, in other words, people like you. What would you say to that? Maybe you do own some shares in the company, and so you choose to shut up. So, the shareholder comes first, the company growing and expanding comes next, marketing and advertisement campaigns come third, patent and legal patent related expenses come fourth, and somewhere down towards the end of the priority chain, comes the customer, probably just above the money spent on support costs, which is the biggest overhead. But then that doesnt seem obvious, because at every higher priority point, the customer and the value provided is mentioned as the most important priority - be it to the shareholders, or in the advertisement campaigns, or while filing for a patent.
And then, as always, everyone caught on to all that, and yet another epiphany entered the mix - after making all the money people are willing to pay for exquisite fantasies (ads), mediocre products, and horrible support, the next mantra was, money for nothing! And this happened in various forms, and arms were twisted hard to make that the only choice. If you think I am talking about someone else, I am referring to anything where you pay a monthly subscription for a sparingly used service. A wireless plan with a two year agreement, a cable tv package, a monthly minimum phone bill, a gym membership where the cost of reenrolling if you take a break is exorbitant. In all these cases, a person from a hundred years ago would probably laugh at you if you offered one of these as an option. However, today, more and more offerings are moving towards this model. Companies realize (duh) that free money is the best money, and would love to get as much of it from you as they can. They have again, invested strategically, to find ways to make this the only reasonable option, by making other alternatives exorbitantly unaffordable. For instance, everytime I used to call my cell phone company, they would talk about this great offer of so much off, free candy, something, if I agreed to a) get a new line with a two year agreement , or, once they realize I'm not that stupid, b) renew my almost ended contract for another two years. And that adds even more incentive for the product development side of the house to avoid thinking about value. If all the customers in my market segment are tied in to a hundred year agreement, to the full extent of their salary inflation adjusted to account for future pay hikes, then I can pretty much stop investing in developing new products, or, if that seems too drastic, move the development to a smaller rural district in that unnamed country down the road from my support office. Can't I?
Leap forward many years, and man invented an abstract form of currency. Maybe it began due to seasonal demands - if grain was harvested and available only in a part of the year, then the farmer needed to have some means to sell it, and then get wool later in the winter. This was made possible in the form of coins, and later joined by notes to form money. So far, so good. Each person had an honest commitment to create the best quality of good to provide to get the most money, so they could afford the best for themselves and their families round the year.
Then came other abstractions of value, further removed from money, to make money. As different technologies became available to improve the productivity in each field of work, people began investing in others' skills. Thus was invented an early predecessor of the corporation. A wealthy investor would invest in farming equipment and land and have skilled farmers do the farming so as to produce more than a farmer would be able to afford at a smaller scale on his smaller piece of land. At this point, the investor still had an interest in ensuring the best quality of output from his land and workers, as that would earn him more money, and things were still reasonable.
Competition emerged as societies grew and multiple people provided the same service, and it became crucial to differentiate one's produce from the other's. This could be done by providing better quality than others or by providing the same good for a lesser price. There was only so much that one could do in increasing the quality, especially in mature industries. Only a small percentage of attempts at innovation succeeded, and cost of researching new innovations was exorbitant. Also, price cuts also had a limit before effecting huge losses.
Then, a brainwave came to the rescue, probably encouraged by newer and wider reaching faster means of communication (printing, radio, telegraph, tv, and more recently the internet). People were excited by the power of the new media, and were easily influenced by what they heard, read and saw. Advertising and other forms of marketing were born. Every available medium of the time was used to bombard the user with marketing messages. At some point, investors and executives at the companies realized that this was way more effective than either innovation or cost cutting. Investments shifted dramatically towards marketing and less and less was spent on innovation. The users were kept mesmerized by well concealed rhetoric and flashy glamorous advertisement. Brands took over the product. It became hard for the consumer to know what value really lay in a product, and they were systematically hypnotized into choosing brands instead of what they needed. Money was spent based on what they knew about the brand, and what they had heard about the product, and (granted, in an oversimplified view,) the ones with the most advertising budget won the customer. So this was the beginning of the downfall of value, but it had only just begun. The handful of customers who were able to lift their head above the din of the blasting marketing messages could see that things werent quite as good as they used to be. There were many more choices, many more new things, but none of them had the rigorous dedication to quality and providing value that had existed in the past. From the company's angle, now all that mattered was how frequently they could bombard the world with messages of innovation and messages of value, and deliver something that the world would relate to the messages. So, there was a rush to produce things in shorter and shorter times. While some pride our current times and the rapidity of churning out goods compared to the past, few seem to notice the enormous compromise in quality that it brings along.
Now there were hundreds of companies creating similar things, and everyone got wise to the marketing and rapid delivery formula. They needed other ways to get ahead of their competition and make money. Another ingenious idea hit the world, protection of assets - in the form of patents, copyrights, trademarks. The ingenious inventor of this idea probably thought: if I can get the law to support me, and prevent competitors from building anything I build, then I can reap the benefits of my idea without my competitors eating a free lunch off of it. Probably a reasonable thought, even when stated as above. However, it didnt quite stop there. This whole notion of protection of intellectual assets went overboard - people began to patent everything from words and phrases to wild herbs to the blue sky (not sure of the last one... yet) and that wiped out the ability of anyone to do pretty much anything new without violating some patent or copyright. Innovation and creation of value was almost dead.
Now, quality dropped so low that people were taking notice. They whined to the corporations, and the corporations who were now wizards in the craft of converting anything into money, found a way to make money off of that as well. The amazing solution was a support contract. Pay me oodles of money in addition to what you pay for what you buy, and I will fix your good even after you bought it. And then, for added good measure, the companies spent a lot of money marketing the support contracts as well. People were too dazed at this point to realize that the same company that did not want to spend upfront in providing high quality in the product would not be particularly interested in investing in excellent after sales support. They went out with a pleasant smile and paid , oh, I don't know, 20-40% more, for the same good. And what did they get when the good went bust? They got to call a toll free (yes absolutely toll free!) number. First off they are met by an automated system that proffers several advertisements, other ways to get help, and upto nine options, none of which match the problem at hand. If they were lucky, they would have a way out of the automated system, and if they had an IQ of over 6000, they would find it, and then, after a sunny afternoon spent listening to classical music interspersed with more ads, they would finally get connected to someone in a rural extremity of a yet unnamed country somewhere out there, where only the supervisor's supervisor would speak some dialect of english that they could understand. After a long delay answering questions involving personal identification including birthmarks in private areas, and (finally!) describing their problem, they would, in many cases, be politely directed to the fine print in the contract that excludes this particular issue. If they called hardware support, they would be told to contact the software company, and vice versa. They would then likely bang the phone down in frustration, and then have to call the phone company support to fix the phone, and the experience would repeat. Now, initially this was met with a lot of indignation and hullaballoo, but eventually people begin to accept at least at some subconscious level that they are decidedly inferior to the corporation as an entity in society.
Some people did whine and were hit with another brilliant rebuttal. Companies were now, routinely owned by people, and most of the large companies were owned by the public. So, if you did manage to bring this up to a company, this is what would happen: In an unstated, but pointedly implied moral argument, the company would shrug (assume for a moment that a company can, somehow, shrug, as well as argue), and argue that their first allegiance is to the shareholders, the common people, in other words, people like you. What would you say to that? Maybe you do own some shares in the company, and so you choose to shut up. So, the shareholder comes first, the company growing and expanding comes next, marketing and advertisement campaigns come third, patent and legal patent related expenses come fourth, and somewhere down towards the end of the priority chain, comes the customer, probably just above the money spent on support costs, which is the biggest overhead. But then that doesnt seem obvious, because at every higher priority point, the customer and the value provided is mentioned as the most important priority - be it to the shareholders, or in the advertisement campaigns, or while filing for a patent.
And then, as always, everyone caught on to all that, and yet another epiphany entered the mix - after making all the money people are willing to pay for exquisite fantasies (ads), mediocre products, and horrible support, the next mantra was, money for nothing! And this happened in various forms, and arms were twisted hard to make that the only choice. If you think I am talking about someone else, I am referring to anything where you pay a monthly subscription for a sparingly used service. A wireless plan with a two year agreement, a cable tv package, a monthly minimum phone bill, a gym membership where the cost of reenrolling if you take a break is exorbitant. In all these cases, a person from a hundred years ago would probably laugh at you if you offered one of these as an option. However, today, more and more offerings are moving towards this model. Companies realize (duh) that free money is the best money, and would love to get as much of it from you as they can. They have again, invested strategically, to find ways to make this the only reasonable option, by making other alternatives exorbitantly unaffordable. For instance, everytime I used to call my cell phone company, they would talk about this great offer of so much off, free candy, something, if I agreed to a) get a new line with a two year agreement , or, once they realize I'm not that stupid, b) renew my almost ended contract for another two years. And that adds even more incentive for the product development side of the house to avoid thinking about value. If all the customers in my market segment are tied in to a hundred year agreement, to the full extent of their salary inflation adjusted to account for future pay hikes, then I can pretty much stop investing in developing new products, or, if that seems too drastic, move the development to a smaller rural district in that unnamed country down the road from my support office. Can't I?
posted by An at 12:03 AM
1 Comments:
Wow, good job. I especially liked the part about how companies are more important in society than individuals are - which is decidedly true, particularly from the tax perspective. Excellent.
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