A
anon_xdc8rmuek44eq
Guest
Listened to a good chunk of this recently and hope to finish it. Really fascinating stuff. Hoping for an intellectual/academic discussion here and not a political one. The authors/subjects here take a look at American politics as an industry - and the results are not good (for the people - they're very good for politicians and their partners):
http://freakonomics.com/podcast/politics-industry/
Excerpts:
Katherine Gehl was the C.E.O. of the company. It had been founded well over a century earlier by her great-grandfather. For years, Gehl Foods sold the standard dairy items: butter, milk, ice cream. In the 1960s, they got into pudding and cheese sauces. And more recently, Gehl Foods kept keeping up with the times.
GEHL: High-tech food manufacturing.
Meaning: low-acid aseptic processing and packaging, using robots. Which creates shelf-stable foods without the use of preservatives. The process is also useful for products like weight-loss shakes and iced-coffee drinks. Under Katherine Gehl, Gehl Foods had more than 300 employees and was doing nearly $250 million a year in sales. But: there were a lot of challenges. Why? Because the food industry is incredibly competitive. There are new competitors all the time; also, new technologies and new consumer preferences. So, to plot a path forward, Gehl turned to one of the most acclaimed consultants in the world.
PORTER: I’m Michael Porter, I’m a professor at Harvard Business School and I work most of the time on strategy and competitiveness.
Porter’s in his early 70’s. As an undergrad, he studied aerospace and mechanical engineering, then he got an M.B.A. and a Ph.D. in business economics. So he understands both systems and how things are made within those systems. He’s written landmark books called Competitive Strategy and On Competition; he’s cited more than any other scholar in the field. He’s best-known for creating a popular framework for analyzing the competitiveness of different industries.
PORTER: The framework that I introduced many years ago sort of says that there’s these five forces.
These five forces help determine just how competitive a given industry is. The five forces are: the threat of new entrants; the threat of substitute products or services; the bargaining power of suppliers; the bargaining power of buyers; and rivalry among existing competitors. We’re not there yet but if you want to jump ahead and consider how these forces apply to our political system, I’m going to say them again: the threat of new entrants; the threat of substitute products or services; the bargaining power of suppliers; the bargaining power of buyers; and rivalry among existing competitors. You can see why someone like Katherine Gehl, the C.E.O. of a century-old food company, might want to bring in someone like Michael Porter to figure out what to do next.
Having come to the conclusion that the political system operated more like a traditional industry than a public institution, Katherine Gehl and Michael Porter set down their ideas in a Harvard Business School report. It’s called “Why Competition in the Politics Industry Is Failing America.” When you read the paper, right there under “Key Findings,” is this sentence, in bright red print: “The political system isn’t broken. It’s doing what it is designed to do.” In other words, it was no coincidence that politics had become self-sustaining, self-dealing, and self-centered. They were the blue team and the red team — kind of like Pepsi and Coke.
GEHL: Essentially they divided up an entire industry into two sides.
PORTER: And we ended up seeing that it wasn’t just the parties competing. It’s that they had created influence, and in a sense captured the other actors in the industry.
GEHL: So you have media and political consultants, and lobbyists, and candidates, and policies, all divided onto one of two sides.
PORTER: What you see is, the system has been optimized over time.
GEHL: For the benefit of private gain-seeking organizations, our two political parties and their industry allies: what we together call the political-industrial complex.
PORTER: And this industry has made it very, very hard to play at all if you’re not playing their game.
DUBNER: How does the political industry compare in size and scope — dollars, employees, direct and indirect, penetration and influence, let’s say, to other industries that you’ve studied? Pharmaceutical industry, auto industry, and so on.
PORTER: Well, it’s a great question and we have done enormous amounts of work on it. It turns out to be very difficult to get what I would call a completely definitive and comprehensive answer. We estimate that in the most recent two-year election cycle, the industry’s total revenue was approximately $16 billion. This is not the biggest industry in the economy, but it’s substantial.
It’d be one thing if this large industry were delivering value to its customers — which is supposed to be us, the citizenry. But Gehl and Porter argue the political industry is much better at generating revenue for itself and creating jobs for itself while treating its customers with something close to disdain. Kind of like the cable TV industry on steroids. And the numbers back up their argument. Customer satisfaction with the political industry is at historic lows. Fewer than a quarter of Americans currently say they trust the federal government. In terms of popularity, it ranks below every private industry. That includes the healthcare and pharmaceutical industries, the airline industry — and, yes, cable TV.
GEHL: Generally, in industries where customers are not happy and yet the players in the industry are doing well, you’ll see a new entrant. You’ll see a new company come into business to serve those customers.
A new company like … Netflix or Hulu or Amazon Prime or Sling TV or — well, you get the point.
PORTER: So in today’s world, we have the majority of voters say in polls that they would rather have an independent. So in a normal industry, you’d have a whole new competitor coming up that was about independents to serve that unmet need.
GEHL: And yet in politics, we don’t see any new entrants, other than Democrats and Republicans. So why is that? Well, it turns out that our political parties work well together in one particular area, and that is actually colluding together, over time, behind the scenes, to create rules and practices that essentially erect barriers to entry, ways to keep out new competition.
http://freakonomics.com/podcast/politics-industry/
Excerpts:
Katherine Gehl was the C.E.O. of the company. It had been founded well over a century earlier by her great-grandfather. For years, Gehl Foods sold the standard dairy items: butter, milk, ice cream. In the 1960s, they got into pudding and cheese sauces. And more recently, Gehl Foods kept keeping up with the times.
GEHL: High-tech food manufacturing.
Meaning: low-acid aseptic processing and packaging, using robots. Which creates shelf-stable foods without the use of preservatives. The process is also useful for products like weight-loss shakes and iced-coffee drinks. Under Katherine Gehl, Gehl Foods had more than 300 employees and was doing nearly $250 million a year in sales. But: there were a lot of challenges. Why? Because the food industry is incredibly competitive. There are new competitors all the time; also, new technologies and new consumer preferences. So, to plot a path forward, Gehl turned to one of the most acclaimed consultants in the world.
PORTER: I’m Michael Porter, I’m a professor at Harvard Business School and I work most of the time on strategy and competitiveness.
Porter’s in his early 70’s. As an undergrad, he studied aerospace and mechanical engineering, then he got an M.B.A. and a Ph.D. in business economics. So he understands both systems and how things are made within those systems. He’s written landmark books called Competitive Strategy and On Competition; he’s cited more than any other scholar in the field. He’s best-known for creating a popular framework for analyzing the competitiveness of different industries.
PORTER: The framework that I introduced many years ago sort of says that there’s these five forces.
These five forces help determine just how competitive a given industry is. The five forces are: the threat of new entrants; the threat of substitute products or services; the bargaining power of suppliers; the bargaining power of buyers; and rivalry among existing competitors. We’re not there yet but if you want to jump ahead and consider how these forces apply to our political system, I’m going to say them again: the threat of new entrants; the threat of substitute products or services; the bargaining power of suppliers; the bargaining power of buyers; and rivalry among existing competitors. You can see why someone like Katherine Gehl, the C.E.O. of a century-old food company, might want to bring in someone like Michael Porter to figure out what to do next.
Having come to the conclusion that the political system operated more like a traditional industry than a public institution, Katherine Gehl and Michael Porter set down their ideas in a Harvard Business School report. It’s called “Why Competition in the Politics Industry Is Failing America.” When you read the paper, right there under “Key Findings,” is this sentence, in bright red print: “The political system isn’t broken. It’s doing what it is designed to do.” In other words, it was no coincidence that politics had become self-sustaining, self-dealing, and self-centered. They were the blue team and the red team — kind of like Pepsi and Coke.
GEHL: Essentially they divided up an entire industry into two sides.
PORTER: And we ended up seeing that it wasn’t just the parties competing. It’s that they had created influence, and in a sense captured the other actors in the industry.
GEHL: So you have media and political consultants, and lobbyists, and candidates, and policies, all divided onto one of two sides.
PORTER: What you see is, the system has been optimized over time.
GEHL: For the benefit of private gain-seeking organizations, our two political parties and their industry allies: what we together call the political-industrial complex.
PORTER: And this industry has made it very, very hard to play at all if you’re not playing their game.
DUBNER: How does the political industry compare in size and scope — dollars, employees, direct and indirect, penetration and influence, let’s say, to other industries that you’ve studied? Pharmaceutical industry, auto industry, and so on.
PORTER: Well, it’s a great question and we have done enormous amounts of work on it. It turns out to be very difficult to get what I would call a completely definitive and comprehensive answer. We estimate that in the most recent two-year election cycle, the industry’s total revenue was approximately $16 billion. This is not the biggest industry in the economy, but it’s substantial.
It’d be one thing if this large industry were delivering value to its customers — which is supposed to be us, the citizenry. But Gehl and Porter argue the political industry is much better at generating revenue for itself and creating jobs for itself while treating its customers with something close to disdain. Kind of like the cable TV industry on steroids. And the numbers back up their argument. Customer satisfaction with the political industry is at historic lows. Fewer than a quarter of Americans currently say they trust the federal government. In terms of popularity, it ranks below every private industry. That includes the healthcare and pharmaceutical industries, the airline industry — and, yes, cable TV.
GEHL: Generally, in industries where customers are not happy and yet the players in the industry are doing well, you’ll see a new entrant. You’ll see a new company come into business to serve those customers.
A new company like … Netflix or Hulu or Amazon Prime or Sling TV or — well, you get the point.
PORTER: So in today’s world, we have the majority of voters say in polls that they would rather have an independent. So in a normal industry, you’d have a whole new competitor coming up that was about independents to serve that unmet need.
GEHL: And yet in politics, we don’t see any new entrants, other than Democrats and Republicans. So why is that? Well, it turns out that our political parties work well together in one particular area, and that is actually colluding together, over time, behind the scenes, to create rules and practices that essentially erect barriers to entry, ways to keep out new competition.
