Off-shoring, off-peopling, its all the same for business

There is a new name for automation, Off-Peopling. I actually think it is more reflective of reality and what do you ask is that reality. Simple, people being paid money to work is BAD for business. Replacing employees with cheaper employees or automation is good for business. The ultimate goal of every business is to pay $0 to produce a product that they are paid $Max for. This is how a business gets to maximum profit for shareholders which is what a business tells you they are in business to do. I suspect if this was the actual goal then a whole bunch of executives would be taking less pay and compensation to help those share holders. Any benefit shareholders get is a side effect to making executives rich. And how do they get rich, well we are right back to where we started reducing costs to $0 while maintaining the maximum prices that consumers will pay.

Wait a minute, consumers, aren't those the folks that work for companies, earn money, and buy things. Oops, Houston, we have a problem. Of course this problem is slowly happening, so slow that we still pay attention to metrics that do not reflect the problem at all. Everyone crows about how many jobs get created or are lost. What we need to think about is what is the average compensation of the jobs created versus the jobs lost (lost to where does not matter). This will show us the trend that consumers face and results in the trend businesses will see in the future. As the average family income goes down or flattens then there will be less and less income spent on all those consumer goods that companies make. Of course this is not true for those executives/boardmembers we talked about. Remember they must continue to get ever richer in order to be motivated enough to do a good job for the shareholders.


This graph courtesy of leftbusinessobserver.com

Businesses will not win the shell game of swapping people around for cheaper people or technology alone. Clearly the use of technology to improve productivity has always been done and I can understand that businesses continue to do this. At the same time businesses need to start to concern themselves more with how to make better use of people and help get more people employed at better wages. Most of the products purchased in the world are purchased by the middle class and poor folks. We need a healthy middle class and we need to eliminate poverty. Eliminating poverty by reducing the middle class does not help and increasing poverty to maintain the middle class also does not help. Trading the middle-class in one part of the world to help another part of the world also does no good in the long run.

Businesses must be profitable and executives must be effectively compensated while at the same time helping to grow those nice consumers that buy all their products.