I hate corporate jargon at least as much as the next person, and “Think Win-Win!” is one of many good reasons to be self-employed. Still, it represents an interesting idea: how do we find solutions to problems that make everyone better off? To too many managers, the phrase means “I’m going to screw you but will try to convince you that you are now better off”, but that doesn’t mean it never happens.
Economics is the study of how to satisfy infinite wants with finite resources. Vilfredo Pareto, an Italian economist who died in 1923, was interested in exposing flaws in the Italian government. He found that about 80% of the land in Italy was owned by 20% of the people. Furthermore, he found that in almost every society, a small percentage of the people have the bulk of the wealth. The exact proportion could vary; in some places, 20% of the people held 80% of the wealth, and in some places, 5% of the people held 95% of it. Pareto developed equations to explain the phenomenon, which look scary (you can take a gander on the Wikipedia page.) The explanation is easier: every time you increase the amount of an item in a distribution, whether it be wealth, population, or catastrophic accidents, its frequency will decline by a set proportion. Hence, fewer people are wealthier than poor, fewer cities have large populations than small populations, expensive car accidents are less common than fender-benders. This is the genesis of the so-called “80-20 rule” that is almost as beloved by managers as “think win-win!”
Pareto then theorized that the problem with this distribution is that no one can be made better off without someone being worse off. That, he said, was why poverty is intractable. To improve the lot of the 80% of the people without wealth, those who have it would have to give some up, and they wouldn’t like that. Economists say that this type of distribution is “Pareto optimal”. It may not be optimal for society, of course, but hey, there is no free lunch. (Economists like to say that a lot, too.) (more…)
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First things first. My friend Sam and I were just looking for a little mindless diversion on that November Sunday – privileged with the rare use of an automobile and searching the Chicago Tribune’s weekend section for someplace to drive it. When we saw the listing, buried in minuscule type, it seemed too good to be true – a concert at the Rosemont Horizon featuring the reunited Monkees, the pretty dude from Herman’s Hermits, and a couple other ’60s has-beens, and tickets were only $10! The 5 p.m. start time seemed a bit suspicious – did the Monkees need to play Early-Bird Specials for their geezer fans? – but nonetheless we piled into Sam’s borrowed lime-green Oldsmobile and headed west.
Now, I grew up in a small town in the South – the type where bitter people (mostly Protestants) cling to their guns and religion. So while I grew up a heathen, at least relatively speaking (my family were Unitarians, and we only occasionally practiced that), until I went to college in the Big City I had little experience with the phenomenon known as the Lapsed Catholic. I quickly learned, however, that the Formerly Faithful can be divided into two groups: those who are merely dismissive of the dogmas of their youths, and those who are downright angry. Sam was the angry type … so much so that his back would stiffen at the first mention of religion, and the slightest disagreement over the merits of belief would send him into an apoplexy of cursing and red-faced denunciation. (This trait somehow never completely ruined his friendship with his roommate, who shortly after graduation decided to enter the priesthood. Swear to God.) 