AUGUST 8, 2012 | BY MENCKEN'S GHOST
What Washington has in common with Sears, Montgomery Ward, Woolworth, and GM
In the mid-1970s, Sears built the 110-story Sears Tower in Chicago’s Loop and filled many of the floors with its bloated corporate staff instead of spending the money on upgrading its stores, merchandise, and store personnel. Soon after, Sears began to lose touch with the marketplace and is now a dying company.
North of the Loop was the fancy headquarters building of Montgomery Ward, which is now in the ashbin of history due to its stores looking like ashbins while its central staff grew in size, pay, power, and separation from the marketplace.
The Woolworth building still stands in Manhattan as an ornate architectural masterpiece, but the Woolworth Company is in the ashbin with Montgomery Ward.
At the same time that Sears was building its monument to bloat, bureaucracy, overhead and centralization in the 1970s, General Motors was receiving acclaim in the business press for its General Motors College, where GM managers were taught to think and act alike – like bumbling bureaucrats, bean counters, and producers of thick policy manuals instead of quality cars. The college did not teach the new manufacturing techniques of quality guru W. Edwards Deming, who had to go to Japan to find a receptive audience.
This story has been repeated so many times throughout history that it seems to be an immutable law of nature. Time after time, successful organizations end up dying after centralizing authority in large headquarters and becoming top-heavy with apparatchiks.
I’ve studied this phenomenon for 40 years, published a business book on the subject, consulted with numerous organizations of all sizes on the superhuman effort it takes to reverse course, and stood before thousands of skeptical and angry managers and employees to explain why survival depended on doing things differently. The most resistance was always from those who were the least capable of doing the real work of the organization.
The same immutable law applies to nation states, including, sadly, the United States, which was established on the organizational principle of a small federal government and semi-autonomous states. Ever since the nation’s founding, power, money and apparatchiks have gravitated to the country’s headquarters in Washington, D.C., not only to the federal government itself but also to the private-sector firms that feed off the federal government.
Washington, D.C., and the surrounding suburbs are like the former headquarters of Sears, Montgomery Ward, Woolworths, and GM: bloated, bureaucratic, out of touch, unskilled at real work, and living on the diminishing wealth produced in the hinterlands.
The population of metro Washington, D.C., has increased 86 percent from 1970 to today. During the same period, the rest of the nation has grown 52 percent.
Metro Washington is now the richest metro area in the nation, with an average household income of $84,523, versus a national average of $50,046.
One of the reasons for this high income is that the average compensation (including benefits) of the more than 170,000 federal employees who reside there is approximately $126,000.
The metro area also has nearly 13,000 registered lobbyists, is home to defense contractors Lockheed Martin Corp. and General Dynamics Corp., and leads the nation in the number of lawyers per capita, with one for every 12 residents.
These factors have helped to maintain a relatively low unemployment rate of 6.1 percent in the metro area, in spite of the high unemployment of poor blacks in the inner city of D.C.
What do all of these people do? Most issue diktats. The diktats are summarized in the Federal Register, which will have more than 80,000 pages this year, or four times as many pages as it had in 1970.
Many of the diktats pertain to education, which, since the U.S. Department of Education was established in 1979, has become more regulated, centralized and uniform across the land. Just like students at the General Motors College, students in K-12 schools and universities are taught to think alike, but about government instead of car making.
Unfortunately, the law profession is the dominant profession in Congress, the Executive Branch and, of course, the Supreme Court. This is unfortunate because lawyers are the absolute worst in managing people and organizations – even worse than college professors – due to learning to work as isolated individuals in law school and law firms instead of as interdependent members of teams trying to achieve common goals. They will be the most resistant to shrinking the nation’s headquarters and returning authority to the states and the people.
But there is still hope. After all, the Sears Tower still exists, albeit under a different name after being sold to an investment group. Maybe we can sell Washington to the Chinese.
Mencken’s Ghost is the nom de plume of an Arizona writer who can be reached at email@example.com.