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    The Economist's new Schumpeter column continues to disappoint.
    By Fred Phillips | February 6th 2010 11:42 PM | 1 comment | Print | E-mail | Track Comments
    About Fred

    After a dozen years as a market research executive, Fred Phillips was professor, dean, and vice provost at a variety of universities in the US, Europe...

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    I wrote this letter in response to his1 December 19 column. The letter sank without a trace, despite that it was admirably concise and pithy - if I do say so myself.
    Sir - Schumpeter's defense of business (The silence of Mammon, December 19) considers no alternatives, and is thus weak. Business as a “remarkable exercise in cooperation”? Religious institutions have a far longer track record in this regard. "Creatively redefining the limits of the possible?" Scientific research and education do that, and are the strong suits of the universities. A “check on the power of governments”? No, the voters are supposed to take care of that, and I'm aware of no theory that puts that burden on business. On the contrary, corporations are chartered by the sovereign with the expectation of a social return, even if the latter amounts only to obeying the law, creating jobs, and paying taxes. Companies today do these things only sporadically. Business needs stronger arguments than Schumpeter's, if it is again to shine in the public eye.
    Fred Phillips
    Senior Fellow, IC2 Institute of the University of Texas at Austin
    Then came the January 16 column "Driven to distraction." In it, Schumpeter defends Taylorist pay-for-performance against the alternative view (championed by Daniel Pink) that job satisfaction is internally generated. Let's count the mushmouthing and waffle words:

    "Mr Pink argues that carrots and sticks... can also be counterproductive..."

    "Four reviews of research [conclude] that pay-for-performance can increase productivity dramatically."

    "...at a Chinese electronics factory, performance-related pay is an excellent motivator." (Unfair! Pink didn't say otherwise - only that intrinsic rewards are better motivators.)

    "Companies that eschew extrinsic rewards risk lumbering (sic) themselves with sluggish dullards."

    "...intrinsic rewards can go hand in hand with a taste for extrinsic gain."

    "But properly managed, carrots and sticks can be immensely powerful tools for boosting productivity..."

    I've added all the italics. On this bed of quicksand, Schumpeter erects a brick conclusion: "Frederick Taylor still has the edge over his critics." Amazing.

    Somehow throughout the column, Schumpeter manages not to mention bankers' bonuses, which last year were largely pay for non-performance. A much more interesting column might have explored the motivation, or research basis, for this. Were the bonuses to keep people from leaving, who might do better next year? Neither Pink's nor Taylor's research touches on this odd idea - and I'll bet no one else's does either.

    I contrast Schumpeter's clunky column with The Economist's recent series of obituaries, which have been uniformly fascinating and moving.
    ____________________________
    1 The real Schumpeter is long dead, of course. Like all Economist magazine columnists, this one has adopted a nom de wordprocessor. And thus of course might be her, not him.

    Comments

    Steve Davis

    Nicely put Fred, admirably concise and pithy. (Where have I heard that before?) I've always regarded The Economist as a magazine that says much without saying much at all, and the quotes you've given here show me that not much has changed!