Dysfunctional organizations, dysfunctional countries, and Grey's law

It is impossible to distinguish between incompetent leaders and maliciously destructive ones.

by T. Nelson


Dysfunctional organizations, dysfunctional countries, and Grey's law

I t happens all the time in business: incompetent managers get control of a business and run it smack into the ground. Working conditions deteriorate, people start calling each other names, the place gets dirty, less and less work gets done, and cronyism and nepotism become the principal means of getting ahead.

In such a company, people stop caring about right and wrong. Some start to care only about grabbing as much money as they can. Others escape the unpleasantness of working in a failing organization by taking up little pet causes, like deciding who gets to put pictures on the bulletin board and what color thumbtacks people are allowed to use. Social divisions and cliques are created. As interpersonal conflict rises, productivity plummets.

Grey's Law: Any sufficiently advanced incompetence is indistinguishable from malice. I once worked at such a company. I was a science guy surrounded by talented engineers. But their management was incompetent. The engineers would gather in the main office ten minutes before quitting time and stare silently at the second hand of the Official Clock. When it hit twelve, they didn't trample each other, but being familiar with the principles of hydrodynamics they left with remarkable efficiency, in an amazing example of laminar flow. Within seconds the lights were out, and I found myself standing in a deserted office. Those engineers couldn't wait to get out of there.

Were these employees committed to helping the company? Did they lie awake at night doing heat flow calculations in their head to help improve the bottom line? Hell, no. They were trapped in a job they hated. Some of them were slowly going insane, and spent their days in displacement activity—useless distractions like washing out their coffee cup. The rest engaged in name-calling, gossiping and back-stabbing. The only thing they all had in common was that they loathed the boss. The boss thought they loved and respected him. He was wrong.

When your senior engineers spend their days folding paper cranes and sanitizing their coffee cups, you know your company is doomed. People don't have to “go Galt” to bring down the system. When an organization doesn't let their talented people be productive, it cannot survive, and it will collapse automatically.

The same social dynamic is happening in America today. The government-media-academia complex—that is to say, politicians, newspapers, and academics—are committing what Selwyn Duke called “cultural genocide” against America. Our leadership is so bad that within fifty years, if we continue along this path, America will be indistinguishable from today's Nicaragua. That is to say our culture will be mostly garbage, our people will be mostly Hispanic, and anyone who mentions archaic concepts like liberty or individualism will be mostly ridiculed and probably murdered.

To the average citizen in a dysfunctional country, just like the average employee in a dysfunctional company, the question naturally arises as to whether their leaders are evil or unimaginably stupid. It's a perfect illustration of Grey's law: Any sufficiently advanced incompetence is indistinguishable from malice. But the question is false. It only arises because the employee (or citizen, as the case may be) assumes the management's goal is to keep the company (or the country) running, not run it into the ground. That is not necessarily the case.

In a dysfunctional organization, the organization's goals are misaligned with the individual's goals. In a well designed organization the individual benefits personally by doing things that benefit the organization. But often organizations create perverse incentives that make it more beneficial for the individual to do things that destroy it rather than make it healthy. This may appear to be evil behavior, motivated by hatred for the company (or country), but in fact it's the result of weak, unimaginative leaders who passively accept the incentives that have been laid out for them. Their evil lies in their inability to lead.

Here are some examples taken from the contemporary news. You can probably think of many others.

Perverse incentives in contemporary America
Exam­ple Real pur­pose Actual effect
Making the tax code insanely complex More pork going to special interests Trillions of dollars wasted trying to comply; companies frantically trying to relocate to other countries to avoid bankruptcy
Throw­ing open the borders Bringing in more Demo­crats to pad the voting rolls Importing poverty, socialism
Paying people not to work Vote buying Welfare becomes a permanent lifestyle

In each of these examples, individuals benefit from doing things that harm the organization, in this case the USA. For example, most people would probably agree that penalizing welfare recipients for finding work creates an incentive not to work, and that this harms the economy. But they're unwilling to change it because it benefits them personally.

A classic symptom in pathological organizations is the ascendancy of a yes-man class, which receives benefits by telling those in charge what a great job they're doing. Sometimes the yes-men believe what they're saying, but often it's an example of cynical manipulation of the system. In America, the role of the yes-man is being played by the mainstream media. They too are benefiting from doing things that harm the organization.

Ironically, a dysfunctional organization may appoint leaders who really do hate it, and wish to destroy it, thereby making the cycle complete. Throughout history, this is how many countries and empires have been destroyed. For example, a politician who wishes absolute power would have to disguise his goals by pretending to be benevolent. A politician who hated his country, and wanted to create poverty and disorder in order to reduce its global standing, would have to disguise his intentions in a cloak of incompetence. That is the situation we're in now.

In a dysfunctional company, there's a tendency to blame the employees. Throw the bad ones out, and things will get better. But that rarely works, because the reason the employees are bad is that they refuse to cooperate with a management whose goal, as they see it, is to destroy the employees' livelihood. The organization is harming the individuals, so they resist.

In a dysfunctional country, the tendency is to blame the voters. But what determines who the voters elect? If the system provides an incentive to vote for whoever promises them the most free stuff, or whoever provides the most absolution from their collective guilt, they will vote accordingly. If the system is functional, their selfish voting will elect a leader who is good for the country. If not, they will elect incompetent leaders time and again and never understand why government always seems never to work properly. In fact, it couldn't be any other way.

In any dysfunctional organization, the organization's goals are misaligned with the individual's goals. The individual benefits from doing things that harm the organization, and vice versa. It is an unsustainable situation. Either the individual or the organization, or both, must inevitably lose. The solution is not to get rid of one or the other, but to realign the system of incentives. It will take years because peoples' expectations have to change as well. But short-term solutions that don't change this structural problem are bound to fail.

See also:

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