In management settings, the law of opposites applies far more often than many executives would admit. On its face, the law is counterintuitive. One concentrates much energy and time on setting and achieving a certain goal and despite best efforts the exact opposite occurs. This paradoxical construct is closely allied to another behavioral law: that of unintended consequences. Writing about politics and government, Ron Paul gives us some insight and some examples:
Everyone is aware of the Law of Unintended Consequences. Most members of Congress understand that government actions can have unintended consequences, yet few quit voting for government “solutions” – always hoping there won’t be any particular unintended consequences this time. They keep hoping there will be less harmful complications from the “solution” that they currently support. Economics teaches that for every government action to solve an economic problem, others are created. The same unwanted results occur with foreign policy meddling.
The Law of Opposites is just a variation of the Law of Unintended Consequences. When we attempt to achieve a certain goal – like, “make the world safe for democracy,” a grandiose scheme of World War I – one can be sure the world will become less safe and less democratic regardless of the motivation. See The Law of Opposites
Opposites and Consequences in the Workplace
In the business world, both laws frequently apply. Oftentimes employees complain that they are not appreciated or promoted. Worse, they observe less qualified employees who are. My advice on promotion to any employee was: forget about it. Go back, do an outstanding job, and hope that excellence will be recognized and promotion will follow. Most of the time, the complaining individuals spent much of their time not doing excellent work because they spent way too much of their time complaining. These were the schemers, not the doers. Inevitably, the job performance of these employees suffered. These employees did not want to hear: “relax, go back, work hard and do a good job.” They felt there was some secret formula that I, the supervisor, was hiding from them. While it is naïve to think that everyone who does a good job gets promoted, it is a sure bet that needless complaining won’t get an employee there.
Similarly, friends and colleagues in conversation would often say how they wanted to be rich. Rarely does a person become quickly and safely rich. The fantasy goal in these conversations was usually some high risk, short term investment which would provide that mythical short cut to riches. Alas, the only short cut to riches isn’t that at all: it is hard work, thrift, consistency, perseverance, and perhaps a little luck. My best advice to these friends and colleagues is similar to the directives to my “underappreciated” employees: relax, save some money, invest wisely and grow rich over time.
Paradoxically, the more one focuses on a goal, the less the chances of success. It is much like the philosophy of Inner Tennis: Playing the Game: the more one focuses on the score and winning the game the less likely one will succeed. Relax, see the ball, hit the ball, success will follow.
Solving Economic Problems
This personal rumination brings me, once again, to the actions of the current administration. Somehow bailing out the banks and car companies, setting interest rates at zero, and printing money was going to solve our economic problems? What did we get by doing this? A slumping economy (euphemistically called a “soft patch”); falling house prices; 45 million Americans on food stamps, and soaring food and energy prices. While the goal of the Administration was not to destroy the economy, look at what has occurred. Speculators in stocks and commodities have thrived at the expense of taxpayers and millions of our citizens.
The latest Administration skirmish with the law of opposites was tinkering with the strategic petroleum reserve (SPR). On June 23, the International Energy Agency (IEA), with full support of the Obama Administration, released 60 million barrels of oil from its reserves. Fully half of these reserves came from the US. Republicans and others claim that this effort was done for political reasons to lower pump prices for beleaguered consumers before the 2012 election. See Global Oil Reserves Tapped in Effort to Cut Cost at Pump. The Huffington Post applauded this maneuver. While conceding 60 million barrels represents only 16 hours of worldwide oil consumption, prices dropped 6% and speculators were chastened. See Strategic Petroleum Reserve Release under Fire – For Being Effective.
But the strategy was transitory, ephemeral, and ineffective. By Tuesday, June 28th, both crude and gasoline prices surged past the price they had been at immediately before the June 23rd IEA release, a reprieve from higher oil prices of just five days.
Kevin Kerr, of Money and Markets predicts that the release will completely back fire, and will result in a dramatic spike in prices:
It’s another foolish rob-Peter-to-pay-Paul action by the imploding U.S. government.
The careless action taken by the IEA and President Obama, has now underscored how worried they actually are about global economic growth and tight supplies. So in essence this move could actually stoke the fire to drive prices much higher, much more quickly.
In a recent Bloomberg report, Caroline Bain, of the Economist Intelligence Unit, was quoted as saying:
“Although the immediate impact of the IEA’s reserve release will be to depress prices, in the more medium term, it could actually be bullish for prices. Reserves are finite and cannot be released forever.”
Unlike Uncle Ben’s printing press that never seems to run out of ink, oil supplies are not something the U.S. government can simply print more of.
To put the gravity of the situation in perspective, this is only the third time in the past 50 years that IEA has released strategic reserves. And in order to tap the SPR, President Obama had to authorize it.
Frighteningly, the prior two times resulted in super-spikes. And I think we can expect that record to hit 3-0 very shortly. See Why Obama’s Desperate Move Could Send Oil Prices Soaring
Once again, the Administration undertook a policy shortcut for political reasons and it backfired. Further, we have renewed speculation in a key commodity. Wouldn’t a more functional way to deal with high oil prices be to encourage supply increases through responsible exploration, and reduce demand through conservation?
Gimmickry
Unfortunately we live in the age of gimmicks. If we could only find the right interest rate, the most robust stimulus package, the most flexible accounting rules, a way to get the stock market to boom, or the right oil price our economy would be healed and we would again be prosperous. The law of opposites mandates that the longer we focus on the problem and tinker, the more those nasty, unintended, negative consequences will occur and move us further away from our goal. Only hard work, thrift and political integrity solve these intractable problems, yet the Administration and the Federal Reserve keep searching for the quick fix. As long as that is the case, we are doomed to more unintended consequences, shaky financial markets and a weak economy.
loading...
Related posts:
- The Rule of Law: Inefficient is Good
- Bank Bailout v. Rule of Law
- Above the Law: Too Big to Jail
- Faux Powerlessness Part Deux
- Consistently Inconsistent
Tags: accounting, food stamps, IEA, law of opposites, Obama, Ron Paul, strategic petroleum reserve, unintended consequnces, zero interest rate policy
