Friday, September 23, 2011

Lump of Leadership Fallacy

As I learn more about myself through my regular therapy ses... mean my business classes, I realized that I was guilty of a logical fallacy. It goes beyond a simple logic error. I have been trapped by this fallacy into a harmful way of looking at my life and my future. I have called this the "lump of leadership fallacy". Google this if you want to understand, my explanation sucks.

*waits patiently for you to get back*

Done googling? Ok, cool. I want to talk about leadership, not labor. I believed, until last week, that there was a finite lump of leadership. People are either leaders or not, and positions that need leaders are rare and finite and those people who are leaders ruthlessly compete for them. This is not helpful. Its not even accurate.

There are many kinds of leadership. There are also many opportunities to behave as a leader in unconventional places. Now that I know this, I've stopped worrying about being a leader or being a sheep. Instead, I focus much more on doing the right thing. In this grad school project, I am trying to do the following:

1. Be myself
2. Do useful things
3. Have fun

None of that involves being a better leader. Yet it has made me a better leader anyway because in order to accomplish those things I end up doing the things that leaders do. Maybe I'll never be a rare inspirational leader figure, but I no longer feel like a sheep.

-------- Beware: Below is my attempt to explain a lump of labor fallacy ---------

In economics there is a concept called the "lump of labor fallacy". This refers to the mistaken idea that if a company chooses to replace an employee with another (usually lower cost option), this is a loss for the employee and a win for the new employee (or robot, or whatever).

For example Company X, which I just made up, decides it would be cheaper to replace its five customer service representatives based in Boulder, CO with five call-center operators in India, at a substantial savings. Five people lose expensive jobs, five other people gain jobs. The theory goes that there is only so much labor to go around.

The problem is that even though this sometimes, briefly, works out this way, there's actually no reason why Company X wouldn't reinvest the savings and maybe higher some new people in order to pursue a new business opportunity. The fallacy is a fallacy because even though the threads are complicated to follow, the amount of useful work that people can be paid to do is tied to growth. If companies grow, so does the pool of uses for labor.

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