November 3, 2019

Fatal Abstraction

I was in a meeting the other day with Jackie Reed, the super-sharp CEO of TS Restaurants (Duke’s Waikiki, Jake’s Del Mar, et al) and she pointed out the trap hidden within the apparent safety of checklists.

“When people rely on checklists,” she observed, “they can have a tendency to stop thinking…as if completing the checklist had exhausted their responsibilities as leaders. “

Interesting point. And it got me thinking about what I like to call “Fatal Abstraction,” the propensity we humans have to simplify decision-making via artifacts like checklists and metrics that can – if left un-examined – begin to distance us from our underlying operating realities.

I can remember years ago as a unit manager for Burger King how we turned an intensive three-day analysis of unit operations into a composite score, then evolved over time into managing toward the desired numeric score instead of the critical operational fundamentals upon which the score was constructed.

This is a more common malady than you may think.

Consider how many people take the performance of the stock market as an indicator of the health of the main street economy. While the two may have had a stronger connection in the 20th century, the link between them has largely dissipated. Rising asset prices are not a reliable indicator of the real state of employment or the soundness of the average household balance sheet. Ditto with the GDP data.


The government’s regular employment numbers are also artifacts. They report what might be termed the most optimistic and superficial view feasible of a complex – and troubling – set of realities in the labor market.

Underneath the apparently positive unemployment rate (3.5%), lies a more troubling reality. Over 20 million people have dropped out of the labor force. Whether they are just temporarily frustrated about not finding work or willing to live on disability payments, they are NOT counted in the unemployment figure. A bit of an oversight, no? The share of men aged 24-54 in the labor force has declined from a peak of 98% in 1954 to 88% today. Originally masked by the entry of women into the workforce starting in the 1970’s, this decline has hit black men, veterans, and those with a high school diploma hardest…perhaps a reflection of the loss of high-paying but low-skilled manufacturing jobs.

This highlights the reality of a structural change also at work in the U.S. jobs arena. As noted above, high-paying manufacturing jobs have fled; low-paying, part-time service jobs have proliferated. The labor unions have atrophied. Wall Street applauds when major corporations cut payroll. The next wave of automation – powered by artificial intelligence – stands in the doorway, waiting to eliminate more jobs – including white collar ones.

So, again, the “fatal abstraction” of the conventional unemployment rate misdirects the attention we should be paying to continuing and troubling job erosion.

Want another dot to connect?

Over the past 20 years, we’ve lost 800,000 people to death by drug overdose…68% of them via opioids. In 2017, we lost over 70,000 (we lost a total of 58,000 lives over the course of the Vietnam War).

Look at the geographical pattern of the Opioid Crisis and you’ll find yourself focusing on areas in which the factory jobs have disappeared: New England, the Midwest, Virginia and West Virginia. According to author Alan Krueger, self-reported disability and pain is significantly higher among men out of the labor force.

As a citizen, this situation – which is getting worse – should trouble you. I know it troubles me.

We need to push beyond the misleading abstractions and come to grips with the deeper realities they hide.

It would be nice if one of our presidential candidates would tackle this one in a meaningful way…but I’m not holding my breath