The 80/20 Fraud.

16 January, 2012

In 1906 the Italian  economist  Economics

I heard somebody offer the opinion that astrology was invented to make economics look like a science! I like this, (but that somebody clearly was not an historian).

At a Canadian university in 1928 a PhD student in economics was failed when he submitted his thesis.

His thesis: That the stock market would collapse the following year.

In 1929 when the stock market did collapse, heralding The Great Depression, the university examiners decided to award the student his PhD after all.

He declined it and for the remainder of his career as a professor, he refused to be called "Doctor". In his case "Mister" outranked "Doctor".

Vilfredo Pareto observed that 80% of the land was owned by 20% of the people.

This ratio has moved into business studies and called The 80/20 Rule, bright sparks tell us that:

• 80% of profits come from 20% of customers.
• 80% of complaints come from 20% of customers.
• 80% of profits come from 20% of the time spent.
• 80% of sales come from 20% of products.
• 80% of sales are made by 20% of sales staff.

Luminaries such as  Henry Kissinger  Henry Kissinger

If you don't know about this man already, do a web search and learn what he did and how he felt/feels about the people of Laos or East Timor (especially the women and children- because women and children are the first casualties in any war), just for starters.

Kissinger is an easy target for commentators but this 80/20 mentality is to be found in the foreign policies of other nations as well.

fell right in love with The 80/20 Rule. Kissinger is quoted as saying, "If eighty percent of your sales come from twenty percent of all of your items, just carry those twenty percent".

And that's the principle underscoring much of what you would study if you went for an MBA.

When you focus on the 20% - which represents 20% of the cost, you lose 80% of your overheads. This can make a company highly profitable in the short term and boost the career prospects of the suits at the top.

When you  cut loose  Cut Loose

"Your call is important to us". "We take every complaint seriously".

Uh huh.

Are you beginning to understand what's behind all these call centres, charged phone calls and minute after minute of "The Very Worst of Mozart - Digitally Irritated" giving you earache while you wait?

Have you figured out that your on-hold call charges are paying for the customer service department - plus a profit?

What they are really sayng is: "Why don't you just go away."

the 20% of your customers who complain, you lose 80% of the complaints and correspondingly you can get rid of most of your customer service department.

Thus far you may be inclined to think The 80/20 Rule makes sense. But let's see how it translates into local business. Here's an example:

A long established art shop in the middle of a medium sized town in the west of England served its customers well for more than two decades. The owner and her one part-time assistant were knowledgeable, welcoming and patient. The shop sold all sorts of art supplies and would cheerfully give advice and order in goods for special requirements.

For this shop, 20% of the goods on the shelves (in jargon called SKUs, or Stock Keeping Units - Ugh!) accounted for the bulk of sales, i.e. the 80%, but all customers were happy because of the wide variety of items from which to choose.

The 20% paid for the overheads and the other 80% kept customers happy.

Then, with a big fanfare and much investment capital behind it, along came one of these giant "We Sell Everything" shops and set up on the outskirts of town where there was plenty of Council-subsidised free parking.

The catch? Well, actually they did not sell everything. What their art department did sell was exactly and only (remember Henry Kissinger?) the 20% of what the little shop sold and for several months they sold it at a discount.

The little shop consequently lost much of its bread and butter trade. It was simply a matter of time before the little shop was forced to close. This meant the 80% of the goods on the shelves were no longer available to local customers. Choice died.

The local politicians? They're part of it. The local Member of Parliament for this little shop is himself an MBA, as is his wife. Neatly once removed, he is not directly responsible for the business actions of his wife. However, she has worked for two of Britain's biggest supermarket chains and was in senior management when they started locating their 80/20 mini-supermarkets in Britain's high streets, in the process putting many small shops out of business.

In England, local people have fought tooth and nail to prevent these 80/20 mini-supermarkets getting permission to invade. Local Council politicians, almost without exception, quickly give permission. Anyone besides me smell corruption?

The 80/20 Rule merges with an applied form of  utilitarianism  Utilitarianism

It's worth doing a search on utilitarianism, but I'd suggest you don't wander too deeply into the quicksand of philosophical definition and discussion.

Utilitarianism might have started as a subject of philosophical discussion, but for the purposes of this page and, more importantly, for the purposes of our present world and the direction it is taking (or is being taken) we need to see utilitarianism through the eyes of our rulers and the accountancy lens of The 80/20 Rule.

Crudely put, 80/20 privatized utilitarianism means if you are not one of the net contributors then you shouldn't be breathing the air of those who are.

It is not by chance or negligence that the elderly are dying unnecessarily in many British hospitals and nursing homes. Or even in their own homes in winter because they cannot afford heat. For today's profit-driven 80/20 rulers these people are a net drain on resources and are therefore disposable. My guess is that 20% of hospital patients account for 80% of the expenditure. Just like complaints, if you get rid of the 20% you lose 80% of your cost. Feel safe in hospitals?

An illustration:

In the old days of British hospitals, a hospital was determined to be clean and hygienic only when the meticulous and caring Matron with real authority was satisfied. Under today's regimes a hospital is determined to be clean when the manager holds up a piece of paper and says, "I have a receipt that proves I have paid to have the hospital cleaned by an outsourced company with the lowest bid."

80/20 utilitarianism is euthanasia hidden in plain sight.

What they are really saying is "Why don't you just die." , made all the more sinister by privatisation.

In our present world, our rulers are bent on privatising everything. From the point of view of the average person, this is not a good thing.

Privatisation places our infrastructure and essential services into the hands of companies who answer only to their shareholders, even though you may have noticed that the word "stakeholders" has crept into the discussion. Using the word "stakeholders" gives the impression these companies include in their decision making process their customers, their employees and the people living in areas where they are located.

This is all smoke and mirrors.

A director of a privatised British bus company once said to me, "They think it's about serving the customers. It's not. It's about making money."

So, if you want a little lens cleaner, here it is again for you to use whenever anyone tries to fog up your glasses:

• They think it's about serving the customers.
• It's not.
• It's about making money.

And for emphasis:

• And it's only about making money!

Privatised companies are dedicated to The 80/20 Rule. So, using bus companies as an example, they focus on the 20% of the routes that earn them 80% of their revenue and slough off the other routes. Local authorites must then figure out how to service the unprofitable routes.

I don't think this is altogether accidental and I see it as gradually nudging the population into urban and suburban areas where public transportation can be run at a profit and people more easily controlled.

When you start looking at privatising hospitals, prisons, youth detention prisons and so on, it gets really scary because they are bad enough as it is (For anyone in Canada, check out some of the deaths in youth detention). In Britain, it is thought the government (and this is probably true no matter which party is in government) wants to privatise everything. This, in my view, is behind the treatment of the elderly.

For one thing, surgery and other treatments for the elderly have a longer waiting period than for younger patients. Since hospital managers are mostly accountants and mostly neither terribly bright nor terrribly caring and work primarily for their inflated salaries and bonuses, they long ago figured out that it's far cheaper to provide medical treatment for old people who are dead.

Read the papers. (For example:The Telegraph 05 December 2011) In many British hospitals the elderly are fast tracked to death.

It is that brutal.

You are likely familiar with the good old bell curve. Here's one from Wikipedia (Hover your mouse over the thumbnail to enlarge)

It's the middle bulge the 80/20 boys love so much. You can see that roughly 20% of the curve contains roughly 80% of the population.

Now, turn this curve upside down and you will get an idea of how the 80/20 boys perceive the costs of maintaining the roughly 20%. In their perception costs are the inverse we see when we turn the graph upside down.

The white area represents the costs (in their minds - just as Kissinger said).

You can see that the 80% of the population costs approximately 20% of the overall cost. So, following Kissinger, just keep the 20% cost.

This thinking also runs deep in our personal lives. As, increasingly, desire and expectation are moulded by commercial materialism infused via mass media  marketing  Marketing

You must have heard this before, but as a reminder:

Marketing: the business of getting you to buy something you don't need with money you don't have.

, instinctively people focus on the 20% of cost, time, effort, intellect (complete the list yourself as an exercise) that yields 80% of our happiness, the 80% of the cost, time, effort, intellect (and so on) gets trimmed. I see this as orchestrated and reinforced selfishness, and we fall into it all too easily.

But what is trimmed?

Well, (and you will certainly be able to add to this list) here's a few I can think of immediately:

• Unborn babies (less than "perfect", wrong sex, inconvenient etc.).
• Old people who hinder our lifestyle and cost a lot.
• The mentally ill.
• Time - spent with family, in learning, in helping others.
• People behaving badly (better to store them - out of sight, out of mind)

And so on. It's an uncomfortable exercise, but for  disciples of Jesus Disciples of Jesus

Followers of Jesus in the New Testament did not call themselves "Christians". This name was given to them, probably in derision, by people antagonistic to anyone who followed Jesus. Another derisory term used was "followers of the way".

Followers of Jesus called themselves "disciples" or "saints".

"Disciple" meant a person who is taught, or in the process of being taught.

"Saint" meant a person set apart or separated from the bad practices of this world.

Pliny, the governor of Pontus/Bithynia from 111 to 113AD wrote this about Christians in a letter to the Emperor Trajan:

"However, they assured me that the main of their fault, or of their mistake was this:-That they were wont, on a stated day, to meet together before it was light, and to sing a hymn to Christ, as to a god, alternately; and to oblige themselves by a sacrament [or oath], not to do anything that was ill: but that they would commit no theft, or pilfering, or adultery; that they would not break their promises, or deny what was deposited with them, when it was required back again; after which it was their custom to depart, and to meet again at a common but innocent meal - -".

Being set apart because one was a disciple of Jesus was an act of the will and of the mind, in stark contrast to the values of the contemporary culture. Not a passive or wimpy thing - not then and not now!

Much later, "Saint" was twisted and distorted to refer to someone who achieves some kind of holiness. This is far, far different from its first use (as above) which was as a title used by and for people who were disciples of Jesus.

It is worth keeping in mind that from the time the title was twisted and distorted until now, there has not been such a thing as a holy "Saint". Never has been, never will be.

We who are disciples of Jesus are just sinners saved by grace.

it is well worth the discomfort if it leads to us changing our thinking and our behaviour.

Most of 80/20 boys are themselves mostly in the bulge, and, like the hospital managers they employ, neither terribly bright nor terribly caring.

Look for the money flow. And look for the power flow. Motivation glows in neon.

As an illustration, if you view the curve as showing the distribution of intelligence then the folk who are on the left of the bulge are what are currently termed "learning disabled". Rather obviously, it costs money to look after them. You don't need too many guesses to figure out whether they are net contributors and therefore what the 80/20 boys think of them.

On the other side, still viewing the curve in terms of intelligence, the really bright people are also located on the fringes. I'm in the top 1%, so you can see where I am.

In terms of resources dedicated to education, it is the folks in the bulge who get the 80%, although you can readily appreciate that 20% of resources would yield education for the 80%. But the  Golden Rule  The Golden Rule

He who has the gold makes all the rules.

applies. That is why our learning disabled are neglected (and this is desperate because they are so vulnerable). It is also why the highly gifted are similarly neglected. This means the human race derives very little benefit from those with extremely high intelligence.

I don't want to spend more time with the bell curve, I want to return to the 80/20 boys application of their beloved tool and what it means for those of us who are disciples of Jesus.

For those of us who are disciples of Jesus, the 80/20 rule is virtually the exact opposite of what we are called to be and to do. You see, while the 80/20 rulers want to kill off the vulnerable on the fringes, these vulnerable people are the very ones who are our responsibility. This is what Jesus said about it:  Matthew 18:12-14  Matthew 18:12-14 (New International Version)

12 What do you think? If a man owns a hundred sheep, and one of them wanders away, will he not leave the ninety-nine on the hills and go to look for the one that wandered off?

13 And if he finds it, truly I tell you, he is happier about that one sheep than about the ninety-nine that did not wander off.

14 In the same way your Father in heaven is not willing that any of these little ones should perish.

This was later echoed by James in his letter: James 1:27  James 1:27 (New International Version)

27 Religion that God our Father accepts as pure and faultless is this: to look after orphans and widows in their distress and to keep oneself from being polluted by the world.

. It was put into verse by a Scots invalid, Elizabeth Clephane, in the nineteenth century and titled  The Ninety and Nine  The Ninety and Nine

1. There were ninety and nine that safely lay
In the shelter of the fold.
But one was out on the hills away,
Far off from the gates of gold.
Away on the mountains wild and bare.
Away from the tender Shepherd's care.
Away from the tender Shepherd's care.

2. "Lord, Thou hast here Thy ninety and nine;
Are they not enough for Thee?"
But the Shepherd made answer: "This of Mine
Has wandered away from Me;
And although the road be rough and steep,
I go to the desert to find My sheep,
I go to the desert to find My sheep."

3. But none of the ransomed ever knew
How deep were the waters crossed;
Nor how dark was the night the Lord passed through
Ere He found His sheep that was lost.
Out in the desert He heard its cry,
Sick and helpless and ready to die;
Sick and helpless and ready to die.

4. "Lord, whence are those blood drops all the way
That mark out the mountain's track?"
"They were shed for one who had gone astray
Ere the Shepherd could bring him back."
"Lord, whence are Thy hands so rent and torn?"
"They are pierced tonight by many a thorn;
They are pierced tonight by many a thorn."

5. And all through the mountains, thunder riven
And up from the rocky steep,
There arose a glad cry to the gate of Heaven,
"Rejoice! I have found My sheep!"
And the angels echoed around the throne,
"Rejoice, for the Lord brings back His own!
Rejoice, for the Lord brings back His own!"

Lyrics: Elizabeth Cecelia Douglas Clephane

. Put to music by Ira Sankey, it has become a classic. In my view it far outclasses modern hymn writing.

One thing in particular has special meaning for me. It, not surprisingly, comes from Jesus and he talks about  a bruised reed and a smouldering wick  Matthew 12:20 (New International Version)

20 A bruised reed he will not break, and a smoldering wick he will not snuff out, till he has brought justice through to victory.

(And elsewhere in scripture)

To me, this expresses precisely how and why disciples of Jesus are out of step with our world and also derided by our world.

My understanding of this metaphor is that it depicts a damaged writing tool, a reed in those days, and of a lamp barely alight (those little oil lamps with wicks). The 80/20 utilitarians would have us see the "common sense" of not wasting time and money on things that are not fully functioning. "Don't waste your time with that bruised reed, go get a new one." "Snuff that lamp out and get a new wick. It's going out and it's costing us time and money."

With the metaphors of bruised reeds and smoldering wicks, scripture is of course, referring to people. A wise person once said to me that nobody is trash because God doesn't make trash.

On the one hand, this part of scripture is our own personal comfort. On the other hand, it instructs us how to view people. Disciples of Jesus can have no participation in those activities that throw away bruised and dying people.

It also means that those dear people whose discipleship is not generally viewed as strong or heroic by other believers can take heart because Jesus has not thrown them away and He has plenty of use for them yet.

Just as Pliny observed with the believers early in the second century, we devote ourselves to doing good and keeping ourselves unpolluted by the world. Obviously, this is more easily done with mutual support with other believers but with the internet virtual mutual support can be possible.

Two quotes from Paul are useful here:  Galatians 6:9-10  Galatians 6:9-10 (New International Version)

9 Let us not become weary in doing good, for at the proper time we will reap a harvest if we do not give up.

10 Therefore, as we have opportunity, let us do good to all people, especially to those who belong to the family of believers.

and  Ephesians 5:11  Ephesians 5:11 (New International Version)

11 Have nothing to do with the fruitless deeds of darkness, but rather expose them.

the latter verse can be a bit frightening for believers at any time but more so today as even supposedly "Christian" countries are turning against Christian values. But I believe we must expose the fruitless deeds of darkness.

Exposing the fruitless deeds of darkness is a topic I think is worth exploring. If readers wish to email me with their thoughts I can publish them.