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“Creative Destruction”

Joseph Schumpeter’s memorable phrase about capitalism should be the start of study for the Gang of 75 and anyone associated with the Dartmouth Students Stand With Staff group.

How many different institutions have our concerned faculty members worked at in their lives? And how many different jobs can Dartmouth students expect once they leave school? Perhaps some students hope for a life-time position in the back office of an insurance company, but most realize that they will have had five or six employers by the time they reach retirement. I spoke to an alum the other day who was proudly working in his tenth start-up. Given the strength of the local economy, laying off some Dartmouth workers will not be the end of their world. In fact, I expect that most of them have had several different employers already.

Free market capitalism is about creating, building, and re-structuring organizations in ever more efficient and intelligent forms. Businesses shed workers (my local business has two people in its accounting department now; there were five a decade ago) and they hire them (today we employ 25 trainers, up from four in 1999). One of my chief responsibilities as a business owner is to figure out how to cut costs — which means, in a labor intensive business, how do get the job done with fewer people. Another of my responsibilities is figuring out how to serve customers better — who can I hire, profitably, to provide the services that my customers want?

This creative process happens all around you all the time. When was the last time that a pump jockey filled your car with gas and then took your credit card into the station to run it through a paper credit card printer? How many fewer bank tellers do we have now, given that we all go to ATM’s to withdraw cash? And what are all those Kodak workers doing today, the ones who used to produce film; not to mention the 33% of the American workforce that used to grow food on farms 80 years ago (down to about 1.5% now)?

Answer: they and their offspring are doing other, more useful things more efficiently.

Yet somehow at Dartmouth, the notion has taken hold in certain quarters that once someone has a job here, it should be for life, no matter what advances in technology there have been, or what the changing needs of student are. That’s plain wrong.

Like any living institution, Dartmouth must constantly work to reduce its headcount by finding smarter, less costly ways to do old tasks; then the College should go on to find innovative new tasks that will make the world a better place — and hire people to do that work. President Kim’s idea for an institute of health care delivery science is a perfect example of the latter, and there are any number of similarly good ideas among the faculty, ones that were bottled up during the last decade’s intellectual and organizational stagnation.

The alternative to a vigorous culture of constant recombination is stasis, where everyone keeps doing the same thing over and over year after year, with labor unions and wooly-headed faculty members shouting out each time that change is in the air. The result of that mindset? Look to Detroit’s car companies. They were forced to hold onto unneeded workers for many years, rather than reorganizing on an ongoing basis. When the layoffs finally came — and they always finally do come in competitive situations — they came in the tens of thousands. That could be our fate, too, if we don’t make the tough decisions today that are needed to improve Dartmouth.


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