My success as chief economist at a major international consulting firm was not due to the lessons I learned in business school. It was not due to the competence of my staff of brilliant econometricians and financial wizards.
Those things may have helped at times. But there was something else that made it all happen. That something else was the same something else that elevated George Washington, Henry Ford, Mahatma Gandhi, Mother Theresa, Martin Luther King Jr, Steve Jobs, and other successful people to the heights of their success.
That something else is available to everyone of us.
It is the ability to alter objective reality by changing perceived reality, what we might think of as the Perception Bridge.
As described in my book The New Confessions of an Economic Hit Man, my job was to convince heads of state of countries with resources our corporations covet, like oil, to accept huge loans from the World Bank and its sister organizations. The stipulation was that these loans would be used to hire our engineering and construction companies, such as Bechtel, Halliburton, and Stone and Webster, to build electric power systems, ports, airports, highways and other infrastructure projects that would bring large profits to those companies and also benefit a few wealthy families in the country, the ones that owned the industries and commercial establishments. Everyone else in the country would suffer because funds were diverted from education, healthcare and other social services to pay interest on the debt. In the end, when the country could not buy down the principal, we would go back and, with the help of the International Monetary Fund (IMF), “restructure” the loans. This included demands that the country sell its resources cheap to our corporations with minimal environmental and social regulations and that it privatize its utility companies and other public service businesses and offer them to our companies at cut-rate prices.
It was a strategy of using perceived reality to change objective reality. In these cases, Objective Reality 1 was that the countries had resources. The Perceived Reality was that using those resources as collateral on loans to finance the building of infrastructure projects would create economic growth and prosperity for all the citizens. Objective Reality 2, however, was that economic growth occurred only among the very wealthy. Since economic statistics (GDP) in such countries are skewed in favor of the wealthy, the fact was that only our companies and the wealthy families benefited. The rest of the population suffered. In many cases this has led to political unrest, resentment, and the rise of various forms of radicalism and terrorism.
“Reality is merely an illusion.” –Albert Einstein
We know from quantum physics and chaos theory that consciousness, observation, and changes in perception have impacts on physical reality that can expand exponentially. Modern psychology teaches that perceived reality governs much of human behavior. Religion, culture, legal and economic systems, corporations – in fact, most human activities – are determined by perceived reality. When enough people accept these perceptions or when they are codified into laws, they have immense impact on objective reality.
Human activities – individual, communal, and global – are driven by this process of altering human perceptions of reality in order to change objective realities. A couple of cases from US corporations illustrate this.
Case #1: Ford Motor Company
In 1914 Henry Ford’s Objective Reality was: A) His company sold Model T cars that were produced through the assembly line process by workers who were paid a standard minimum wage; and B) Because the assembly line was monotonous and workers were under a lot of pressure to reduce the amount of time to build a car from 12.5 hours to less than 100 minutes, there was an extremely high turn-over rate in Ford’s work force.
So Ford perceived a new reality. He raised wages from the standard $2.34 for a nine-hour day to $5 for an eight-hour day – at a time when every other car manufacturer was trying to reduce wages. In addition to keeping workers on his assembly line, Ford was motivated by a second perception. He understood that the company, its workers and the buying public all came from the same population and he reasoned that “unless an industry can so manage itself as to keep wages high and prices low it destroys itself, for otherwise it limits the number of its customers. One’s own employees ought to be one’s own best customers.” Ford perceived that increasing the buying power of his workers would have a multiplier effect; it would also increase the buying power of many others.
Objective Reality 2: Ford sold 308,000 Model Ts in 1914—more than all other carmakers combined. In 1915, sales soared to 501,000. In 1920, Ford sold a million cars. In the process, Ford’s actions helped stimulate unprecedented growth in the US middle class.
Case #2: Nike, Adidas and other Retailers
Objective Reality 1: These companies design high-end footwear and clothing that is manufactured in factories that the companies do not own in China, Vietnam, and other “sweatshop” countries.
Perceived Reality on the part of management at these companies: A) Outsourcing production releases their companies of worker-rights responsibilities and minimizes wages; B) Hiring highly-paid athletes to promote products counterbalances the negative publicity generated by activists who advocate more pay for sweatshop workers; and C) These policies, that are diametrically opposed to those of Henry Ford, will maximize profits.
Objective Reality 2: A) Low “non-living” wages and poor working conditions in overseas factories result in high worker turnover, illnesses, and adverse publicity; B) By negatively impacting consumer economic growth, such policies destroy opportunities for new markets that would result if workers were paid enough to buy the products they make and at the same time stimulate the multiplier effect; and C) Neither corporate profits nor overall economic growth in the countries where the factories are located are in fact maximized.
I had the opportunity to highlight the difference between the two cases above when a Portland Oregon (home of Nike) radio station interviewed me. The host inquired “If you could ask Nike founder Phil Knight one question, what would it be?”…