# Inferno

Original: 
http://michaelochurch.wordpress.com/2013/04/16/gervais-macleod-22-inferno/

In Part 21, I wrote a summary of the modern Organizational Problem. For 
a recap of the highlights:

- As machines take over boring, commoditized work, the only stuff left 
for humans is convex work where enabling excellence is more important 
than excluding failure, which is not even possible if the work is 
difficult enough to be interesting. Traditional, risk-reductive 
approaches to management fail on convex work.

- Companies evolve, due to the inevitable corruption attendant to their 
internal credibility markets, toward a sociological state that is 
internally stable (due to the Effort Thermocline) but renders it unable 
to compete on the market, and prone to moral abandon. This either drains 
them slowly (rank culture) or causes them to lapse into ethical 
depravity (Enron) that brings down the whole house.

Most of my focus, in Part 21, was on the macroscopic, impersonal forces 
that act on organizations. I mentioned conflict between lawful evil and 
chaotic good, as well as the ancient mechanisms (induced depression) 
through which lawful evil asserts itself, both briefly, but now I’m 
going to do a deep dive into the micro-scale illnesses of the 
organization, tunneling through all the layers, in an attempt to find 
solutions at each level.

I’ve dedicated quite a few chapters to trust. I’m fairly confident that 
I’ve solved the root financial problems already. I’ve also discussed the 
toxicity of distrust. We’ve covered a lot of ground, both technical and 
soft. What I believe I have achieved is to unite the sociological, the 
economical, the moral, and the financial elements of the organization. 
We’re almost ready to Solve It: to tackle the Organizational Problem. In 
Part 21, I summarized the macroscopic details of organization decay 
(industrial and moral) but the problems are most tractable at the 
microscopic scale. We need to descend into the often personal hell of 
corporate life.

The structure of our journey through the problem, stratum by stratum, 
I’ll put in this part (Part 22). I have, however, needed to split what 
was intended as a “final post” into two. Part 23 will discuss the 
solution and follow the same structure.

Let’s waste no time in getting ourselves to the gates of Corporate Hell.

## First Circle: Opacity

We come to Limbo, the first circle, where we confront the sin of 
opacity. Are most people in Corporate America being fairly compensated? 
I’d argue that they’re not, but the real crime isn’t what they’re being 
paid. It’s that they’re deprived of so much information that they have 
almost no insight into their actual value, and no leverage.

Ultimately, no one knows what human labor (or any asset) is “worth”. 
It’s generally impossible to come up with fair values for everything in 
a coherent way. That’s why markets exist: because valuation is an 
extremely difficult computational problem that’s best performed by 
“selfish” actors (investors and arbitrageurs) equipped to take advantage 
of distributed knowledge. It’s easy to compute a “fair value” for 
commoditized material assets. For human labor, it’s much harder. Finding 
a fair value for it is inherently difficult even under the best 
conditions.

On the market for human labor, most people can’t tolerate the volatility 
that would be seen on a highly-liquid exchange market (e.g. the U.S. 
equity market) where values shift by 20 to 30 percent per year. Most 
people would not be able to survive, at current compensation levels, if 
the labor market had that kind of volatility. So liquidity (which makes 
commodity markets more liquid and efficient) is not something most would 
desire. It would have their talents reallocated (i.e. job changes) on a 
monthly basis.

People (even those who love capitalism uncritically) have a hard time 
believing in markets. Can a $200-billion company really lose or gain $1 
billion in true value in a day? Well, there’s a paradox inherent in 
markets, which is that price volatility and fairness seem to be 
(surprisingly) positively correlated. A price can absorb lots of signals 
and exhibit Brownian drift (which is probably harmless, in the long 
term) that makes it appear inconsistent because, clearly, the true value 
didn’t change that much in so little time. Or, it can absorb very little 
signal and have more superficial consistency, but less fairness, insofar 
as this begets illiquidity, “custom pricing“, and high premiums for 
middlemen. Markets either have to be pseudo-inconsistent (prices 
fluctuate based on small margins of supply and demand that are often 
almost random in their time of emergence) and fair, or consistently 
unfair. Most peoples’ salaries are set by the latter type of market, 
with unfairness layered on by asymmetries in information.

With human labor, people are stuck in a bad position. I am in support of 
a basic income, but that’s not the world we live in. The need for a 
monthly income puts them into a state of extreme risk aversion– 
devastating and pernicious, but so ubiquitous that people fail to 
recognize it as perverse; it’s just usual. While they’d make more (on 
average) if they could supply services directly to the market, the 
income volatility that doing so would involve is much more than most 
people have the financial means to stomach. They’d rather get a 
consistent low rate for their labor (paid during sickness and on 
vacation and, if one excludes at-will termination, regardless of 
uncontrollable fluctuations in work quality) than deal with the 
vicissitudes of an impersonal market that only cares about what they 
produce, even if the latter is much better for them in the long run (and 
might deliver savings that leave them able to escape the corporate 
shackles).

What’s the problem? It’s not that wages are “unfairly” low. I can’t even 
assess whether that’s the case. Employment is an insurance trade, and 
low wages exist because of the risk premium. What’s a “fair” risk 
premium? One can’t assess that without building a market. We don’t know, 
and that’s the problem. The crime is that people really don’t know how 
much genuine risk reduction (if any) they’re getting. Since they can be 
fired “for performance”, while most white-collar jobs make performance 
impossible to measure objectively, I’d say it’s very little. There’s 
also a very strong argument to be made that labor is unfairly treated 
because a few major players on the other side control the market. So I 
have very strong suspicion that most of these trades are unfair but, 
without a market to appeal to, there’s no proof.

The evil is in opacity. People enter the MacLeod Loser trade– taking a 
subordinate role in an established organization, rather than engaging 
with the market directly– in order to get rid of financial risk that 
most people have too little wealth to tolerate. In exchange, they get 
low wages that keep them in financial semi-desperation. They don’t know 
how much risk-reduction they’re actually getting (at-will employment) 
and, because the market is so tightly locked-down by major players, they 
don’t know what a risk-neutral fair price for their work is, so they 
can’t assess what they’re paying their employers for this insurance. Are 
they getting screwed? Probably, but I can’t prove that because it’s 
impossible to compute with a fair price. I can prove another evil: they 
have no way of knowing whether they’re getting screwed. If they could 
evaluate their own deals and judge them fair, I wouldn’t be one to argue 
with them; but they will never be in access to that information. 
Management keeps such a tight-lipped approach to everything important– 
compensation, personnel policies, promotion guidelines, career planning– 
and, worse yet, brings brutal punishments onto those who share such 
information. Although this is technically illegal, many companies make 
it a fireable offense to disclose one’s own compensation.

With opacity, the severe asymmetry of information leaves one side unable 
to evaluate the fairness of the deal. The deal might be totally fair, 
but often it won’t be. This is why I made such a strong argument in 
favor of transparency in compensation. The poison of opacity must be 
driven out with force.

Opacity isn’t only about the financial aspect. It’s also about 
domination (managerial mystique). The manager knows the employee’s 
salary, but not vice versa. That’s intentional. Most companies bring 
their people into submission by hiding important information, scaring 
people into disadvantageous panic-trading, and taking the (highly 
profitable) other side. For concave labor, this didn’t damage operations 
too much; for convex work, it does. People need a certain amount of 
empowerment and information to do convex work well. They rarely get it, 
because management intervenes. I won’t say that management has no role 
in the technological-era, convex-labor world; but it will have to become 
a more dignified, advisory role involving the provision of direction and 
mentoring, rather the carrot-and-stick extortion that exists now.

Most corporations evolve a set of rent-seeking high officers who rob 
investors and employees alike. They plunder investors through 
misappropriation of capital and dishonest representation of risk, while 
they use opacity over all important information to scare employees into 
terrible, panic-driven trades and subordination. Where does this lead? 
We must look at the winners of this trade, and that takes us right into 
the Second Circle: parasitism.

## Second Circle: Parasitism

Every organization has people in it who have ceased to contribute, but 
continue to hold important roles and draw high compensation. Purges of 
“deadwood” (or “low performer” witch hunts) are usually directed at the 
bottom, but the worst problem employees are always people at the top 
(who’ve ceased to think of themselves as “employees”; they’re executive 
royalty!) Sure, there are small-scale subtracters at the bottom; but the 
worst are usually dividers at the top who suck all life out of the firm. 
Parasitism and even outright theft occur at all levels, but there’s a 
point (Effort Thermocline) where their prevalence increases sharply.

Low and opaque wages, fast firing that negates the promised risk 
reduction, and a general lack of respect for employees, all represent 
the “unfair” aspects of the corporation that we know and hate. There’s 
also an assumption that “the assholes at the top” are capturing large 
amounts of surplus value. That’s often right. Below the Effort 
Thermocline, value is created; above it, it’s captured.

Why do companies tolerate a class of rent-seeking parasites who add 
nothing, when it might be better for morale to fire them all and 
redistribute the proceeds to employees (profit sharing) and investors? 
Well, it turns out that much of regular economics (going back to Marx) 
makes a fatal error, which is to conflate labor and management, the 
latter being a subset of the former. On paper, that’s true. 
Sociologically, it’s not: managers do not see themselves as labor, and 
do not act as such, and are not viewed as labor by other workers. By the 
technical terminology, CEOs are still “labor”, even though their 
compensation is not set by a fair market (but through self-serving 
deal-trading with other CEOs on whose boards they sit). In their minds, 
executives are the real owners. Here’s a breakdown of the corporation, 
with square brackets ([]) representing terminal nodes:

(Company)-----+
 .             |
 .     +-------+---------------+
 .     |                       |
 . [Capital]                   |
 .                         ("Labor")-----------+
 .                             |               |
 .      [Executives]--------(Mgmt.)            |
 .      a.k.a. Sociopaths      |               |
 .                             |               |
 ~~~~~~~~~~~~~~~~~~~~~ EFFORT THERMOCLINE~~~~~~~~~~~~~~
 .                             |               |
 .                     [Middle Managers]       |
 .                     a.k.a. Clueless         |
 .                                             |
 .                                         [Workers]
 .                                         a.k.a Losers

The old Marxist way of looking at the company has two tiers: bourgeoisie 
and proletariat. Capital vs. labor. That made sense when industrial 
processes were simple enough that anyone who held capital could manage 
them. If you wanted a good vs. evil narrative, you could equate capital 
to the rent-seeking slaveowners who had oppressed humankind for 
millennia, and labor to the slaves, and conditions for workers were so 
poor that you’d essentially be right. However, as the factories and 
machines and operations became more complicated, owners had to put 
professional, non-owning managers on the payroll, and that created the 
three-tier company: owners vs. managers vs. workers.

That gets us to three tiers, but there’s a distinct change of flavor 
between upper management (executives) and the floor-holding mere 
managers in the middle, who are still accountable for doing work; how’d 
we end up with four?

First, it should be obvious that managers are on the advantageous side 
of a principal-agent problem with investors because they control the 
books. While investors have right to interrogate management, being the 
owners of the enterprise, they rarely know what questions to ask. 
Second, they have even more advantages over the workers, being able not 
only to fire them but also (if daring enough to risk a lawsuit) able to 
inflict long-term damage using work’s feudalist reputation economy. They 
have a position of power over both sides, and one that can be very 
profitably (for them) exploited.

I would also argue that workers are investors. The modern concept of the 
career developed as an antidote to this socially unstable dynamic of 
owners against workers. For many people, that sharp dichotomy between 
the two categories is deeply anachronistic, because workers have the 
option of moving up to higher-skilled labor in the modern, fluid 
economy. “Worker” is no longer a permanent class, at least in theory. So 
workers are investors of time. Finally, with public equity ownership and 
401(k) plans, they are literally investors.

Yet there’s a lot of opacity in the labor market, especially pertaining 
to careers. Is the career game a free market, or a feudal reputation 
economy? When you have what claims to be a market economy, but that uses 
opacity as a tool of exploitation, and clearly copied half of its pages 
from pernicious feudalism, there’s a lot of fear that can be exploited. 
High levels of ambient fear will separate people into “protectors”, 
vassals, and peasants. Out of an anarchic power vacuum that cannot last 
for long– peoples’ nerves can only take so much– brutal strongmen rise 
into power. That’s where executives come from.

Executives are a subset of managers who arrogate themselves to be the 
real owners of the company, more important than passive investors and 
simply more powerful than workers. The owners-versus-workers dichotomy 
comes back, this time between rent-seeking, non-producing executives 
above the Effort Thermocline, and a labor sector that includes the 
terminal middle-management (Clueless) who failed to include themselves 
in that arrogation, and the risk-averse non-strivers (Losers).

So, executives are the ones who get to such a level of invulnerability 
that they command large salaries just for “making decisions”. The 
morally degenerate, high-status ones most willing to abuse their 
principal-agent advantage create sinecures where they have lots of 
power, but no responsibility. Now there’s a four-tier enterprise: 
investors vs. executives vs. middle managers vs. workers. This mirrors 
the MacLeod hierarchy precisely (with investors, being organizationally 
passive, not on the chart).

Managers can rob investors financially by misleading them, and they can 
steal from employees on the credibility market, or by misleading them 
about the career-building value of the work they are doing, and those 
who excel at both tend to develop an outsized social status and become 
the executive Sociopaths. Those who either refuse or are unable to 
participate in such robbery will linger in the less dignified middle 
management tier and become the Clueless.

Investors and (non-executive) employees share a lot in common, in truth. 
Employees are investors of time, and often literal investors as well. So 
why are executives so easily able to rob the rest of the company blind? 
Shouldn’t investors and workers (often the same people, since most 
workers’ retirement assets are invested in corporate bonds and equities) 
band together and drop a pipe on that shit?

It’s a nice idea, but it turns out not to be so easy. First, let’s take 
an investor’s standpoint. Corporate governance is– and I mean this 
literally and non-pejoratively– a plutocracy. It’s voting, proportional 
to investment. Unfortunately, any aggregative voting system is at risk 
of corruption, because there are a lot of passive players who don’t 
really care either way, and who will be inclined to swing their votes 
for personal favors: cheap votes. That’s why vote-buying must be made 
illegal in a democracy: there are a lot of people out there who would 
swing their votes for $100. Advertising, for one example, is all about 
capturing the advantage that a brand holds over cheap voters who 
prioritize product image over quality. The civil danger of cheap votes 
is that a voting bloc’s power grows as the square (in statistical 
impact, measured by variance) of its size, which means that people who 
develop the ability to harness cheap votes and tie them together become 
extremely powerful, and can hijack the system even if they’re only able 
to buy a small share of votes. Cheap vote problems are typically solved 
by electing representatives whose job is not to be cheap and giving them 
disproportionate power, but also empowering voters to fire them, on the 
assumption that they’ll do a better job than the political machines that 
specialize in cheap-vote trading. That’s why management exists. 
Permanent managers are held to be more effective in running the company 
than a plutocracy subjected to cheap-vote abuses.

When that runs poorly, management loots and investors lose. In truth, as 
a cynic, I’d argue that if typical management had its way, there would 
never be profits. What would be profit would go directly toward the 
executive payroll.

On the side of labor (true, non-executive labor) there’s a different 
cheap votes problem. Employees are the cheap votes. How often does a 
low-level worker take up cause against his employer, risking termination 
(likely) and damage to her reputation (a possibility, in the feudal 
reputation economy of references and resumes) in doing so? It’s so rare 
that it makes the news, and such people are often blacklisted and ruined 
for doing it. Whistleblowing is an activity where there’s a fixed amount 
of punishment to be allocated to a variable number of adversaries, which 
makes isolated whistleblowing so dangerous it rarely happens, and with 
no one willing to be the first, one sees a culture of terrified silence. 
A powerful company can pretty easily ruin a single person’s professional 
reputation– with frivolous lawsuits against her, negative references, 
and possibly negative statements to the press about the departure. All 
of this is illegal, but she’s a single person up against a company with 
limitless resources. On the other hand, if 20 people blow the whistle, 
the company can’t discredit all of them. It must go into “damage control 
mode” to repair its image. It will offer generous settlements. If a 
thousand people act, and talented people start losing faith in the 
company and leaving, the firm will actually need to change its behavior. 
However, conditions are such that unethical companies and managers can, 
like Gus Fring, hide in plain sight, because people are too scared of 
whistleblowing’s consequences for the opposition ever to get to 20, much 
less a thousand.

Opacity is justified by expediency (“we can’t have transparent 
compensation; that would just be crazy“) but it conceals the fact that a 
powerful set of people abuse information to rob investors and workers to 
an extreme degree. Is it a conspiracy? No, I wouldn’t go that far. As I 
said, executives hide in plain sight. They don’t hide the fact, for just 
one example, that those who fight opacity by openly disclosing their 
salaries are socially excluded, isolated, and eventually fired for it. 
(This, also, is illegal. Disclosure of salary is protected; it’s an 
anti-unionbusting provision.) It’s pretty well known what happens, in 
the white collar world, to people who disclose their salaries. The true 
dishonesty pertains not to the social norms, but to their reasons for 
existing. Managers claim they fire those who engage in salary discussion 
because it’s “rude” and “threatening to team cohesion”, when their real 
motivations are more sinister.

Executive parasitism is a huge problem for most companies– much more of 
one than operational inefficiency or unfavorable market conditions. Its 
severity is one thing that the trust-averse “Theory X” got right: given 
too much power, people will turn to parasitism as they focus on 
protecting what they have. The problem with Theory X is that the gun 
points the wrong way. In Theory X corporations, prevailing distrust is 
used to justify abuse of workers by management, while management must be 
trusted by both sides (workers and investors) have no other choice– they 
are just too far out of power. Theory X uses prevailing distrust to 
shift power to those who are least deserving of any trust.

The old, Marxist, model puts investors and workers on two sides of a 
chasm, with each side despising the other. Theory-X management steps in 
and tells investors, “Hire us, and we’ll keep your workers from stealing 
from you”. That’s their sales pitch. (In the modern economy, workers who 
favor their career goals over the organization’s are seen as “time 
thieves”; I disagree, but that’s a side note.) It turns out that 
professional managers are very good at preventing stealing; they want 
all the action for themselves!

Workers and investors don’t belong on opposite sides of some hadal chasm 
anymore. We need to recognize our common enemy: looting management. The 
“workers vs. investors” concept made sense in 1848 when the vast 
majority of people were not only desperately poor, but locked into 
dead-end labor with no chance of improvement. There was no such thing as 
a career or a 401k. It’s not true in 2013. Workers can be 
well-compensated and treated well if they develop unique skills that 
give them leverage. Their main obstacle as “career capitalists” is not 
knowing what the market will value, nor the true long-term needs of 
society that they might be able to fulfill (later on) for a profit. 
Their managers certainly have no interest in showing them the way. That 
brings us into…

## Third Circle: Career incoherency

If workers can be viewed as investors (the careerist perspective) then a 
question arises: why do so many people end up stuck in poor investment 
strategies that, quite visibly, pay off poorly? A well-managed asset 
portfolio can appreciate by 6% per year without any work. People (at 
least in the top 15% by talent, and maybe more) ought to be able, pretty 
easily, to garner 8 to 15% annual increases (at least for a good 10 to 
20 years, at which they’re into very-high-skill labor legitimately 
wealthy) through their control of one of the most important variables, 
which is how hard they work. Yet we don’t see that.

Becoming great at something– good enough to make a substantial living on 
the free market at convex work– requires the proverbial “10,000 hours” 
of deliberate practice. I don’t care to debate the exact number; that’s 
certainly the right order of magnitude, and it’s probably within +50% 
for most fields of endeavor. At 10,000 hours, most people should have 
independent reputations and credibility, and the right to access the 
market’s will-to-pay (or, at least, their own company’s) directly rather 
than through a manager/pimp taking god-knows-what (opacity) percent. 
That would take 5 years, given a typical 2000-hour work year. Yet most 
people don’t even get there in 25 years. Why? Most of them are assigned 
to crappy work which confers no career benefit. They’re putting 2000 
hours in at “work”, but they’re not getting deliberate practice. This is 
the norm in organizational employment, and most people never really get 
out of the dues-paying period. They’re lucky if they get 200 hours of 
quality work in a year, which means they never become good at what they 
do. The lack of developed skill leaves them with no leverage and they 
can be exploited into perpetuity.

In the long term, and for society, this is devastating. One of the first 
things an economist learns about the Third World is that cheap labor is 
a curse, because it makes labor-saving technologies (that would make 
society richer) too expensive by comparison. Why buy a dishwasher when 
you can pay someone 30 cents an hour to do it? National elites become 
addicted, unknowingly, to cheap labor and their countries decline. Why 
invest in people, for the future, when you can exploit them in the 
present? The long-term result of this is that everyone (even that 
national elite) loses. This is more true than ever in the corporate 
world. Corporate managers are averse to training employees out of a fear 
that more marketable underlings will be likely to leave them. In 
reality, the reverse seems to be true. Good people leave jobs because 
they stop learning, not because they learn “too much” and find better 
employment elsewhere. I’m an unapologetic job hopper and I would easily 
stay at a job (perhaps for 10 years, perhaps until retirement) if I 
genuinely believed I was improving my market value by 20% per year. But 
if I’m not learning anything, then my rate of growth is negative 5 
percent per year, which I just won’t tolerate.

Career coherency exists when one’s job requirements also serve one’s 
career– there is no conflict between the immediate work assignments and 
the person’s long-term career goals. People do their best work when 
career coherency is the case, and (except for the MacLeod Clueless) they 
will do as little as they can get away with amid incoherency.

Of course, career incoherency is depressingly common. Companies tend to 
load the junior or politically unsuccessful with fourth quadrant work 
that “just needs to get done”, so people get resentful and leave. The 
truth is that only the MacLeod Clueless take career-incoherent assigned 
work very seriously. Losers manage themselves to the Socially Accepted 
Median Effort (SAME) but slack off beyond that point, while Sociopaths 
often blow it off entirely. A common Sociopath response to being 
assigned career-incoherent work is to fail badly at it, but in such a 
way that the blame can’t be directly assigned to him (to use Venkat 
Rao’s terminology, a “Hanlon dodge”). This is a hard balance to strike, 
but extremely powerful when it works. What eventually happens is that 
management, should it distract him with crappy work, is punished just 
enough that future crappy work is sent elsewhere, but not so severely 
that it makes the Sociopath look incompetent or noncompliant. He 
performs poorly while retaining plausible deniability, and it helps if 
management is a little bit scared of him (“if I keep giving him 
low-yield assignments and he fails, maybe he’ll blame me“). The 
Sociopath figures out just how far he will get the benefit of the doubt, 
and plays accordingly.

In general, the best and worst employees of a company tend toward a 
self-executive– meaning that they serve investors’ interests and their 
own directly, ignoring the interference of parasitic executives– and 
almost insubordinate pattern of behavior. What about the moral and 
industrial middle classes? Those are the ones most affected by the 
prevailing culture. In a rank culture, they’ll be compliant and 
superficially loyal. In a tough culture, they’ll be viciously 
competitive. In a self-executive culture, they’ll tend to be 
technocratic and organizationally altruistic. The very good and very bad 
are pretty much the same whereever one goes, and both categories will 
blow off career-incoherent management and work (although for very 
different reasons) so it tends to be people in the middle who define, 
and also who are most defined by, the corporate culture.

What happens if a company shuts off self-executivity? Do the very-good 
and very-bad stop being insubordinate? Absolutely not. The very good are 
pushed into increasingly desperate public stands for what is right. It 
should be predictable what happens to them: they get fired, or 
humiliated so badly that they must resign. The very bad, however, tend 
to be good enough at playing the people to stick around. When 
self-executivity is outlawed, only outlaws will be self-executive (i.e. 
be able to get anything done). The result of this is an environment 
similar to the violent black markets that emerged in the Soviet Union; 
the shadowy nature of transactions puts a lot of otherwise unconnected 
baggage and friction on them. Even staid products like lightbulbs, when 
there was a public shortage, often had to be obtained from characters 
more like speakeasies than hardware stores. A modern analogue is the 
market for illegal drugs. Yes, most of the products are poisonous, but 
the violence surrounding this economic activity has a lot more to do 
with the illegality of the trade than the toxicity of the product, which 
most serious players in the business never even use.

When you shut off self-executivity, you shut off internal innovation– to 
a point. The very-good insubordinates will still tilt at windmills, and 
be summarily fired for the quixotry. The very-bad will furtively pursue 
innovations on their own, but with malevolent intent. That’s how you get 
evil innovations like Google’s “calibration scores”, which were an 
obvious (and, sadly, successful) move to sabotage the company. Those are 
the direct product of what happens when self-executivity is pushed to 
the black market.

In the short term, under desperate circumstances, debate and 
self-executivity must be curtailed out of the need for focused 
dedication toward a coherent definition of corporate success. This is 
one reason why, while I support open allocation, I recognize it as 
inappropriate (at least at full extent) for the needs small, 
bootstrapped companies. They should pursue open allocation in spirit and 
values, but shipping a coherent product takes first priority. However, 
large and wealthy technology companies have a moral responsibility to 
implement open allocation; if they shirk it, they not only fail morally 
but, because they cease to have a culture worth caring about, they also 
demolish themselves through brain drain.

Why do companies shut down self-executive behavior? Why aren’t employees 
allowed to manage their careers and contribute directly to the company’s 
internal market? Self-executive work is, empirically, typically worth at 
least three times as much as traditionally managed work. (In software, 
it’s more like 10, hence the phrase “10x programmer”.) So shouldn’t 
there be infinite demand for something that makes everyone 3+ times more 
productive? Well, to answer that one, we must progress further into 
corporate hell…

## Fourth Circle: False scarcity

One prevailing trait of the Clueless is that they never question 
arguments from scarcity or desperation. “Deadlines” must be met, and 
“there’s no money in the budget” is taken at face value. This enables 
the Sociopaths at the top to create a false scarcity that’s empowers the 
Clueless to do reprehensible things that they otherwise wouldn’t. It’s 
the opposite of 1984. In Orwell’s depiction of totalitarian socialism, 
people were misled with false claims of prosperity. Corporations go the 
other way, by creating a phony scarcity while million-dollar bonuses are 
funneled to the executive thugs who enforce it.

That’s where career incoherency often comes from. The company “just 
can’t afford” to do things properly, to compensate fairly, or to invest 
in employees. Things just need to be done, this way, and now. Debate and 
a progressive outlook can’t be afforded. The “emergency mode” in which 
there might be justifiable cause for curtailing employee autonomy and 
long-term concerns becomes permanent.

Why does this actually work? It seems counterintuitive. Soviet 
governments lied about being rich and exaggerated growth figures to 
improve morale; American corporations claim to be poorer than they are. 
Why? Wouldn’t that damage morale?

I lack a more global perspective on this, but I think that false 
scarcity is most effective in an American setting, where individual 
prospects trump corporate morale. People aren’t going to be especially 
bothered by the idea that their company is poor or unsuccessful, as long 
as they have a good place in it. They’d rather the firm be rich, 
obviously, but they care more about their individual station and 
long-term career prospects than the organization itself. Caring about 
the macroscopic reputation of one’s firm is a luxury for real members of 
it (executives, who have something to lose if it goes down). What is the 
firm’s prestige, they ask, going to do for me? Americans (moreso than 
other nationalities) are happy to work for unsuccessful, uninspiring, 
and even desperate institutions if there’s personal gain (compensation, 
promotions, career opportunities) to be made in doing so. One major 
exception is academia, where social status is somewhat divorced from 
compensation. In the rest of the economy, people don’t mind working for 
macroscopically mediocre institutions if they have an inside track to a 
legitimate role.

In this way, companies don’t lie to their own people about how 
successful or strong they are. Instead, they present themselves as 
somewhat weak and hampered so that whatever bone is thrown to a worker 
seems like a genuine favor. “We have no raise pool this year, but we 
really want to keep you so I fought for days and got you a 2-percent 
cost-of-living increase, which no one else is getting.” Excluding 
academia, Americans would rather have excellent positions in mediocre 
companies than crappy, subordinate positions in excellent companies. In 
a opaque regime where workers rarely know what others are getting in 
terms of compensation, career development, and project allocation, the 
self-effacing company can mislead a large number of workers into 
believing, each, that they are favorites: what you’re getting is meager, 
but everyone else is getting less.

The false scarcity has one toxic side effect. Sociopaths recognize it as 
a negotiation tactic and leave it at that, but the Clueless actually buy 
into it and “volunteer” to enforce its directives. So they end up 
shutting down self-executivity, as the desperation mentality evolves 
into cargo cult of “urgency” enforced by idiotic middle managers. For an 
analogue; in the 1990s, there was a fad where unskilled programmers 
would direct compilers to inline aggressively because “it makes the code 
go faster”. That’s not always true, and it’s not the whole story. Some 
code runs faster when the compiler is told to inline heavily but, in 
general, people are not smarter about such details than the compiler 
writers, and abuse of inlining makes the generated code substantially 
worse. The word urgent is the manager’s variety of “inline-all”. “It 
makes people work faster.”

False scarcity is a present-term negotiation tactic with deleterious 
long-term effects. Let’s take the Socratic method to an employee asking 
his manager for a raise. Here’s a conversation from Anywhere, U.S.A. 
between manager (Kim) and employee (Larry):

Larry: …so based on the market for Widgeteers in this region, I believe 
I should be making $85,000.

Kim: I can’t give you a raise, Larry. You’re already at the maximum 
salary for Widgeteer III’s.

Larry: I know that, but I’ve been doing the work of a Widgeteer IV for 
almost two years. Even you’d agree that I do more work than John did, 
and he was a Senior Staff Widgeteer when he retired.

Kim: You’re welcome to apply for promotion in February, but I won’t be 
able to support you. You need three consecutive 3′s on your performance 
reviews and I can only give you a 2 this year. Meets Expectations.

Larry: Explain to me why I’m a Two. I was a Three last year and I’ve 
only improved.

Kim: Last year, I had 24 review points to give out for the Proton team, 
but this year Jake got three more review points for his team because 
he’s fucking Janice, so I get three points less. I only have 21. I have 
to give Alex a 3 or he’ll mope and get nothing done for a year– you know 
how he is– but with only 21 points, if I give more than two 3′s, I have 
to give someone a 1. The damn paperwork that comes with a 1, well… you 
just wouldn’t believe it.

Larry: Would you be able to move me to the Neutron team? I’m sure you 
have plenty of points for that project, given the launch.

Kim: The Neutron team does not have enough headcount to accept Twos. We 
don’t want people who meet just Meet Expectations.

Larry: But you just admitted that I deserve to be a Three!

Kim: Go take your Meets-Expectations ass somewhere else, Twoser. I knew 
you were a Two the day I met you.

Larry: Well, wait. What is it that the Neutron team seeks? Maybe I could 
learn the skills now, and when a slot opens up, I could make the 
transition smoother.

Kim: We have deadlines. There’s no way that I can allow you to learn on 
company time. We just don’t have the slack. You need to put your head 
down and keep working on Proton.

Larry: So I can’t move to Neutron because I don’t have the skills, and 
you won’t let me take the time to learn them, even though it’s a project 
of much higher business value?

Kim: That’s right.

Larry: What if I spend a day per week learning Neutron, and come in on 
Saturdays?

Kim: I wouldn’t normally ask you to work on Saturdays, but if you’re 
going to come in on weekends, I ask that you work only on your assigned 
project. I can’t have you getting distracted. If I suspect that you are 
using Saturdays to pursue side projects and you are doing it on company 
resources, I will have to write you up for insubordination.

Larry: What if I work on my assigned project on Saturdays, and spend 
Fridays with the Neutron team?

Kim: Larry, I am not in on Saturdays and I am not going to come in on 
the weekend just to make sure you get your work done.

Larry: But you know that I get my work done!

Kim: The performance review I am writing says ‘Meets Expectations’. One 
point lower and you’d be a ’1′ and I’d have to write a Performance 
Improvement Plan. This would require me to write a negative summary of 
your performance, with dates and events to create the perception of 
legalistic precision when really it’d be all bullshit and we’d both know 
it. You are not a One, but you are clearly a Two, an 
expectations-meeter, because I have no more review points to give you. 
That means that I am disallowed from knowing that you get your work 
done.

Larry: What if I apply to the work-from-home program, but still come 
into the office five days a week, so that I can work Saturdays remotely?

Kim: That is an option, but your file says you live in zip code Q6502. 
You would be in a Category IV location for cost-of-living, and I would 
have to dock your pay by $6,500. So that is not going to get you your 
raise.

Larry: So what happens if I apply for transfer to a team that has more 
room for growth?

Kim: I will send you links to appropriate resources and make 
introductions to other teams’ managers for you, but then I will put 
negative commentary about your performance on your personnel file that 
you won’t be able to see. No one will want you, for the simple reason 
that I have credibility and you don’t. You won’t know what I’m saying 
and will have no way of appealing it. In this way, I am like a feeder 
who makes his captive unhealthy, sexually repulsive to other men, and 
preferably immobile so as to have complete dominance over her because no 
one will want her once she is morbidly obese. The difference between you 
and a bedridden feedee force-fed 18,000 calories per day is that you 
won’t know that it’s happening, and it will be entirely out of your 
consent. Then, I will allow your position to be cut from my team in a 
trade that gets me a $5,000 personal bonus and 2 more review points so I 
can get Bob promoted and not have to deal with his damn high-pitched 
voice anymore. You will have three weeks to endure transfer interviews 
in which you will have no chance, because I’ve already smeared your 
performance review history, at the end of which you will be fired not by 
me, but by a person you’ve never met.

Larry: Well, that might not be so bad. Is there a severance package?

Kim: We don’t like severance packages because it means we are rewarding 
failure. Besides, there’s no money in the budget. [pauses, lowers voice] 
However, my promotion packet is coming down to decimal points, so those 
“360-degree” reviews of bosses that usually don’t matter? This might be 
the one time in a hundred where director-level people give a shit what 
people like you have to say. If you let me write your review, we can 
work out a story that gets you $20,000. How’s that sound?

Larry: Make it forty thousand.

Kim: 27-five. A pleasure!

This might seem like an attempt at anti-corporate humor. It’s not. 
Conversations like this actually go down all over the place in Corporate 
America. I’ve probably seen every perversion in this (except for the 
word “Twoser”) at least once.

Corporations have a problem with abuse of process, but there’s something 
else that pervasive scarcity allows. Abusive process. It comes down the 
snake and the grass. The snake is seen as vicious and malignant. The 
grass is viewed as being compliant and beneficent. But what covers the 
snake, so it can strike? The grass. The corporate grass has a good-cop, 
bad-cop flavor. There are abusive policies that exist (justified by 
false scarcity constraints and an overzealous need for bureaucratic 
consistency) that are so severe that nothing can get done unless 
exceptions are made, but exceptions are made so often that people view 
them as harmless, like a too-low speed limit in a place where no one is 
ticketed unless actually at an unsafe speed. The rules on paper are the 
ugly, barren ground that would be exposed without plant cover. Then, 
there are the “nice guy” makers of exceptions who enable people to 
actually get stuff done. They’re the grass. The snakes are the ones who 
have the power to turn off the making of exceptions in order to bring 
down a rival.

The worst scarcity companies generate is the scarcity of work. The 
“problem” with self-executive employees is that they tend to generate 
projects that management never imagined. They create work for 
themselves. Good work. Work of a much higher quality than is typically 
seen in something assigned by management, because they’re 
self-motivated. This is good for them and their employers, but their 
managers view it as a negative. They might outshine the master.

This brings us to the so-called “lump of labor” fallacy. How fallacious 
is it? Is the demand for labor fixed and limited, or can it can grow as 
people and society progress? On one hand, there will always be limitless 
demand for making peoples’ lives better. On the other, structured work 
environments generate a pernicious and visible work scarcity.

If demand for work is truly finite, you get a competitive society where 
the fight to “get” work is more defining than the actual doing of work. 
If it’s limitless, you get structural cooperation as people work to make 
each other (and themselves) more productive. Most economists consider 
the “lump of labor”– that there’s a finite amount of work to go around, 
leaving us in zero-sum competition for it– to be an erroneous and 
regressive mentality. In the abstract, they’re right. Adding value, 
improving processes, and making peoples’ lives better should always have 
limitless demand.

However, within the typical corporation, the lump-of-labor mentality is 
pervasive and almost a permanent fixture. You need the attention of a 
manager (a professional “no man”) to get a project sanctioned. “Plum 
projects”– the rare case of desirable work that has high-level sanction– 
are handed out as political favors. High-impact work is directed only to 
the managerially blessed; most people don’t get any of that and are 
loaded up with fourth-quadrant evaluative nonsense with no purpose other 
than the living out of a painful dues-paying period. Sure, in the real 
world that exists outside of this corporate bullshit, there’s limitless 
need for people to make life better, often by implementing ideas that no 
executive would ever think of. However, under the corporate regime, 
there is a fixed (and small) amount of sanctioned work that it will 
accept as sufficient justification for retaining an employee. This means 
that the lump-of-labor slugfest– a race to the bottom among MacLeod 
Losers and Clueless as even the fucking process of getting to do real 
work becomes competitive– is very much in force over corporate denizens.

As corporations begin to believe their own false-scarcity myths 
(perpetrated by Sociopathic robbers at the top, and implemented by 
Clueless useful idiots in middle management) they start to fall under 
the delusion that they’ll fail outright unless all work is directed 
toward “sanctioned projects” as defined by a small, powerful set of 
people. Executives are often too far out of touch to have any clue what 
projects deserve sanction, and middle managers are both distracted by 
their own career needs and hobbled by their own tendency toward 
Cluelessness. Thus, they tend to generate a “sanctioned project” pool 
that is not only small but also increasingly divorced, as time goes on, 
from the company’s actual business needs.

It’s the increasingly myopic scope of “sanctioned projects”, and the 
morally degenerate competitive infrastructure (closed allocation) that 
builds up around them, that makes most corporate workplaces so horrible. 
But what’s the alternative? Can workers really just be allowed to define 
their own work? Well, it works for Valve and Github, two of the most 
successful companies out there. With self-executive work being worth 3 
to 10++ times as much as traditionally managed work, it’s an unambiguous 
win for a company that can afford the risk and, with computational 
machinery now extremely cheap, that essentially only requires trusting 
them with their own time.

So why is this so rare? We have to go into a deeper Circle of Hell for 
that…

## Fifth Circle: Trust sparsity

I focused heavily on trust in parts 17 (financial trust and 
transparency), 18 (industrial trust and time management), 19 (living in 
truth vs. convex dishonesty), and 20 (simple trust vs. Bozo Bit) because 
it’s increasingly clear how much damage is done to organizations by the 
lack of it. When you see large companies “acq-hiring” mediocre engineers 
at $10 million per head, it becomes clear that firms are desperate.

What are they desperate for? These “acq-hiring” firms have plenty of 
engineering talent in-house, but they get to a point where the 
prevailing assumption is that all of their own people are incompetent, 
lazy, and ineffectual, so they staff important projects with external 
jackasses bought in at a panic price. This behavior is a lot like 
impulsive hoarding, where a person’s living quarters become so messy 
that he has to buy a new winter coat every November not because he wears 
out the old one, but because his house is too much of a mess for him to 
find it again. The one difference is that, for the metaphor to apply 
fully to acq-hires, he’d have to be spending $15,000 on a $200 coat.

Why do companies hire so many people but trust so few of them? I 
examined this in Part 20, but the gist of it is that, while the larger 
concept of trust has degrees and variations, simple trust (whether a 
person is treated as competent and worthy of respect) tends to be binary 
(“bozo bit”) and it is usually a global systemic property of a group of 
people. It is either trust-dense, meaning people are generally held to 
be independently credible, or trust-sparse, which tends to generate a 
dysfunctional array of warring cliques. In a trust-sparse environment, 
being without a clique leads to isolation, exclusion, and failure, so 
the pressure to become part of one generates a feudalistic pattern of 
behavior.

Because simple trust is a binary and systemic property, one person 
“flipping the switch” can turn off the lights for good. It just doesn’t 
take much. Trust density, although the core of any healthy business, 
seems to be fragile. What makes it this way? I’ve concluded that there’s 
a cardinal rule that organizations, unless they want hell to break 
loose, must follow: don’t hire before you trust.

Most rules in business have exceptions. Not this one. Only hire people 
with the intention of investing simple trust– trust to do the right 
thing with their own time– in them. If you hire someone who proves 
unworthy of simple trust– it’s uncommon, but it happens– than fire him. 
Don’t be a dick about it– write a generous severance package– but get 
him out as quickly as you can. Also, don’t keep an unethical high 
performer around just because he’s “hard to replace”. You need a company 
where everyone can be afforded simple trust and, if you lose that, it’s 
almost impossible to get it back.

Plenty of companies hire people with full intention never to make them 
real members of the company. They’re brought in for grunt work, because 
it seems less risky to hire a schmuck off the street (the hiring can be 
undone) than to automate the undesirable work (a project that might 
fail). Bad move. This addiction to cheap labor accelerates itself 
because a trust-sparse company can never find and trust capable people 
who’ll automate the crappy work, which is what should be done. Soon 
enough, the company is one where new hires spawn with the Bozo Bit in 
the “on” position, which creates resentment between the old and new 
hires. No one likes being seen as a “bozo” and it turns out that the 
most reliable ways to turn off one’s bozo bit are generally considered 
unethical (convex dishonesty). The corrosion is pretty much immediate.

Why in the hell would a company sell off its culture, and hire people it 
distrusts? I’m actually going to sample from evolutionary biology and 
invoke r- and K-selection. An r-strategic species aims for rampant 
proliferation but low quality of individual offspring. A hundred may be 
born, but only a few will survive. On the other hand, a K-strategist 
aims to have few, highly successful, offspring. In humans, women tend 
toward K-selection (because of the natural reproductive bottleneck) 
while men can be r- or K-strategists. However, r-strategic behavior in 
men leads to positional violence, maltreatment of women, and population 
catastrophes. Civilization began when humans discovered monogamy and, 
instead of successful men having tens of “wives” (sexual slaves in a 
harem) and hundreds of children, with no paternal investment; they were 
encouraged to have few wives (often, only one) and a smaller number of 
children, in whom they invested highly. In other words, civilization 
began when men were forced to be mostly monogamous K-strategists, ending 
the extreme frequency (death rates of 0.5 to 1 percent per year) of male 
positional violence and enabling stability.

If we view business as a reproduction– of work processes and values, 
knowledge and relationships– then we find that there are also r- and 
K-selective business strategies. K-strategist “parents” (bosses) want to 
have few “children” and invest in them highly, treating them as proteges 
or advisees. More common are the r-strategic corporations that hire a 
bunch of people, invest nothing in their careers, and expect only a few 
to thrive. For concave work, the r-strategic approach was probably the 
most profitable one, since adding more heads meant pulling in more 
dollars. But the 21st century is showing us that, for convex work, a 
K-strategic approach to business expansion is the only way to go.

It is bad that these r-selective companies hire before they trust, and 
it is also dishonest. When recruiting, companies engage people by 
telling them a story of what kind of work they’d be doing as trusted 
real members of the team while failing to state that most new hires will 
end up in the untrusted, bozo category for arbitrary reasons. It’s when 
that happens that companies start to evolve credibility black markets, 
and the panicked trading that transfers power to ethical degenerates 
sets in. To understand the process behind this, we have to descend yet 
again, into…

## Sixth Circle: Passive aggression 

Tough cultures believe that within-company competition is beneficial and 
makes people work harder and produce more. They’re wrong. Rank cultures 
tend toward “harem queen” dynamics as people jockey for managerial 
favor. That’s bad as well. Dysfunctional companies, and that’s most of 
them, tend to be marked by passive-aggressive behavior and social 
competition. The contest for the artificially scarce resources (good 
projects, managerial attention) that success depends upon, and the fear 
of ending up in the bozo category, generate patterns of behavior so 
negative that they ruin a company outright.

This style of degeneracy is hard for managers to detect because, when 
workers are engaged in it, they appear affable and dedicated. They race 
against each other to work the longest hours, and take on responsibility 
to gain power over critical nodes of the company. This is also why it’s 
critically important to fire unethical high performers, no matter how 
“indispensable” they seem. Unethical people, unless they are completely 
devoid (like, bottom 1%) of social skills, will always seem like high 
performers, and they will always appear indispensable. They develop the 
skills of shifting blame and taking credit so rapidly that by their 
early 20s they have more experience in manipulating people (yes, that 
includes you) than most people have in a lifetime. They always seem too 
important to get rid of. Don’t fall for that. You can afford to fire an 
unethical high performer, especially because he’s probably not a 
legitimate high-achiever; you can’t afford not to.

Social competition is what the truly toxic use in order to get their 
way. They isolate targets and rivals, and they often take advantage of 
the false scarcity in work allocation to make sure that the best people 
get the worst work, driving them out. Clueless middle managers, who take 
complaints from ladyboy favorites at face value, are typically oblivious 
to the demoralizing backstabbing that goes on in front of them. They’re 
just bad judges of character. It always gets me when managers say they 
infallibly shut down anyone who tries to “play politics” under them; if 
anyone is visibly playing politics, he is clearly unsuccessful at it, 
and perhaps he took the blame for someone else’s political plays. 
Sociopaths, on the other hand, don’t care too much about the character 
of people working for them either way, so long as those aren’t a 
personal threat to their goals. Clueless don’t know about all the nasty 
politics that exists below them; Sociopaths can see it but don’t care.

On the whole, however, people tend to agree that ethical character is 
important; even Sociopaths don’t want to deal with those who will rob 
them. Character is far more important than talent. The problem is that 
it’s very hard to judge a person’s ethical mettle. How does one know 
what a person would do in extreme circumstances, when such conditions 
are so rare? That’s where human social dynamics come into play. People 
assume, often wrongly, that the little betrays the big. In a 
heterogeneous world, this fails in a major way. If someone pronounces 
words in a slightly different and characteristic way, that’s called an 
accent and it’s not a sign of stupidity. If someone can’t work 80 hours 
per week, that’s not a sign of poor ethical character but an artifact of 
typical human limits and of health problems that are irrelevant at the 
40-hour level. Yet, human social organisms tend to believe, in spite of 
the ridiculousness of it, that social reliability (the little) betrays 
true character (the big). Thus, companies tend to attempt to measure 
ethical character through superficial reliability contests, and the 
amusing thing there is that, even though they consistently backfire by 
promoting the bad people who are most used to such contests, 
corporations (especially tough cultures, where reliability tests are the 
point) continue to use them.

Winners of reliability contests tend to be the worst people, because the 
artificial “crunch times”, deadlines, and scarcity push people to their 
limits and strain their social resources. Psychopaths are naturally 
adept at manipulating this in order to make sure others faceplant first, 
leaving them standing. Psychopaths don’t tire in social competition 
because it’s fun for them to watch everyone else burn out. Management, 
in general, is not capable of figuring out when this is happening. The 
psychopath presents himself as a high performer, and colleagues are too 
scared to tell the truth.

Most of these reliability contests, not by design but through ignorance, 
are built in such a way that the psychopaths are most adaptive to them. 
The social competition dynamics of a reality show (e.g. Survivor) and 
office politics are at least a million years old. Since psychopathy is 
most likely an individually fit (but socially harmful) r-strategy, it 
co-evolved with that nonsense. It turns out that “the bad guys” have 
been hacking our social reliability competitions for a thousand times 
longer than we’ve had language to describe any of these ideas.

I’ll take a concrete example, which is the stigma associated with “job 
hopping”. Why is it there? Employers understand that the most dangerous 
people are the high-talent unethical ones. They’re right. And job 
hoppers tend to be high-talent “disloyal” people; at the least, they 
don’t give loyalty away for free. Unfortunately, since there’s no way to 
measure ethical character, the rage is taken out on people who have “too 
many jobs”. Well, through various consulting projects I’ve had access to 
more data on this matter than most of these HR idiots could see in 
twelve lifetimes, and I have the answer on that: unethical people don’t 
hop from job to job, continually subjecting themselves to social change 
and potential disadvantage. Instead, they most commonly ingratiate 
themselves with upper management early on, build deep trust over time 
(since that’s the only way to do it) and, when the opportunity emerges, 
betray everyone in one fell swoop. Knowing the power that comes with 
seniority, they’re more prone than the general population to long job 
tenures. Unethical people tend to have a Doppler Effect in which there’s 
one perception of them from ahead and above them (that they are affable, 
subordinate, dedicated) and there is another, much more accurate, view 
from those below and behind them whom they consider unworthy of 
impressing.

The best way to avoid taking on a large number of unethical people is 
not to attract them. It is, in general, impossible to detect them until 
they’ve done their damage, so the only strategy is passive defense: 
build a (K-strategist) company that won’t attract them. This ties into 
trust sparsity. Unethical people love trust-sparse environments, because 
those mean there is a Bozo-Bit switchboard to be found, played with, and 
used to gain power. That brings us to the chief accelerant, as well as 
byproduct, of trust sparsity. We come to the Seventh Circle. Headlong 
into the flames we go…

## Seventh Circle: Extortion

I’ve said my piece about closed allocation being a form of extortion, 
because the conflict of interest between people and project management 
forces the employee to serve the manager’s career goals or face 
isolation, firing, and possible humiliation. “Work for me or you don’t 
work here.” It’s far from true that managers are the only people guilty 
of this behavior. Companies have been targeted by morally bankrupt 
programmers who built defects (“logic bombs” and back doors) into their 
systems. It’s expensive and humiliating to be extorted, and the 
emotional scarring can last for a long time.

That extortion leads to distrust should be so obvious that it doesn’t 
need explanation, so we’ll treat it as self-evident. Some of the “scar 
tissue” that companies develop is a direct result of previous extortions 
by employees, management, counterparties, and investors. Some more of it 
is cargo-cult transplant scar tissue that executives transcribe, without 
knowing why it exists, from one company to another as they move about. 
The tendency for companies to evolve toward a “Theory X” distrust of 
employees– sometimes without knowing why– comes from this replication of 
other companies’ post-traumatic policies.

Most of the other Circles of Hell tie into this Seventh. What is the 
benefit that it confers to a psychopath to have access to the “Bozo Bit” 
switchboard of a trust-sparse company? What, precisely, is most social 
competition? It is extortion. When a venture capitalist threatens to 
“pick up a phone” and turn off interest among nominal competitors if you 
don’t accept an abusive term sheet, what is that? What is the purpose of 
feudal reputation economies? Oh, right.

- There is an asymmetric power relationship, usually conferred by social 
access to people capable of extreme physical or social violence (esp. 
harm to reputation).

- The extorter is attracted to the extortee by the latter’s 
participation in productive activity, in an attempt to draw a share of 
the profits through coercion. For this reason, the extortee’s success 
will only draw more extortion.

- The harm is sometimes presented as a punishment, but is an extreme one 
and usually in retaliation toward something the extortee has the right 
to do. In other cases, it’s presented as an offer of “protection” (from 
oneself, or one’s hired thugs.)

Extortion is the epitome of parasitism. It adds nothing to the 
ecosystem. Rather, it feeds off the profile of the most productive 
players. Extortion is not the same as blackmail. They’re similar crimes, 
but there’s a fundamental difference in why each is illegal. Blackmail 
is illegal because it’s selective, corrupt law enforcement: even if the 
blackmailer has the right not to report the crime (this differs by 
jurisdiction) he does not have the right to selectively do so based on a 
personal payment. Extortion is illegal because it’s a drain against 
productive activities, as extortionists ratchet up their demands, often 
putting producers out of business. It is also exceedingly common if not 
made illegal, and hard to drive out even then.

Is management (in the classic corporate sense) extortion? I’ve made this 
claim before; can I defend it? Well, let me explain it in detail. 
Managers ought to have the right to terminate a relationship, just as 
employees do. In a small company, this would mean the end of employment. 
But in a large company, should managers have unilateral termination 
authority? Absolutely not. Do they? From a Clueless perspective, no. 
From a cynical (and accurate) perspective, they do. Companies rarely 
afford managers unilateral termination because it’s too much of a 
lawsuit risk; but they give the manager so much credibility (especially 
if performance reviews are Enron-style, meaning that they’re part of an 
employee’s transfer packet in internal mobility) that they can engage in 
“passive firing” (damage to employee’s reputation, often deliberate and 
invisible to the target, that makes him ineligible for internal 
mobility). Why do they allow this? For the sake of “project expediency”. 
Companies grant this power to managers out of the misguided belief that 
the trains simply won’t run on time unless bosses have that power. They 
can’t grant unilateral termination explicitly (lawsuit risk) so they 
create mean-spirited performance review systems and passive-firing 
infrastructures toward the same goal.

How is managerial authority most often used, both in rank and tough 
cultures? The subordinate employee is coerced into throwing all her 
weight into the manager’s career goals, with the scraps given to her 
own. What exactly is that? Again, it’s pure extortion. Companies permit 
it, because the manager has credibility.

The whole point of a credibility market is to allow extortion in the 
name of “project expediency”. Does it actually serve that purpose, and 
improve project success? No. The extreme success of open allocation 
proves that companies don’t need extortionist managers. While there 
probably is a need for some of what is called “management” in most 
companies– for training, direction and guidance only– there is no 
evidence, anywhere, that a healthy company benefits (except in 
short-term, existential emergencies that require “my way or the highway” 
leadership) from this sort of behavior.

One might notice that all of the six Circles above tie into managerial 
extortion.

- Opacity gives power to management over employees’ long-term careers, 
since they have no clue what the actual economic landscape or market 
climate is, especially if they face an adverse manager (reference 
problem).

- Parasitism is the obvious goal of the extortionist, but extortionists 
find the organization’s fear of parasitism (“low performer” witch hunts) 
to be an effective tool of aggression.

- Career incoherency is a result of widespread extortionist managerial 
culture. It’s the manager’s right to say, “You work for me or for no one 
here” that forces people to do work of limited or no career value.

- False scarcity is what encourages people who might object to the 
extortion, instead, to passively tolerate it. This is the “project 
expediency” argument; many companies believe (falsely) that nothing will 
be achieved, and the company will die, without extortionist thugs (using 
the threat of harsh credibility reductions) to police the bottom.

- Trust sparsity is the philosophical underpinning of the extortion 
market. It creates the “Bozo Bit switchboard” which is the holy grail of 
a psychopath.

- Passive aggression is enabled by a perverse and intentionally 
dysfunctional bureaucracy where people can cause harm through inaction. 
I know someone who was fired because his boss forgot to write a 
performance review, and the default rating assigned in the no-review 
case happened, that year, to fall under the 5% mandatory-fire cutoff. 
Whether this was a case of forgetfulness or passive aggression is beyond 
my knowledge, I honestly have no idea. But many companies operate on an 
original sin principle where employees are ruined (no credibility) 
unless protected by a manager. And what is mandatory “protection”?

It’s extortion that is at our enemy’s heart. That’s the core of 
corporate evil, at least on the internal front. It must seem that we’re 
at the bottom, but we don’t yet have full explanatory power over what 
motivates so goddamn much extortion. What makes people extortive? Is 
that truly “human nature”, or is it merely human behavior when people 
are subjected to humiliating false scarcity and nonsensical, 
dehumanizing processes? Let’s go into that, right now. It’s an ugly 
place, but we’ve been through plenty of those…

## Eighth Circle: Powerlessness

Evil exists, and lawful evil is a defining force of intra-corporate 
social competition. However, maybe there’s room for compassion: sympathy 
for the damned. Why, we might permit ourselves to ask, is there so much 
bad behavior in the corporate context? Is it the stakes? That’s the 
Theory-X explanation. There’s a lot of money in it; ergo, people steal. 
I don’t buy that, because work isn’t the highest-stakes thing people do, 
and there are processes with more importance and less moral corruption. 
Theory Y’s explanation of bad behavior at work is that it tends to be 
self-accelerating; people are naturally inclined toward good action, but 
one bad behavior leads to several more, with the victims often unable to 
retaliate directly and, therefore, propagating the misery through the 
company. That’s quite true, but it doesn’t explain the first injection 
of evil. Where does that come from? Theory Z, being agnostic on the 
broader moral questions, takes the teamist approach of planting “fire 
brakes” between teams so that any submodule (person, team, department) 
that turns toxic can be sloughed off in isolation. (This is why internal 
transfer is so hard– a fact that extortionist managers love, obviously– 
in a Theory-Z organization.) Who’s right?

Theory Y is mostly right, but probably only 90% correct. There are 
first-strike extortionists and thugs out there. They exist. Bad people 
are real. An organization that can’t defend itself against them will 
perish. While passive defense (not attracting them) is best, companies 
do need to keep a watchful eye on this behavior. The problem with this 
is that extortionists get their first practice on the people the 
organization cares the least about, and are already well on a roll by 
the time the negative behavior becomes a visible problem.

Companies tend to get their moral policy utterly backward. They take a 
Theory-X attitude toward their people in general, imposing restrictions 
designed to guard the firm against extortive behavior and theft. 
However, it’s impossible to get anything done in such an environment. 
That’s why trust-sparsity generates convex dishonesty, even in heroes 
(“stone soup”) who are forgiven after the fact. The result of this is 
that trust-sparse companies must make exceptions, and they do this based 
on million-year-old social protocols originally designed to encourage 
K-strategists to deny sexual favor to unworthy and unsavory 
r-strategists. There’s nothing wrong with that. As a product of human 
evolution, I’m glad that the K-selective machinery exists. But the 
psychopaths have a million-year track record of hacking it and getting 
in. They do the exact same thing to trust-sparse companies. Firms need 
to defend themselves with something else.

Total denial doesn’t work, because companies can’t operate if they never 
trust anyone; and conditional denial leads to the victory of psychopaths 
who’ve spent a million years making themselves exceptions to other 
peoples’ (well-advised) rules.

What we need is to go the other way, to full-on trust density, and 
release all non-extortive power to employees. The company must grant 
autonomy and freedom to serve the business goals to everyone, except to 
those who attempt to steal or extort, which it must terminate 
immediately. It turns out that this is a stronger way of policing 
ethical behavior, because the people on the ground (a) actually care 
about organizational health, and (b) aren’t afraid to speak up when they 
see problems.

What’s the alternative? What dominates corporate life for most people? 
Powerlessness. If trust-sparsity is allowed, then anyone can become an 
untrusted member of the group, and almost everyone is exposed and 
afraid. If that’s the case, then all but a few people are in a 
disempowered and humiliating position. Lord Acton told us that power (of 
the extortive kind) tends to corrupt, and he’s right. Powerlessness, 
however, also corrupts.

Power makes bad people evil, and it makes weak people (and that’s a 
large pool, sadly) bad. Powerlessness, on the other hand, makes good 
people ineffectual, bad people similarly evil, and weak people both bad 
and strong. How do I mean that? What could possibly occur through 
powerlessness that makes the weak strong? Individually, they’re 
defeated, but they become cheap votes (see above) for the true bad guys 
to corral and deploy. Since the statistical voting power of a bloc is 
proportional to the square of its size, and blocs of the weak become 
substantially more cohesive amid powerlessness and fear, they become 
strong when under direction from evil. This is why Clueless 
middle-managers, although few are innately unethical, can easily be 
misled toward criminal activity.

What is the end game of the corporation when people are powerless? Well, 
it generates the MacLeod pyramid, and also accelerates its degeneracy. 
Make people more powerless, and:

- Losers will become increasingly apathetic, content to draw a salary 
for no contribution which is (despite some economists’ claims to the 
contrary) not a comfortable arrangement for most. The Socially Accepted 
Median Effort (SAME) will drift toward zero. Even managers will tolerate 
non-contribution as it becomes clear that no one is able to get real 
work done, anyway.

- Clueless develop an awareness of low performance (theirs and others) 
and their overactive superego drives them toward overcompensation. This 
adds back-and-forth “Brownian management” to the mix. It only adds noise 
because, while these Clueless are eager, they lack coherent strategic 
direction.

- Sociopaths rebel and sabotage operations if they are personally 
rendered powerless, but they’re also (unlike most) prone toward 
assessing power in relative terms, so a Sociopath who is macroscopically 
powerless might still be happy to improve his personal power base by 
trading on the credibility market. Sociopaths can tolerate macroscopic 
powerlessness if they can still double their micro-scale power at a 
sufficient rate.

This seems to be the end state of dysfunction: powerlessness. Companies 
fear extortion by employees– as they, perhaps, should, because it 
happens– but they go so far as to disempower those inclined toward 
good-faith experimentation and creativity. Then, people lose all reason 
to care about the health of the organization. Why would anyone care 
about a company that views her as a bozo? She shouldn’t. She should take 
what she can and get out once something better is avaiable.

We come to the bottom of the Eighth Circle and find a black hole in the 
center of the floor. We look into it, and see no bottom. It’s just a 
chasm. To most people, it would be terrifying. Few of the denizens of 
the other circles, as miserable as they may be while they are, would 
dare to enter it, but we’ve come this far. We need to complete our 
journey, so let’s get on with it. Let’s jump into the hole and find the 
bottom…

## Ninth Circle: ??????????

We start to fall, and in the thin air down here, we continue to 
accelerate for a long time. It’s not painful, although the air is 
somewhat hot and it is very loud to be falling this fast. As we get to 
about a thousand miles an hour, we realize we have time for somewhat of 
a side conversation. While we drop, it looks like we have time for an 
aside about religion, and then about economics.

Yes, I said religion. Don’t worry. It will make sense when we get to the 
bottom, but while we’re careening toward the center of the earth, let’s 
talk about it.

Westerners (especially detractors of religion) tend to believe that 
religion exists to allay fears about death, even though religious belief 
predates faith in any desirable afterlife. (Babylonians, for example, 
believed in a repulsive afterlife state.) Actually, religion exists to 
guide people through their fears about life. Religion has had enough on 
its hands in helping people understand this world. At any rate, I’m most 
simpatico with Buddhism, so I’m going to discuss the first of the Four 
Noble Truths. Commonly interpreted as “all life is suffering” (dukkha) 
it is better interpreted as meaning, “there is suffering in all 
(samsaric) life”. Rich and poor, animals and humans, and even the 
traditional gods and demigods (if they exist) of other religions are in 
a world where dukkha is possible. Shakespeare’s Hamlet referred to “the 
thousand natural shocks that flesh is heir to”, and he seems to have 
been discussing the same thing. There’s an overarching theme: life is 
difficult and there is pain in it. The ancient Greeks blamed a woman 
named Pandora; Jewish and Christian mythologies involved a snake in the 
Garden of Eden. Both myths implicated curiosity (philosophically, this 
could be related to the idea, through rarely formalized this way, that 
evil exists because we want to know what it is) while the Eastern 
approaches focus on attachment.

The Western Christian arc evolved a doctrine called original sin, even 
though it’s not strictly Biblical. I don’t find it to be a useful 
concept at all. It has been used to justify horrible actions in the past 
such as the cultural (and sometimes physical) genocide of non-Christian 
people and, in my mind, it serves no value. It takes the view that we 
deserve to be punished and are (without supernatural intervention) of 
negative worth. It’s anti-humanist. I take a more Eastern approach to 
human nature: there is no such (inflexible) thing. Therefore, there can 
be no “original sin”. There are ignorance, karma, suffering, and a 
myriad of biological impulses we have to sort out, but total depravity 
is nonsensical. It just might be, in fact, one of the worst concepts 
ever.

Original sin found its way into the “Calvinist work ethic” that outlived 
actual Calvinism, and has since become a fully secular doctrine. 
According to the original-sin economics, people are devoid of human 
value unless made productive (“saved”) by a large, successful, and rich 
institution. Individual people have no credibility, and being on the job 
market is taken to be so humiliating that a person should fear being 
there (even though, since companies can fire at-will, everyone is always 
on the job market). Companies, however, do have credibility. Prestige. 
Reputation. It’s all the same thing. They can save. Independent 
individuals, however, are seen as depraved and damnable, especially if 
they’ve been unemployed for “too long”.

It’s bad enough that we have to deal with this original-sin nonsense in 
the greater society, which is one reason why the United States will 
always be thirty years behind Europe when it comes to healthcare and a 
modern insurance (they are not as ashamed to use the word “welfare” 
here) state. That’s bad enough; it really sucks, actually. However, we 
even have it within companies. You are not credible unless a member of 
the (mostly corrupt) priesthood called “management” speaks for you. If 
you seek another job within the company, your performance reviews are 
part of the transfer packet, even though that’s almost illegal. (It is 
not, technically speaking, illegal for companies to include HR history 
in internal mobility decisions, but it is illegal for managers to 
interfere malevolently with work performance, which includes internal 
mobility if such options exist. Therefore, a negative review that is 
visible in the transfer process is, in fact, already in violation of the 
law.)

What does this original-sin mentality buy us? It creates an economy 
where almost everyone is in danger of falling to the bottom, or being 
excommunicated, and this fear creates an economy of extortion so vast 
and toxic as to be self-perpetuating. That’s what we’ve got, thanks to 
our original sin mentality.

The evil isn’t capitalism or communism. It’s much older than that. It’s 
the belief that most humans are devoid of any value, and require 
salvation through some process that is actually the whim of a corrupt 
clerical hierarchy.

I haven’t solved the Organization Problem, and at 12 kilowords already 
I’ll have to put that in Part 23, but I’ve found it…

We land on the bottom. This is it. The Ninth Circle. Here we are. I 
light a torch and there’s… nothing here. It’s just a cave. Have we 
passed through the center of the earth and into the antipodes? It is a 
comfortable temperature here. It does not look like Hell.

Is this a ruse? No, it doesn’t seem to be. There seems to be nothing 
Hellish about this spot. Maybe that’s the point.

In fact, I might remind you that you were never in a cave (much less 
Hell) at all. You’re reading text on a computer screen! If you pictured 
a descent into Hell, that was your doing (but I hope it didn’t disturb 
you too much) and no one else’s, because that hell didn’t exist.

So let’s look at this Ninth Circle of hell: there is no there there. So 
it is, also, with the Corporate Hell. Yes, there are extortions and 
people are powerless, and there is a common fear of loss of income. This 
is all nasty stuff. There’s plenty of ugly behavior. The beast is cruel 
and yet… where is it? Who is it? It’s vapor! It exists because it lives 
in minds, and because we care– too much, perhaps– about it. Quite 
possibly, it lives in your mind. It has certainly raged on in my mind. 
That’s how I know what it is. Now I wish to kill it, on a global scale. 
I want these extortionists driven back into the shadows from which they 
came. I have no idea how long or how much work it will take to succeed, 
but that’s no excuse not to try.

Given the non-substance of our enemy, and the fantastical nature of the 
Hell that it has created for us, maybe we can. Maybe we can end the 
cycle of extortions and powerlessness for good. We know that the Emperor 
has no clothes. We’ve known it for decades. Maybe we, as a generation, 
can summon the courage to laugh at his tiny balls.

It might not be so clear, and it might take another essay (Part 23, 
coming up) to show this, but each of these levels taught us something 
about the organization, and all of them contain subproblems that must be 
solved. The structure of the solution will mirror, somewhat, the 
“Inferno” shape of the problem, which has been given here. So that’s 
what comes next, in part 23. Stay tuned. It won’t be long.