Why do most people feel exploited?
Vivek Srinivasan
Investment, Finance, Startups, Go to Market | viveksrinivasan.com | learningbyproxy.com
In the book - Scale , the author asks; Why aren’t elephants 10 times larger? There are natural limits to scale. A larger body would mean, the heart would have to pump harder so blood can reach every corner of the body. The energy requirements scale geometrically. Also, the wear and tear on the body increases.
The cost of life is energy. Nature optimizes the use of energy. This optimisation puts a limit on the scale of a being. These same principles are at play in business.
The graph above represents the cost curve. Economies of scale are not infinite! After a point, your cost will begin to go up. Scaling beyond a certain point is NOT optimal.
But we live in this capitalistic world where it is assumed that any and every company should scale ad infinitum.
Now, no manager (read CEO) will want to confess that scaling any further will only worsen the company's profitability. Hence they turn to the cost (supply side) of their business and try to squeeze them as much as possible. This has resulted in a war against suppliers and a war against workers (you can check out the links).
The only way to deliver economies of scale or at least maintain the economies that have already been achieved is by making sure that the workers are treated almost like slaves. At the same technology and human behaviour are used to turn one seller against the other. They race to the bottom for market share.
The worker protests are a symptom of a bigger problem that nobody will acknowledge that there are limits to scale. It is the same frustration that has put Trump back in office.