The Jenga Effect – or, “The Fallacy of Perpetual Growth”

This is an article that I wrote WAY back in 2014, but I feel it’s still applicable today, and I doubt many in positions of power have seen this, or are heeding the lesson herein:

The Jenga Effect – or, “The Fallacy of Perpetual Growth”

This is the cause of many of the failings of the modern world. It is a function of greed. It is the concept that has been pushed out by MBAs (Masters of Business Administration) and slowly infected into every publicly owned business like a disease. It’s the fallacy of perpetual growth.

If you have ever worked for ANY public company in any kind of position higher than entry level, you’ve seen this in one form or another. Metrics, bean counters, that all say “THIS quarter must have better numbers than LAST quarter!” and “THIS quarter must have better numbers than the same quarter last year!”.

That is the fallacy of perpetual growth. You also see this in the government. In fact, social security is BASED on the concept that there will always be a larger and larger working class to pay for the ever growing retired class.

But it is indeed a fallacy, IT’S NOT THE WAY REALITY WORKS. Things ebb and flow, the economy ebbs and flows, business success and consumer purchasing ebbs and flows. Business should fluctuate WITH it.

This is why the most stable companies that exist today are sole-proprietor companies or family owned businesses. Oh sure, most of them are not huge and most of them are not global. Hell, very few are even national. But they are ALWAYS THERE.

Why? Because when one person or a small group has a personal stake in the company, they don’t have to be beholden to stockholders and the fallacy of constant growth. If my company profited 100K net last year, and this year is a “tough” year, I don’t HAVE to drive for 125K or 150K or even 100K… I can be happy with LESS. I can be happy making a MEASLY profit as long as we stay stable and stay in business and don’t lose money. I can take the LONG view.

If I don’t have the money to increase my business, I can WAIT and SAVE the money and buy expansions outright in my own time. The growth of my business can be related to the success of my business. If I’m doing poorly and have a small franchise, I can cut one or two stores out and sell them off and keep the rest operating the same way. I don’t have to cut corners everywhere and stress every one of my employees out. I don’t HAVE to make them “do more with less”.

Public companies can’t do that. They are pushed on all sides for ever increasing profits and ever expanding GROWTH of the company.

And do you know what I see happening? In every business that I’ve ever worked with? The company is becoming a behemoth monster, constantly growing in size, while at the same time eating itself from the inside out, until all that’s left is a gigantic skeleton with no meat left… just scrawny bones that can collapse or any moment.

Or better yet, a better example is Jenga. Yes, Jenga. The tower that grows in height, but gets a thinner and thinner internal structure until it eventually collapses.

THAT is the end result of the fallacy of perpetual growth. You pull from the bottom to feed the top and guess what’s going to happen? Eventually, it’s all going to tumble down. Unless we stop it, dead in its tracks. The only way to save the free market and capitalism in America – is to put it on a diet, a profit diet. Because for the last few decades, it has been gorging itself, become opulent, while in the meantime the citizenry has suffered.

Companies need to move to long term thinking, rather than short-term profits, lest they find themselves collapsing from the weight of their artificial “growth”.