When Governments Fail…

This past Monday, Iceland’s coalition government collapsed amid public outcry of the government’s failure to effectively bail out their broken financial system.  Simply put, Iceland did not have deep enough pockets like the US did to provide some sort of recovery program for its banks and other financial institutions.  Although those are some of the more specific reasons as to why this organization failed, upon coming across this story, I was curious to see if I could draw parallels to some of the things we’ve discussed in class…hopefully it’s successful.

Now, I find it very unsettling that while a government fails, organizations (more specifically, corporations), prosper.  This is even more concerning in the case of Iceland, which to date, had the oldest functioning legislature in the world, founded in 930 AD.  So why are large corporations, such as Walmart, seemingly easier to run and maintain than small (democratic) governments? While I acknowledge that these two types of organizations are very different from each other, on the highest level, they share characteristics of functioning rational organizations such as formality and goal specificity.

Right, wrong, or indifferent, maybe there is something that Iceland’s government, (which I’m sure considered itself to be a rational organization with high levels of formality and goal specificity) could learn from the way in which Walmart operates as a rational organization.  I’ll preface this with the fact that I have very little knowledge about Iceland’s former coalition government to begin with, so bear with me.

We learn from Ehrenreich’s Nickel and Dimed that the school of thought that most closely aligns with Walmart’s organizational characteristics is (arguably) that of Taylor’s scientific management.  Although Nickel and Dimed points out that Walmart’s implementation of this system is not without its flaws, it is necessary to point out that during the course of its existence, Walmart has learned how to effectively manage 2,100,000 employees.  To place that number into perspective, the population of Iceland is 304,367…Walmart employs almost SEVEN TIMES the total amount of people who live in Iceland.  Although running an organization successfully under a rational organization system goes far beyond sheer size of the workforce or population, this is an interesting fact to point out.  Maybe, just maybe, Iceland’s new government should try to implement aspects of Taylor’s scientific management, such as closer re-evaluation of the effectiveness of certain institutions and their fiscal feasibility.  Maybe this is just naïveté on my part to think that a government as an organization can implement principles that Taylor intended for industrial improvement, but hey, because their former government failed, maybe they could consider alternative approaches to ensure their government does not collapse again.

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6 Responses

  1. Iceland and Wal MArt in one post! I love the audacity. Can’t wait to read it in more detail.

  2. Looking at this situation, I am not sure that the comparison works completely. If Wal-Mart were a government it would most certainly be a dictatorship. Wal-Mart’s 2,100,000 employees (as seen in Nickel and Dimed) have very little say in what actually happens to them or to the company. As with all rational systems they are simple machine cogs that are put to a particular task. There is also very little consideration given to how their workers’ lives are affected by the over work and low pay. Wal-Mart also has control of the upstream part of its supply chain. This is very difficult to attain, but if the suppliers would like to be seen in this huge part of retail society, then they must comply. No one can escape the iron grip of Wal-Mart’s power.

    Iceland on the other hand cares about its citizens. While they were hurt by the financial crisis and the people are upset, it is possible that the government has just chosen to put its money into other projects to help the people (prior to the crash occurring). For example, Iceland has one of the best public health systems and as a result their life expectancy is one of the longest in the world. They also provide other exemplary services to their citizens (http://www.britannica.com/EBchecked/topic/281235/Iceland/10085/Health-and-welfare). If they decided to run their country like Wal-Mart, people could lose these basic needs that are provided by the government.

  3. I do agree with you regarding the comment on how Walmart is run contrasts sharply with Iceland’s governmental structure. However what I meant to imply was that their financial system via governmental regulation should be more formalized to possibly prevent another collapse in the future. I had a difficult time actually comparing a corporation to a government such as this, and did not mean that Iceland’s government should completely cease to provide basic needs and services to its citizens. Thanks for the reply!

  4. First off, the sheer amount of people employed by Wal-Mart is ridiculous, I never knew it was that big. On a more serious note, I’m not sure if Iceland adopted a government style contrasting with the ideas of Taylor’s scientific management, how effective it would be. Taylor’s scientific management works so well because it micro manages workers, delegating jobs to be repeated over and over in order to obtain maximum efficiency. I realize that Iceland is much smaller than Wal-mart, but they have to deal with a huge assortment of problems than Wal-mart never has to deal with. I think if Iceland began to micromanage the people of their nation, the sheer amount of work involve would be insurmountable.

  5. I agree that the comparision works, from a financial stand of point but the situation is so much more serious because if you lose your job at Wal-Mart you can probably get another one at K-mart but now if your government fails you loose pretty much everything, I mean where does the governing body goes?? Can’t wait to read on Iceland’s progress…

  6. Fascinating discussion. I applaud you for thinking of this comparison.

    The question of the basis of comparison is always an important one.

    The government of Iceland did not fail, its current government did. In parliamentary systems, unlike our federal republic, such failures happen regularly and force new elections. The best analogy to this is a fight over the board of a firm. Of the more famous recent ones is the struggle over HP’s board. One link about that episode: http://news.cnet.com/2100-1001-872236.html

    The larger question of whether more formalization of roles would have helped Iceland’s central bank and financial sector is an interesting one. Not sure we know how formalized their roles were. Did they have an executive in charge of thinking about complexity catastrophe? The best fit theory right now seems that that global integration created very tight coupling between Iceland and the rest of the world.

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