Parallel economies

The economy is what supports us all, and yet there are so many silent ways in which we undermine its strength every day, either not knowing or not wanting to admit it. One of the ways is through the parallel economies that we build, scale, advertise and (last but not least) tolerate. They work in one way or another against the current economy and are initiated by people who dislike the status quo and seek unfair/unethical ways to catapult themselves fast in the front line. In the quest for it, they are ready to do even the unimaginable, often exploiting weaknesses in current laws and regulations and hoping to avoid punishment in the worst case. It's true that entrepreneurs seek to be "game changers", but sometimes their effort is more directed towards crushing others than building something for them. Unfortunately, we still don't distinguish very well between "good" and "bad" entrepreneurship and tend to support them equally.

We don't need to look far to find examples of parallel economies. Bitcoin/Lightcoin directly target the financial system, clearing the way for more people to work against the banks. Thus, job losses in the real economy might correlate with people's inclination to seek alternative ways to make a living or repay their debts. But this is exactly what further weakens the real economy. Crowdfunding also seeks a strong network effect with people pooling their resources to support notable ventures. I highly appreciate the intent to encourage more people in pursuing their dreams. However, doing it in this way might create a parallel economy—one, in which a closed circle of people will fund each others' projects, which isn't necessarily in the best interest of everyone else. What is further questionable is the strength of the relationships and the underlying motivation to "stick-to-it" after the project has been successfully funded, when people won't be able to easily hold each other personally accountable for their successes and failures. Such model of a "subsidized success" can't be a long-term solution and it's only recently that companies and governments have started to see it. Europe's operative programs are effectively subsidizing some companies, creating a parallel economy and market distortion, which is why I am distrustful of them. New companies were created for the sole reason to apply for these programs, get the funding and run away, without contributing anything to the real economy. Then came venture capitalists, who wanted to "expand operations" and promised to convert poor entrepreneurs into rich ones, if they could feed themselves from a large percentage of their effort. VCs are still cheerfully welcomed, without fully understanding the consequences, maybe forgetting the John Adams' quote "There are two ways to conquer and enslave a country. One is by the sword. The other is by debt." I don't know about the sword, but debt is still a legal and subtle way to conquer and enslave even the best entrepreneur. "You—yes, you—no" and another parallel economy was born with pitches, elevators and other sophisticated terminology. The result is an even greater inequality among the people willing to start, different levels of support depending on conditions and various eyes looking in the ground that might never try again. A corrupted atmosphere that most probably won't facilitate further cooperation, since we usually like to commute with others that are in a similar position.

What about vouchers/coupons for discount services? It seems like a parallel economy that makes everyone happy in the short term, but affects company profits and more importantly how we perceive our own self-worth in the long-term. It's hard to even measure the potential costs of that. And once we are fixed on the lower price, we perceive the real one as unfair ("anchoring"). Thus, by providing discount services, companies devalue not only their products, but the products in their industry as a whole.

I always hesitated to share my opinion on outsourcing, and maybe for a good reason. I'm not sure that working with distant people makes for a good human connection, although I can understand the benefits of doing so. (A parallel economy always has some kind of benefits to lure us.) In a sense outsourcing is a direct competitor to insourcing—the ability of people to work together, to laugh and cry together, to trust each other. If people get reduced to only what they do and this is the only thing expected from them, then relationships can no longer be the same. That said, a distance isn't an excuse to not know the exact situation a person is in. If people work together in an office, they can know each other much better (even to an extent where they might not want to work together), they can support each other in ways two monitors can't, and they also might reach a higher level of synergy. The disadvantage of this is easy to see—they get too comfortable of working together, their speed of innovation gradually slows down and they start to experience outside people, processes and perspectives as a threat and not as an opportunity. This means that having internal and external teams might seem to work best, since advantages and disadvantages will be somewhat balanced. But this is exactly the situation where these teams might start to silently compete against each other in search for greater power/influence. And suddenly, outsourcing has become—if I may say so—a parallel economy.

Freelancing is also tempting for web designers, but it doesn't help to get as closer to the client as possible. Personal eye-to-eye work will always lead to better results and maybe even greater satisfaction just because of that. A client who outsources to an unknown freelancer is very likely to be seen as "Paypal money" rather than a real person. Some clients even hire multiple freelancers just to test them out anonymously and then select the one that did the work with the best price:quality ratio. I don't know what the tolerance for this would be in real life, but some things are much more likely to happen only online. There will be always another designer that does the work better, cheaper and faster than us. By deciding to compete where we are unlikely to succeed, we'll feel unhappy of wasting our time and energy. It's much better to do the opposite: to engage in work where we are most likely to succeed. Entering the freelancing pool lets us compete against hundreds of other designers, so we practically admit that we are no different—just a needle in the haystack. If one designer won the contest, hundreds of others lost it, having done something for free, which is an enormous waste of human potential on a world scale—something that will always bother me. By participating in such a parallel economy, we guarantee that less and less people will actually work with us in person.

On a country level, Germany might have developed itself to the parallel economy of the European Union, since it continues to grow compared to many other shrinking countries or maybe just because of that. It's somehow very easy to accuse them of having low productivity or of not being competitive enough, when their most capable workforce already works for you. This in itself is creating such imbalances that no financial aid coming from Germany would be able to compensate for. If the young people leave, it's not clear how any economy could survive in the long-term. What further bothers me is the question that regularly appears in forums: "Are we the ones that should pay for it?". If we don't put self-interest aside, it's clear that the EU won't have a future. To answer this: "Noone should, but everyone could", because that's what I think is the true definition and test for a Union. The majority chooses its leader on a day by day basis, fully independent of whether countries like Germany want it or not. A parallel economy that works against that majority will only make the decision easier.

If we continue to allow parallel economies to flourish, we have no right to complain of not having jobs. It is better to be able to recognize when our efforts could harm others invisibly and to avoid being part of such trend that leads nowhere.