McKinsey, Rightsizing, and Population: Businesspeople have the tools to get sustainability

June 29, 2024 by Joshua
in Nature

Human ingenuity doesn’t mean all companies should hire as many people as possible. Business gets it.

I’ve meant to write this post since reading When McKinsey Comes to Town and hosting one of its authors on the podcast, Michael Forsythe. A concept the book coversIs it the case that the “ability to is “rightsizing.” I had associated it with McKinsey, since the book documented McKinsey advising companies to do it, but I looked it up and the term seems widespread.

For context, people debate over how many people can live sustainably on Earth—its carrying capacity. Many people lob verbal grenades at people who say that number is finite, suggesting it can always be higher. They say people who suggest human population is already above Earth’s carrying capacity must hate people.

Many people have a hard time accepting or even considering humanity might increase its chances of survival with a smaller population than today’s 8 billion. A few relevant quotes from Julian Simon:

There is only one important resource which has shown a trend of increasing scarcity rather than increasing abundance. That resource is the most important of all—human beings. . . . [An] increase in the price of peoples’ services is a clear indication that people are becoming more scarce even though there are more of us.

We now have in our hands—really, in our libraries—the technology to feed, clothe, and supply energy to an ever-growing population for the next seven billion years.

It is your mind that matters economically, as much or more than your mouth or hands. In the long run, the most important economic effect of population size and growth is the contribution of additional people to our stock of useful knowledge. And this contribution is large enough in the long run to overcome all the costs of population growth.

Our supplies of natural resources are not finite in any economic sense. Nor does past experience give reason to expect natural resources to become more scarce. Rather, if history is any guide, natural resources will progressively become less costly, hence less scarce, and will constitute a smaller proportion of our expenses in future years.

Adding more people causes problems. But people are also the means to solve these problems. The main fuel to speed the world’s progress is our stock of knowledge; the brakes are our lack of imagination and unsound social regulations of these activities. The ultimate resource is people—especially skilled, spirited, and hopeful young people endowed with liberty—who will exert their wills and imaginations for their own benefits, and so inevitably they will benefit the rest of us as well.

What else can we conclude from his influential view, but that Earth can sustain an infinite population, or however many we reach in 7 billion years? I suppose even his supporters might say that infinite population could spill out to other planets and star systems, maybe other galaxies. According to Wikiquote, he made his “next 7 billion years” prediction in 1995. The population growth rate was around 1.5% per year that year and the population was nearly 6 billion. I couldn’t help plugging in the numbers of 6B increasing by 1.5% per year for 7 billion years, but I can’t find a calculator or spreadsheet that can handle 1.015^7,000,000,000.

Should his logic also imply all businesses should hire as many people as possible? They are the most valuable resources, more than money or inventory.

But businesses know not to hire too many people. The dictionary defines rightsizing:

transitive verb

: to reduce (something, such as a workforce) to an optimal size

intransitive verb

: to undergo a reduction to an optimal size

A business site expands and clarifies:

Rightsizing is the process of a company restructuring or reorganizing itself by reducing its workforce, cost-cutting, or rearranging its upper management. The aim is to streamline the business so that it can make a profit more effectively. Technically, the term means adapting the company to market conditions, which in theory could also mean increasing the workforce.

While rightsizing may involve reducing staff, it also encompasses optimizing business processes and enhancing efficiency across various departments.

In today’s fast-changing business environment, the ability to adapt and respond rapidly is crucial for survival. Cutting staff numbers has become much more common in the world of business since the 1980s.

Is it the case that the “ability to adapt and respond rapidly is crucial for survival” in business but not on Earth overall? Why wouldn’t finding an optimal size as opposed to an infinite number apply to Earth overall? It applies to every other plant and animal. Might it be hubris for humans to think it doesn’t apply to us?

Businesspeople have the tools to understand and resolve sustainability. They practice them in their world successfully, knowing that if they don’t, they won’t survive. Not all their tools but many apply to sustainability.

Rightsizing a business’s staff often means hiring or firing. Podcast guests Jane O’Sullivan and Alan Weisman document many ways humans have through purely voluntary, non-coercive ways managed population levels. Anyone suggesting managing population levels requires fascism, authoritarianism, or cruelty is either ignorant or demeans themselves. I don’t know Earth’s carrying capacity exactly, but it’s not infinite. I find the evidence overwhelming that it’s below our current population.

Anyway, my point in this post is not to figure out Earth’s carrying capacity, but only to show that businesspeople know the “logic” behind people promoting ever more growth is specious.

overshoot and collapse

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