VARDAMAN VIRTUAL FORESTRY COMPANY

The Most Direct Link to Knowledge Workers in the Southeast Forest Economy

Dr. Peter F. Drucker rose to fame as a management consultant more than 50 years ago with “The Concept of the Corporation,” his study of General Motors.  Later 31 more books solidified his reputation as the premier in this field.  He had time in the 1970’s for two sessions with JMV & CO that enabled us to stage our early growth.

Now The Economist has just published a series of six articles by him in his 92^nd year as a survey entitled “The Next Society.”  You will find it invaluable in thinking about the three important subjects in our title.  To print it for easy study, call up www.economist.com, click on “Business” in the upper left corner of the home page, scroll down to Peter’s article in blue, and click on “more.”  At the start of each article, click on “Printable Page” in the upper right corner.  Be sure to have a pen handy; you’ll highlight dozens of passages in addition to those we have quoted below.

“A growing number of older people – say those over 50 – will not keep on working as traditional full-time nine-to-five employees, but will participate in the labor force...as temporaries, as part-timers, as consultants, on special assignments, and so on...Now the traditional axiom that an enterprise should aim for maximum integration has become almost totally invalidated.  One reason is that the knowledge needed for any activity has become highly specialized.  It is therefore increasingly expensive…and difficult to maintain enough critical mass for every major task within an enterprise.  And because knowledge rapidly deteriorates unless it is used constantly, maintaining within an organization an activity that is used only intermittently guarantees incompetence.  By now the new information technology - Internet and e-mail - have practically eliminated the physical costs of communications.  This has meant that the most profitable way to organize is to disintegrate.” He’s right about the interest in working as temporaries or consultants; more than 100 have responded to our solicitations.

“The 20^th century saw the rapid decline of the sector that had dominated society for 10,000 years: agriculture.  In volume terms, farm production now is at least four or five times what it was before the first world war.  But in 1913 farm products accounted for 70% of world trade, whereas now their share is at most 17%…The decline of farming as a producer of livelihoods has allowed farm protectionism to spread to a degree that would have been unthinkable before the second world war…The new protectionism…will achieve nothing, because ‘protecting’ ageing industries does not work.  That is the clear lesson of 70 years of farm subsidies.  The old crops – corn, wheat, cotton – into which America has pumped countless billions since the 1930s – have all done poorly, whereas unprotected and unsubsidized new crops – such as soya beans – have flourished…Policies that pay old industries to hold on to redundant people can do only harm.  Whatever money is being spent should instead go on subsidizing older laid-off workers and retraining and redeploying younger ones.”  You have already seen protectionism in the timber economy.  And is the sale of timberland by big timber companies a sign that they think that it will not produce adequate investment returns?

“Life expectancy – and with it the number of older people – has been going up steadily for 300 years.  But the decline in the number of young people is something new.  The only developed country that has so far avoided this fate is America.  But even there the birth rate is well below replacement level, and the proportion of older people in the adult population will rise steeply in the next 30 years…By 2030 at the latest, the age at which full retirement benefits start will have risen to the mid-70s in all developed countries, and benefits for healthy pensioners will be substantially lower than they are today…Already young and middle-aged people at work suspect that there will not be enough pension money to go around when they reach traditional retirement age.”

We need not tell you what these three changes will mean to you.  You’ll learn more valuable lessons about prospects of the near future by reading the survey.  We are applying new knowledge to grow timber crops much faster and disintegrating our organization to produce more profit, so we’re doing our share to prepare for “The Next Society.”