Read The Risk Pool By Malcolm Gladwell

If this post does nothing more than get you to go read Malcolm Gladwell’s New Yorker article on the challenges to large corporations caused by pension obligations, than I’ve done my job.

No, really. Please just go here and read the piece. I can wait. In fact, let’s take the rest of this post to the next page.

Okay, if you care to hear my thoughts about this article: it’s (okay I’ll use Doctor Evil-speak instead of what you know I want to say) frickin great. This is great writing. Great business writing.

Check out this passage:

“Looking at General Motors and the old-line steel companies in demographic terms substantially changes the way we understand their problems. It is a commonplace assumption, for instance, that they were undone by overly generous union contracts. But, when dependency ratios start getting up into the 3-to-1 to 7-to-1 range, the issue is not so much what you are paying each dependent as how many dependents you are paying. ‘There is this notion that there is a Cadillac being provided to all these retirees,’ Ron Bloom, a senior official at the United Steelworkers, says. ‘It’s not true. The truth is severy-five-year-old widows living on less than three hundred dollars to four hundred dollars a month. It’s just that there’s a lot of them.’

“A second common assumption is that fading industrial giants like G.M. and Bethlehem are victims of their own managerial incompetence. In various ways, they undoubtedly are. But, with respect to the staggering burden of benefit obligations, what got them in trouble isn’t what they did wrong; it is what they did right. They got in trouble in the nineteen-nineties because they were around in the nineteen-fifties—and survived to pay for the retirement of the workers they hired forty years ago. They got in trouble because they innovated, and became more efficient in their use of labor.”

Bingo. In terms of style, this is just perfect. The clarity of this thinking is forged by the simple, powerful prose. While his article focuses on the impact of demographic trends on international competitiveness, his attention to detail and his ability to tell a story make this feel much more than the sum of the parts. Gladwell uses a simple lens (again, the meaning of the “dependency ratio,”) to create a wide picture that addresses the decline of American manufacturing (his details on the steel industry are great.)

(As a quick aside, I confess to enjoying Gladwell’s articles more than his books. When he’s at the top of his game, as he is here, his articles feel like miniaturized books. And while I admire his story-telling genius, his books often feel to me like expanded articles, or articles-strung-together.)

(Note to self: as a topic for another day, write about business books that were better as magazine articles.)

Substantively, he’s really onto something. I’ve read quite a lot about the competitiveness of the auto industry, and of manufacturing in general, but I’ve yet to read a passage that assesses the challenge facing GM and other so clearly.

It could be that I like his article much because it does a better job of expressing a point of view I’ve held for some time—the fact is that GM now manufactures cars that are competitive with Toyota in terms of quality, and it does so in domestic factories that are, at their best, competitive with world-class manufacturers in terms of speed, quality, injuries, and productivity. This fact does not excuse the company from a multitude of other sins; but it should not be ignored. And Gladwell’s ability to point out the fact that “what got them in trouble isn’t what they did wrong; it is what they did right” might do some good in helping outsiders propose the RIGHT solutions for these giants.

In fact, Gladwell does take GM’s leadership to task, only he does so with a fine edge, by pointing out that current CEO Rick Wagoner has the power and position to promote universal health care and expanded social welfare—yet has declined to do so.

Reading this article reminded me that business writing can have grace, power, and speak to important issues. Many years ago Richard Preston wrote several (or perhaps one) spectacular articles in the New Yorker on Nucor that became American Steel, a classic business book.

Having said all that, I’m saving one thought for last (since it is the least important point here.) Since the article ran in The New Yorker, there’s been a huge online debate about things slightly tangential to what matters. Last week a writer/economist/scholar named Jane Galt takes issue with the demographic theory of “dependency ratio” at the core of Gladwell’s article. He posted a not-altogether gracious riposte on his site, and she (seemingly delighted to have bagged the online tiger) responded with a self-deprecating reply that spawned an avalanche of comments on her site. The next day Gladwell followed up with a classy after-thought.

Now, her original point was well-taken: she disagreed with Gladwell on the key theory behind his article, that of the dependency ratio. But what transpired had little to do with what I ever thought was important about his article. Instead, a gang of yahoos pig-piled on the comments, and commented on their blogs, and it all became a remarkably stupid example of web-debate at its worst: a great article about an important issue that gets hijacked by folks without the patience or common sense to try to focus on the main thing. I’m not arguing for sloppy reporting here, folks; I’m just expressing dismay over the fact that anything I read about this article on the web completely missed the point—if I were to rely on the web for my information, I would have completely missed the real point of this terrific piece.