A tale of inequality in the rainforest

Max Borders Editor, The Freeman
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Imagine you’re walking in a rainforest. It’s rich with life — verdant, beautiful, and diverse. When you look up, you notice something striking. A few giant mahogany trees dominate the forest. Their canopy covers almost everything. After reflecting some on the presence of these trees, you give them reverence. They are towering, majestic, and they sustain life for a bewildering array of other plants and animals. And yet those smaller plants and animals help sustain the trees, too.

But it is not equal in the forest.

After all, the mahogany trees soak up much of the forest’s sunlight, soil, water, and air (resources). You decide the mahogany trees are hoarding resources. Their biomass takes up nearly 80 percent of the forest ecosystem! It’s just not fair that they should have so much while the smaller flora and fauna have so little. Thinking about this inequality, you start to wonder if it would be better to cut, cull, or pare back some of the larger trees.

Soon you come upon a group of tribesmen. They share some magic root with you, which they say allows you to “talk to the forest.” Being an open-minded sort, you heat up some water and make tea from the root. Then, you plunge deeper into the jungle with your heart burdened with a message of rectitude.

“Hey Toucan,” you say, wondering if the root works. “Why must the mahogany trees take up so much sun, water, and light?”

To your surprise, the toucan turns his head and replies: “Without them we’d have no boughs on which to stand, nor fruit, nor shelter from the storm.”

“It seems unfair, though,” you return. “Without you little ones, the mahogany seeds would have no fertilizer. Their seeds would not so easily find a place for their saplings to take root.”

“This is true,” the toucan says.

A tree frog overhears. “Yes, if we depend on each other so, why aren’t we bigger and the trees smaller? Why shouldn’t we have more of the resources?”

The toucan thinks for a moment. “One thing is certain: If we cut them down to our size, we’ll be living in an empty field.”

Frog says, “I couldn’t live in an empty field.”

“Nor could I.” Toucan turns back to you. “I wonder, traveler. Is it in the nature of the forest that the trees are big and we are small and many? That they control the water and the light the way they do? And would the rainforest be this plentiful without these giants here?”

You take Toucan’s thoughts with you. They stay with you on your journey and go with you all the way back to the city, with its hulking skyscrapers and life teeming below.

* * *

A company is like a tree. The board of directors is like the major roots; smaller investors, minor roots. The board enabled the company to grow when it was but a sapling. The executive team — especially the CEO — is like the trunk. The executive team “holds up” the rest of the company — ensuring that the rest of the company gets the resources it needs (capital) to do its work — but only if the CEO is doing her job well.

Middle management is like the limbs, branches, and boughs growing out from the trunk. The salespeople and front-line employees, though they control fewer resources, are responsible for bringing in resources in point-to-area fashion at the periphery. They are like the stems and leaves. Turn most any org chart upside down and it looks like a tree. Of course, matters don’t end with the front-line employees. Companies, like trees, are open systems. These porous areas at the periphery are the familiar places we think of as points of exchange. If the whole system works right, the company will grow.

We should pause here for a moment to remember that this is a metaphor and shouldn’t be taken too far. But it is striking how all the elements of a company tend to be organized in tree-like fashion.

In the rainforest, animals are the trees’ customers: they get oxygen, food, and shelter out of the deal. The trees get carbon dioxide and soil nutrients. And they channel it — just as they channel most of the sunlight and water. Evolution ensures there aren’t many better ways for the trees of the forest to function, or for its resources to be distributed. The same can be said for economic ecosystems.

Companies — and the capable people who run them successfully — are part of a wider ecosystem in which “gaps” in resource distribution are just as vital as they are to such distributions in nature. We cut them down at our peril.

Max Borders is author of the forthcoming Superwealth: Why we should stop worrying about the gap between rich and poor (Fall 2012). Contact him here if you’d like to receive notice when the book is out.