Friday, March 20, 2009

Some thoughts on Epcot and our economy

Here's one take on the debate about Epcot, inspired by a comment on Epcot Central:

Walt was wrong.

In Walt's EPCOT vision, corporations were to solve all the world's problems. Corporations would develop the technology to save our planet, to revitalize our cities, to create new sources of energy, to help us to live in harmony. The answers were going to come from our huge corporations.

Where is the flaw in this thinking? After all, corporations are the ones that employ people in our country. Corporations are the ones who would seem to have an incentive to do the research and development of solutions to problems and of products which people demand (presumably to solve a personal problem and make life easier for themselves), which they can sell to the populace and make a profit. They should be the ones with the resources to do this sort of work.

In Walt's time, it seems that this is exactly what corporations did or were going to do in the future. But today? Well, I'm not an economist by any stretch, and my understanding of a lot of thes issues is simplistic. But sometimes simplicity is the best way to view these complicated issues. Too many extraneous circumstances have come into the equation, not the least of which is the expense of labor. Labor in the United States is not cheap. And providing benefits for said employees makes an expensive employee even more costly. So the jobs go overseas, and the corporate mission changes a little.

Another major circumstance to come into play is the reliance on share prices. Everything has to be a growth enterprise. Shareholders demand increasing profits, and then share values rise. Income producing stocks like utilities might throw off a good dividend, but they weren't the stocks driving the market toward new highs.

Another facet of this circumstance is the fact that executive bonuses are often tied to stock price, since many bonuses include stock options as a significant source of compensation. Stock options become more valuable when share prices rise, not when they fall. CEOs and boards are concerned with raising stock values not only for their shareholders, which are likely to include large institutional investors, but for their own benefit. So the pressure is to have ever-increasing profits, which in turn raises share price, which in turn increases the values of those stock options that are a big part of executive compensation these days.

Corporations, like many individual Americans, have committed to immediate gratification. It's not so common that a normal person in our country will save for something they really want, putting off its acquisition until they can afford it. They have been raised in a society where they're told that they can buy now and pay later.

It's a little different for corporations. It's almost the reverse. They often prefer to take profits today at the expense of the future development of their core businesses. They are not as apt to invest in technologies which don't show much fiscal benefit right now, often choosing instead to keep that money and use it to boost profits today and raise stock prices.

Disney should understand this failure; they appear to function by the same model.

It's a model which has gotten us into big trouble. In my humble opinion, this mindset in the huge financial corporations has undermined the solid foundations that these businesses were built on. Instead of planning long range, they've looked at what's most profitable today. Greed has made them weak, as they are stripped from within by Gordon Gekko-like executives. Hostile takeovers? Who worries about those when the corporation's own board is breaking down the company from inside and selling off the parts, figuratively (and perhaps sometimes literally!).

That's a lot of talk from an inexpert source to explain, at least in part, why things didn't develop as Walt believed, or hoped, they would. Corporations are not the driving force for betterment of society that they may have been when Walt was alive. Profit was always the goal, but now it has become king. And there's no queen, or royal court.

So when Epcot continues to function with a model that suggests that corporations are the source of solutions to global problems, it may not be the best model for 2009. Science and technology may still answer our questions, but more and more we look to our government to solve our problems. We may not like the solutions government offers, not in total anyway, but at least it tries. While corporations are looking for ways to trim their workforces, at least our government in 2009 is trying to find ways to promote employment, access to health care, and financial security in our old age.

Government is not going to become an Epcot sponsor anytime soon, I fear. Neither are the universities that might be the major source of pure research. If Disney is going to depend on corporate sponsorships, I fear Epcot is in for a long decline.

Only those of us who love Epcot, and indeed, all Disney parks, truly care about the direction Epcot takes. And we don't have the money or economic clout to influence that direction. Of course, the Disney corporation cares, but they also care (more?) about their bottom line and the profitability of this park in the short term.

Corporate altruism is not something we can depend on any more. We just have to hope that Disney finds it profitable (whether it be short- or long-term) to make Epcot the sort of park that we'd love for it to be.


Future Guy said...

Interesting post, Scott.

You know, Walt grew up during a time when industry was changing everyone's lives with new electrical appliances, automobiles, and telephones. In the 50s and 60s, private industry played a key part in the Space Race. Additionally, the competing ideologies of American private enterprise and the USSR's centralized, state-run industry was a major element of the Cold War, and Walt was vehemently anti-Communist. He even testified before the infamous House Un-American Activities Committee and accused the Screen Actors Guild of being a Communist front. So it's easy to see why Walt had such a favorable opinion toward large corporations.

Of course, thanks to shortsighted, Dilbert-style management, American corporations are mainly run, as Dave Barry once put it, by morons sitting around a conference table making bad decisions, decisions that usually lead to things like New Coke, the Pontiac Aztek, and current version of Journey Into Imagination.

Scott said...

I suspect that there is a lot we don't know about that era, as far as the under-the-table dealings between industry and government. And of course it wasn't really a global market. Walt's optimism about industry probably came from the way he ran his own business, whether it was fully justified or not.

Change came relatively slowly in the way we viewed business, and I suspect the next change, if there is one, will be as slow...