James Surowiecki Quotations

If someone really wants my company's business, why shouldn't he be able to do everything he can - including paying me off - to get that business? Because bribery encourages people to make decisions based on the wrong criteria, which means in the business world that it distorts the efficient allocation of resources.

Linux is a complex example of the wisdom of crowds. It's a good example in the sense that it shows you can set people to work in a decentralized way - that is, without anyone really directing their efforts in a particular direction - and still trust that they're going to come up with good answers.

Flexible supply chains are great for multinationals and consumers. But they erode already thin profit margins in developing-world factories and foster a pell-mell work environment in which getting the order out the door is the only thing that matters.

The history of the Internet is, in part, a series of opportunities missed: the major record labels let Apple take over the digital-music business; Blockbuster refused to buy Netflix for a mere fifty million dollars; Excite turned down the chance to acquire Google for less than a million dollars.

The financial crisis of 2008 was not caused by investment banks betting against the housing market in 2007. It was caused by the fact that too few investors - including all of the big investment banks - bet too heavily on the housing market in the years before 2007.

The challenge for capitalism is that the things that breed trust also breed the environment for fraud.

The essence of procrastination lies in not doing what you think you should be doing, a mental contortion that surely accounts for the great psychic toll the habit takes on people. This is the perplexing thing about procrastination: although it seems to involve avoiding unpleasant tasks, indulging in it generally doesn't make people happy.

Academics, who work for long periods in a self-directed fashion, may be especially prone to putting things off: surveys suggest that the vast majority of college students procrastinate, and articles in the literature of procrastination often allude to the author's own problems with finishing the piece.

Wall Street has come a long way from the insider-dominated world that was blown apart by the Great Depression.

Tough times have always lent themselves to nativist sentiments and closed-door policies. But in the case of highly skilled immigrants, these policies are a recipe for stagnation.

If you thought the advent of the Internet, the spread of cheap and efficient information technology, and the growing fragmentation of the consumer market were all going to help smaller companies thrive at the expense of the slow-moving giants of the Fortune 500, apparently you were wrong.

In the business world, bad news is usually good news - for somebody else.

In the heart of the Great Depression, millions of American workers did something they'd never done before: they joined a union. Emboldened by the passage of the Wagner Act, which made collective bargaining easier, unions organized industries across the country, remaking the economy.

Self-dealing, essentially, occurs when managers run companies to line their own pockets instead of those of the companies' owners. It's been a perennial problem in American capitalism and became a real dilemma when America moved toward a model in which corporations would be run by professional managers who had only small ownership stakes.

Technology is supposed to make our lives easier, allowing us to do things more quickly and efficiently. But too often it seems to make things harder, leaving us with fifty-button remote controls, digital cameras with hundreds of mysterious features and book-length manuals, and cars with dashboard systems worthy of the space shuttle.

Solyndra's failure isn't a reason for the government to give up on alternative energy, any more than the failure of Pets.com during the Internet bubble means that venture capital should steer clear of tech projects.

Now, modern economies have a very effective mechanism for deciding if salaries are really too high: it's called the free market. That's how most people's salaries are set, after all, including those of major-league baseball players and European soccer players.

In the days when corporate downsizing was all the rage, Wall Street took a lot of flak for judging companies too harshly and setting the bar for corporate performance so high that executives felt their only option was to slash payrolls.

Critics of consumer capitalism like to think that consumers are manipulated and controlled by those who seek to sell them things, but for the most part it's the other way around: companies must make what consumers want and deliver it at the lowest possible price.

Pop music thrives on repetition. You know a song's a hit when you've heard it so often that you'll be happy never to hear it again.

Markets work best when there's lots of information available and a historical track record to go on; they excel at predicting things like horse races, election outcomes, and box-office results. But they're bad at predicting things like who will be the next Supreme Court nominee, as that depends on the whim of the president.

Businesses that have gone through an episode of hyperinflation become understandably alert to the threat of it: at the first hint of inflation, they're likely to increase prices, since they've learned that if they don't, and inflation hits, their businesses will be wrecked.

A general principle of good taxation is that similar jobs, and similar kinds of compensation, should be taxed the same way: otherwise, the government is effectively subsidizing some jobs over others.

The ban on sports betting does exactly what Prohibition did. It makes criminals rich.

Workers who come to the U.S. see their wages and their standard of living boosted sharply simply by crossing the border. That's a good thing, and one of the best arguments for immigration reform, even if you'll rarely hear a politician make it.

The problem with venality in business is that getting outraged about it makes it easy to miss the systemic problems that venality often disguises.

For most Americans, work is central to their experience of the world, and the corporation is one of the fundamental institutions of American life, with an enormous impact, for good and ill, on how we live, think, and feel.

Republicans like to indict Democrats as anti-corporate zealots.

Steve Jobs was rare: a C.E.O. who actually had a huge impact on his company's fortunes. Contrary to corporate mythology, most C.E.O.s could be easily replaced, if not by your average Joe, then by your average executive vice-president. But Jobs genuinely earned the label of superstar.

You can't be rich unless everyone else agrees that you're rich.

Discussions of health care in the U.S. usually focus on insurance companies, but, whatever their problems, they're not the main driver of health-care inflation: providers are.

The stock market has an insidious effect on C.E.O.s' moods, because of its impact not just on their companies but on their own bank accounts.

You might say that economic history is the history of people learning to manage risk.

The U.S. is excellent at importing cheap products from the rest of the world. Let's try importing some human capital instead.

In some respects, the video-game business is a lot like the razor business, which follows a simple model: Give away the razor, gouge 'em on the price of the blades.

Political risk is hard to manage because so much comes down to the personal choices of policymakers, whether prime ministers or heads of central banks.

Discussions of health care in the U.S. usually focus on insurance companies, but, whatever their problems, they're not the main driver of health-care inflation: providers are.

Disasters redistribute money from taxpayers to construction workers, from insurance companies to homeowners, and even from those who once lived in the destroyed city to those who replace them. It's remarkable that this redistribution can happen so smoothly and quickly, with devastated regions reinventing themselves in a matter of months.

Corporations hope that the right concept will turn things around overnight. This is what you might call the crash-diet approach: starve yourself for a few days and you'll be thin for life.

Companies have long gathered data to break down their customer base into specific segments. Now political parties have become adept at micro-targeting, too, using data on shopping habits, leisure activities, voting histories, charity donations, and so on, in order to pinpoint likely supporters and the type of appeal most likely to win them over.

Campaigns fail if they waste resources courting voters who are unpersuadable or already persuaded. Their most urgent task is to find and persuade the few voters who are genuinely undecided and the larger number who are favorably disposed but need a push to actually vote.

By the time of the '90s boom, CEOs had become superheroes, accorded celebrity treatment and followed with a kind of slavish scrutiny that Alfred P. Sloan could never have imagined.

Being unemployed is even more disastrous for individuals than you'd expect. Aside from the obvious harm - poverty, difficulty paying off debts - it seems to directly affect people's health, particularly that of older workers.

Being out of a job can erode people's confidence and their sense of possibility; and employers, often unfairly, tend to take long-term unemployment as a signal that something is wrong.

Behavioral economists have shown that a sizable percentage of people are willing to pay real money to punish people who are taking from a common pot but not contributing to it. Just to insure that shirkers get what they deserve, we are prepared to make ourselves poorer.

In the auto industry, there's one thing you can always count on: if a new environmental or safety rule is proposed, executives will prophesy disaster.

Intellectual-property rules are clearly necessary to spur innovation: if every invention could be stolen, or every new drug immediately copied, few people would invest in innovation. But too much protection can strangle competition and can limit what economists call 'incremental innovation' - innovations that build, in some way, on others.

On the simplest level, telecommuting makes it harder for people to have the kinds of informal interactions that are crucial to the way knowledge moves through an organization. The role that hallway chat plays in driving new ideas has become a cliche of business writing, but that doesn't make it less true.

Of course, politicians always say they're just describing their opponents' positions, even if they are in fact offering absurd caricatures, if not outright lies.

Of course, looking tough on inflation is part of any central banker's job description: if investors believe that inflation is going to get out of control, you end up with higher interest rates and capital flight, and a vicious circle quickly ensues.

Nike used to be known as Blue Ribbon Sports. What's now Sara Lee used to be Consolidated Foods. And Exxon was once Standard Oil Company of New Jersey. These were name changes that worked. But for all the ones that do, there are 10 or 20 that don't.

Medical tourism can be considered a kind of import: instead of the product coming to the consumer, as it does with cars or sneakers, the consumer is going to the product.

Making loans and fighting poverty are normally two of the least glamorous pursuits around, but put the two together and you have an economic innovation that has become not just popular but downright chic. The innovation - microfinance - involves making small loans to poor entrepreneurs, usually in developing countries.

Lower oil prices won't, by themselves, topple the mullahs in Iran. But it's significant that, historically, when oil prices have been low, Iranian reformers have been ascendant and radicals relatively subdued, and vice versa when prices have been high.

Life insurance became popular only when insurance companies stopped emphasizing it as a good investment and sold it instead as a symbolic commitment by fathers to the future well-being of their families.

It may be that the very qualities that help people get ahead are the ones that make them ill-suited for managing crises. It's hard to prepare for the worst when you think you're the best.

As technology improves, on-screen avatars look more and more like real people. When they start looking too real, though, we pull away. These almost-humans aren't quite right; they look creepy, like zombies.

All things being equal, letting people make decisions for themselves will produce smarter outcomes, collectively, than relying on government planners.

The stock market has an insidious effect on C.E.O.s' moods, because of its impact not just on their companies but on their own bank accounts.

The oil market is especially sensitive even to a hint of expansion or contraction in supply.

The fact that industries wax and wane is a reality of any economic system that wants to remain dynamic and responsive to people's changing tastes.

The autocracies of the Arab world have been as economically destructive as they've been politically repressive.

Real politics is messy and morally ambiguous and doesn't make for a compelling thriller.

In confusing stock options with ownership, corporations confuse trappings with substance.

If companies tell us more, insider trading will be worth less.

Corporate welfare isn't necessarily a bad thing.

The desire for reinvention seems to arise most often when companies hear the siren call of synergy and start to expand beyond their core businesses.

Traditionally, tours were a means of promoting a record. Today, the record promotes the tour.

Under the right circumstances, groups are remarkably smart - smarter even sometimes than the smartest people in them.

A consumer-finance agency is a good thing, but it would do well to teach consumers a simple lesson: if you don't understand the deal you're making, don't make it.

The world's central banks and the International Monetary Fund still have vaults full of bullion, even though currencies are no longer backed by gold. Governments hold on to it as a kind of magic symbol, a way of reassuring people that their money is real.

The Internet has become a remarkable fount of economic and social innovation largely because it's been an archetypal level playing field, on which even sites with little or no money behind them - blogs, say, or Wikipedia - can become influential.

Steve Jobs was rare: a C.E.O. who actually had a huge impact on his company's fortunes. Contrary to corporate mythology, most C.E.O.s could be easily replaced, if not by your average Joe, then by your average executive vice-president. But Jobs genuinely earned the label of superstar.

Popular as Keynesian fiscal policy may be, many economists are skeptical that it works. They argue that fine-tuning the economy is a virtually impossible task, and that fiscal-stimulus programs are usually too small, and arrive too late, to make a difference.

Politically speaking, it's always easier to shell out money for a disaster that has already happened, with clearly identifiable victims, than to invest money in protecting against something that may or may not happen in the future.

Besides great climates and lovely beaches, California and Greece share a fondness for dysfunctional politics and feckless budgeting.

We assume that good-looking people are smarter and more effective than they really are, and that homely people are the reverse.

You can't fuel real economic growth with indiscriminate credit. You can only fuel it with well-allocated, long-term investment.

Publishers, naturally, loathe used books and have developed strategies to depress the secondhand market. They bring out new, even more expensive editions of popular textbooks every three to four years, in a classic cycle of planned obsolescence.

The profit motive, indecorous though it may seem, may represent the best chance the poor have to reap some of globalization's benefits.

But, if recent history has taught us anything, it’s that self-regulation doesn’t work in finance, and that worries about reputation are a weak deterrent to corporate malfeasance.

Groups are only smart when there is a balance between the information that everyone in the group shares and the information that each of the members of the group holds privately. It's the combination of all those pieces of independent information, some of them right, some of the wrong, that keeps the group wise.

If small groups are included in the decision-making process, then they should be allowed to make decisions. If an organization sets up teams and then uses them for purely advisory purposes, it loses the true advantage that a team has: namely, collective wisdom.

Bubbles and crashes are textbook examples of collective decision making gone wrong. In a bubble, all of the conditions that make groups intelligent - independence, diversity, private judgement-disappear.

You might think of consumption as a fairly passive activity, but buying new products and services is actually pretty risky, at least if you value your time and money.

Workers who come to the U.S. see their wages and their standard of living boosted sharply simply by crossing the border. That's a good thing, and one of the best arguments for immigration reform, even if you'll rarely hear a politician make it.

When Americans think of college these days, the first word that often comes to mind is 'debt.' And from 'debt' it's just a short hop to other unpleasant words, like 'payola,' 'kickback,' and 'bribery.'

When Americans are asked to rank professions in terms of honesty and ethics, insurance agents routinely end up near the bottom of the list - somewhere between politicians and car salesmen. Generally, insurers are seen as clever hucksters who prey on insecurity and ignorance to sell people what they don't need at prices they shouldn't have to pay.

When all is said and done, cheap gas is an illusion, because our reliance on gas creates a whole series of costs that aren't factored in to the pump price - among them congestion, pollution, and increased risk of accidents.

What corporations fear is the phenomenon now known, rather inelegantly, as 'commoditization.' What the term means is simply the conversion of the market for a given product into a commodity market, which is characterized by declining prices and profit margins, increasing competition, and lowered barriers to entry.

What an economy really wants, after all, is not more investment per se but better investment. It wants capital to flow to companies that will create value - not in the form of a rising stock price but in the form of more goods for less cost, more jobs, and rising wages - by enhancing productivity.

Until the nineteen-seventies, Western countries paid little attention to corruption overseas, and bribery was seen as an unpleasant but necessary part of doing business there. In some European countries, businesses were even allowed to deduct bribes as an expense.

This intelligence, or what I'll call "the wisdom of crowds," is at work in the world in many different guises. It's the reason the Internet search engine Google can scan a billion Web pages and find the one page that has the exact piece of information you were looking for. It's the reason it's so hard to make money betting on NFL games, and it helps explain why, for the past fifteen years, a few hundred amateur traders in the middle of Iowa have done a better job of predicting election results than Gallup polls have.

The fact that cognitive diversity matters does not mean that if you assemble a group of diverse but thoroughly uninformed people, their collective wisdom will be smarter than an expert's. But if you can assemble a diverse group of people who possess varying degrees of knowledge and insight, you're better off entrusting it with major decisions rather than leaving them in the hands of one or two people, no matter how smart those people are.

The important thing about groupthink is that it works not so much by censoring dissent as by making dissent seem somehow improbable.

Sometimes even a smart crowd will make a mistake.

Sometimes you have to destroy your business in order to save it.

The history of the Internet is, in part, a series of opportunities missed...

Moviegoers love the intricacies of a crime all the more when it's for a good cause.

Companies, like people, don't much like to change.