McDonald’s, Hollande and Future Government

What do these facts have to do with one another and with the future of government?

It is conventional economic wisdom that McDonald’s success was built not on the quality of its burgers but rather on their consistency. No matter where you went, you could rely on a mediocre hamburger fixed exactly the same way every time, down to the size of the mustard drop. You knew it would not be anything to write home about, but you also knew it would never be horrible, and that it would not make you sick. McDonald’s brand gave you that comfortable predictability when you traveled or when you simply did not feel adventurous. In short, it was something you could trust.

But it wasn’t just McDonald’s. All brands were built on trust (and image), whether they were low or high brow, product or service. You bought a particular type of watch because you knew it served you well in the past. When a newer, fancier brand came out with added features at a lower price, you stuck with trusty Vanilla Watch, because you were unwilling to take the risk on the unknown, a watch that might not keep time. “Better is enemy of the good,” as the French say, you thought to yourself.

No longer. Social Media has changed all this just in the last few years. You no longer need trusty McDonald’s when you’re on the road, or on vacation. You now use Yelp, or Facebook or UrbanSpoon, to quickly read reviews and recommendations about local restaurants. It is not that you take no risk when trying out the unfamiliar place, but social media credentials gives you access to info, opinions, and actual customers, stuff once nearly inaccessible. Perhaps you still trust McDonald’s, but you trust your friends, and friends of friends, more.

With the undermining of the traditional trust-based brand, economic theory predicted two things would happen. Firstly, it predicted a revival, or at least survival, of local businesses. Secondly, it predicted that the traditional brand would adapt its methods. Both predictions are supported by recent business trends. Local businesses have made a comeback, although not exactly a killing. But neither have all the old brands died out.

They have adapted to the new conditions. McDonald’s at first experienced a decline in the mid-“oughts,” but is recently surging back. It is doing so by changing its business model. It is no longer “mediocrity you can trust” but rather” everything you need in one place.” McDonald’s now serves expresso, lattes, chai, tea, fresh baked goods, smoothies, real ice cream, several kinds of salads, several kinds of wraps, and more, depending on location. In Europe, it serves beer and local bread.

Even seemingly invincible brands in complicated industries (where know-how is king) have had to adapt. Apple could no longer sit on its laurels. An upstart electronics company can build phones, use open source software, and sell on Amazon. The number of generic tablet computers out each quarter was more than could be tracked. Before social media, few would have risked buying a sophisticated electronics item from an unknown player. Now anyone can read customer reviews on Amazon, or Egghead or Ebay, and know a good amount about the quality and reliability of new gadgets from Brands Unknown.

Brand economics again predicted that Apple would either decline rapidly or make rapid changes. And change has indeed happened at Apple. In the last couple of years, the pace of innovation has clearly climbed. Instead of one or two new products every calendar year, Apple now releases two or more every quarter. The pace of software upgrades has also accelerated. Once, its software would remain unchanged for years; now major overhauls and feature additions happen annually or more often. And Apple has even gotten into the economy gadget case business.

What does all this have to do with Hollande and the US government?

Taking government as brand for the moment, we can notice that information that was once high-cost or filtered through gatekeepers, such as old media newspapers, is now available to anyone nearly instantly. There are four types of such information accessible through the world wide web and social media:

1. information and internal workings of the brand,
2. info about the executive of the brand (read politicians),
3. info about other brands (read other countries) and their customers’ satisfaction, and
4. info about alternatives (read political design).

The increased availability and low cost of such information, economic theory predicted, would cause a crisis in old brands. Recent history in the West and the Mideast give good evidence of this. Firstly, trust in individual politicians is low, as can be seen by the large number of freshman congresspeople in the US and similar high parliamentary turnover elsewhere. In fact, about two in five lawmakers in the House have served for less than three years. It’s not because politicians are less honest then they used to be, it’s that voters do not need politicians for information anymore, neither information about the workings of government nor about ideas in the broader pubic sphere.

Secondly, trust in government itself is at an all-time low. Congress’s approval rating has never been so low for so long. It nearly hit single digits! The American President appears ignored by government and opposition alike, as we see in his recent timid response to the healthcare launch debacle. Likewise newly elected ruling parties in Europe and the Mideast are given little leeway, in terms of policy, by their opposition. And ruling parties are often granted little legitimacy.

Thirdly, citizens today compare themselves to those living in other countries more frequently than in the past. Migration remains extremely high despite poor economic outlooks for migrants. Up to date in 2013, there are 232 million migrants throughout the world. Inside the US, a place that used to think itself beyond comparison, more people are looking to other countries for solutions to problems or models of reform, e.g., the health care system, the electoral system. One can notice, for example, the new types of voting systems in place in certain counties in California, Minnesota, Maine, Vermont, Michigan and others.

Fourthly, and related to the previous point, consumers of government (citizens) are beginning to consider, and experiment with, alternatives to representative government. Australia and Canada have both used citizens’ assemblies (albeit unsuccessfully) to deliberate on and attempt to solve controversial issues that traditional political parties were impotent in settling. Both the Australian assembly on climate change in 2010 and the British Columbia assembly on electoral reform in 2004 failed to realize their ambitions. But they serve as evidence of the growing dissatisfaction with politics as usual and the willingness to try a radical alternative, letting a group of randomly selected citizens decide on the future of the country. This trend perhaps came to its highpoint to date last winter in Iceland’s “crowd-sourced” Constitution, written by a group of 25 citizens chosen by lot. It was approved by a 67% super-majority of voters in October 2013. Although it has not yet been implemented due to deadlock between the ruling and opposition party, it is an unprecedented political event in modern history. It also suggests the far-reaching ramifications of social media and equal access to information.

In summary, the crisis of “Brand Gov” is evident in the growing restlessness and distrust with the status quo the whole world over. It is not about “the economy stupid” but about “economics stupid,” that is, basic economic theory about information available to actors in any kind of “market.” People can now comparison shop, read “citizen reviews” and discuss with others, the important issues regarding their own and other governments. Indeed, social media has changed the way McDonald’s does business and it may soon change the ways representative governments conduct theirs.