Why does our service economy offer such bad service?

How do you get a call centre to do anything for you that involves change, or taking responsibility? Robert Skidelsky and Nan Craig on the downsides of our overdependence on a service economy.

Britain is a service economy with a lot of lousy services. The paradox is easily explainable. Service and cost-cutting are contradictions in terms. Good services are intrinsically expensive because they require a high ratio of labour to product; hence the old view that services could not be automated. Yet the main aim of those who run our service economy is to cut the costs represented by human labour as much and as fast as they can.
 
The view that services are automationproof has been disproved. Think of the labour-saving devices in the home – vacuum cleaners, washing machines, dishwashers – that have reduced the burden of domestic drudgery and created leisure time that in the past only the rich enjoyed. Think of cash dispensers, of online shopping. In all these cases, machines provide the services that people once did – and usually more conveniently.
 
On the other hand, think of call centres, which offer services according to automated formulae. In this case, it is not that people are being replaced by machines but that they are being programmed to act like machines. This enables them to process a greater number of calls per unit of time.
 
Recently, NHS Direct announced that it will pull out of contracts to deliver the new NHS 111 helpline. The details are complicated but the gist is that contracts to run the helpline have been awarded by competitive tender, with bidders offering the service at the lowest cost. Cost reduction is secured by reducing the number of doctors and nurses per operator, with operators relying on callcentre scripts and algorithms to process calls: exactly the opposite of what most people think of as a good service. Andy Burnham, the shadow health secretary, has spoken of nurses being replaced by computers and of an urgent need “to get more clinicians back in the front line handling calls”. He is right.
 
Try changing your mobile telephone provider, reporting a lost credit card or making almost any attempt to contact your bank, and you are likely to enter a Kafkaesque world of customer frustration. The recent attempt by our office to upgrade a phone package is a case in point. We were moved back and forth between the old supplier, the new supplier and the delivery service, none of which seemed to have the faintest idea what the others were doing.
 
What distinguishes services that can be automated successfully from those that can’t? The answer is the nature of the need: the less complicated the need, the more efficiently it can be satisfied without human intervention. The economist William Baumol identified services that resisted commodification, for whichthe human touch was essential and quality was correlated with the amount of human labour dedicated to their production. He gave the performing arts as an example, but the analysis can be extended to such services as teaching and medical care.
 
Amazon, for instance, works well when it allows people to order, quickly and conveniently, an item that they already want. Its recommendation system, however, is based on algorithms rather than the knowledge and intuition of a good bookseller. That is why bestsellers sell more and everything else sells less. Automated services fit and thereby create products that can be standardised, because an automated system can’t cope with anything else.
 
In the rich countries of the west – in some more than others – personal service has fallen victim to a kind of Fordism or its successor, scientific management, which dissects tasks into tiny individual units. Scientific management, developed by the American mechanical engineer Frederick Winslow Taylor in the late 19th century, is the foundation of modern techniques such as the use of strict call-centre scripts, which aim to create algorithms that automate the human element of work as much as possible.
 
Adam Smith foresaw this development in manufacturing 250 years ago.He gave the example of the pin factory, in which “the important business of making a pin is . . . divided into about 18 distinct operations, which, in some manufactories, are all performed by distinct hands”. The result of this “division of labour” was a tremendous increase in the productivity of the factory.
 
Cost-cutting in services proceeds by a false analogy with the pin factory. In all services that can be automated, part of every process is delegated to a team that inhabits a separate silo. No team is able to carry out more than its tiny element of the process; as a result, from the first moment you contact a company, you have to choose which team to talk to (“Press one if you are a business customer; press two if you are a personal customer; press three if you wish you were dead”).
 
Then, if you have a query that is even slightly complicated, at least the first three people you speak to will probably not be able to help. No one has an overview of how the whole thing works and no one has any power to cut through the undergrowth, because each person is in control of only a tiny patch of the service. As no one person or team knows what anyone else does or who any of the customers is, all information has to be stored centrally; if something is “not in the system” or if the system has broken down, it’s a dead end.
 
As the call-centre worker has never met you before, he or she will have little sympathy and no relationship to draw on; because they will almost certainly never speak to you again, there is no incentive for them to be helpful if your problem can’t be fixed within the formula. From their perspective, they are having to deal with customers who are irate because of events that the service provider has no control over and no responsibility for.
 
As ever, there are people with a sense of service, but whose hands are tied by the architecture of the system that they inhabit. There are also, inevitably, a few people who hate customers and are terrible at their job. They suit the system well because they are never required to be innovatively helpful and, if something goes beyond their remit, they can happily transfer you to someone else or simply tell you that what you want is impossible and ring off.
 
Eventually, someone at one of the call centres we contacted in our efforts to upgrade our telephone agreed that the system does not work very well. He sounded unhappy about it but said, “That’s the way the world works.” He is almost right. That is now how much of the world works. It hasn’t worked this way for long but it is no longer possible to imagine a world in which contacting any large company by telephone would not involve speaking to a different person every time you called.
 
No one is made happier by the system except, perhaps, the owners of the cost-cutting companies, who can pay for properly personal services for themselves out of hugely enhanced profits. As the cost of idiosyncracy rises, what used to be thought of as personal services can be afforded only by the rich. The so-called concierge services make a great play of being adapted to individual requirements. Yet, like the “bespoke” tailors of old, they mainly serve the rich. If you have £100,000 on deposit, your bank gives you a “premium account manager”; if you don’t, you go through the call-centre system.
 
Beyond the nightmare for the consumer is the nightmare for the producer. Smith rightly understood that the division of labour, though good for productivity, was degrading for the worker. The effect on the “hands” of knowing nothing about the manufacture of pins except what was required for their specific tasks was, he said, to make them “as stupid and ignorant as it is possible for a human creature to become”.
 
The same deskilling effect operates in the service economy. It has been suggested that part of the problem with call centres is that the people who staff them are uneducated and badly trained. However, the problem is that the system in which they work prevents them from taking responsibility for their products. Taking away the ability of a callcentre worker to help people doesn’t just frustrate the caller but destroys the satisfaction that comes from solving someone’s problem. It’s the deprivation of this satisfaction that makes the work of the operator both boring and emotionally stressful, rather than something that has an intrinsic motivation. The call-centre operator is a contemporary example of the artisan deprived of the pleasure of workmanship.
 
There is an even more dire implication. If profit maximisation requires human beings with machine-like qualities, why not get rid of the people altogether? Machines don’t need wages. Call centres, like factories, will soon be staffed entirely by machines; all checkout services at supermarkets will also be done by machines; the specialist knowledge of taxi drivers will be replaced by satnav; there will eventually be driverless cars. Machines will “talk” to each other. Except for a few specialists to make and fine-tune the machines and others to meet the continued demand of the wealthy for personal services, the human race will no longer be required for work. It will have to find something else to do.
 
Robert Skidelsky is a cross-bench peer and emeritus professor of political economy at the University of Warwick Nan Craig is the publications director of the Centre for Global Studies.
Artwork by Nick Hayes.

This article first appeared in the 26 August 2013 issue of the New Statesman, How the dream died

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Donald Trump vs Barack Obama: How the inauguration speeches compared

We compared the two presidents on trade, foreign affairs and climate change – so you (really, really) don't have to.

After watching Donald Trump's inaugural address, what better way to get rid of the last few dregs of hope than by comparing what he said with Barack Obama's address from 2009? 

Both thanked the previous President, with Trump calling the Obamas "magnificent", and pledged to reform Washington, but the comparison ended there. 

Here is what each of them said: 

On American jobs

Obama:

The state of our economy calls for action, bold and swift.  And we will act, not only to create new jobs, but to lay a new foundation for growth.  We will build the roads and bridges, the electric grids and digital lines that feed our commerce and bind us together.  We'll restore science to its rightful place, and wield technology's wonders to raise health care's quality and lower its cost.  We will harness the sun and the winds and the soil to fuel our cars and run our factories.  And we will transform our schools and colleges and universities to meet the demands of a new age.

Trump:

For many decades we've enriched foreign industry at the expense of American industry, subsidized the armies of other countries while allowing for the very sad depletion of our military.

One by one, the factories shuttered and left our shores with not even a thought about the millions and millions of American workers that were left behind.

Obama had a plan for growth. Trump just blames the rest of the world...

On global warming

Obama:

With old friends and former foes, we'll work tirelessly to lessen the nuclear threat, and roll back the specter of a warming planet.

Trump:

On the Middle East:

Obama:

To the Muslim world, we seek a new way forward, based on mutual interest and mutual respect. To those leaders around the globe who seek to sow conflict, or blame their society's ills on the West, know that your people will judge you on what you can build, not what you destroy. 

Trump:

We will re-enforce old alliances and form new ones and unite the civilized world against radical Islamic terrorism, which we will eradicate completely from the face of the earth.

On “greatness”

Obama:

In reaffirming the greatness of our nation we understand that greatness is never a given. It must be earned.

Trump:

America will start winning again, winning like never before.

 

On trade

Obama:

This is the journey we continue today.  We remain the most prosperous, powerful nation on Earth.  Our workers are no less productive than when this crisis began.  Our minds are no less inventive, our goods and services no less needed than they were last week, or last month, or last year.  Our capacity remains undiminished.  

Trump:

We must protect our borders from the ravages of other countries making our product, stealing our companies and destroying our jobs.

Protection will lead to great prosperity and strength. I will fight for you with every breath in my body, and I will never ever let you down.

Stephanie Boland is digital assistant at the New Statesman. She tweets at @stephanieboland