The Great Office Coffee Famine

Monetary Policy in the Modern Office

Sometimes, economics comes to you. Sometimes, the abstract stuff policy makers talk about manifests itself in the small happenings in life. Such an event happened to me a few years ago when I worked in publishing. It was a week’s long drama filled with lies, mistrust, and secret deals. It was the time when the coffee machine ran out of coffee pods.

At my office, the company had invested in one of those fancy coffee machines that takes the small, one-use pods of coffee. The pods were supplied by the company free to employees. It was the sort of benefit that’s been pretty common among certain types of offices for years now. People were happy with the arrangement. Publishing, especially exam publishing, runs off of caffeine most of the time. The system worked well, until the coffee ran out.

The Famine

One day, during a particularly busy period, people were greeted with an empty pod container. It turns out that the little pods that drove the coffee machine were proprietary, and my company had subscribed to the machine manufacturer for a certain number of pods per month. My department was one of the first to run out. Raids to other kitchens were enough to solve the problem for a little while. But after the entire building had been drained of its remaining stocks, the reality of a coffeeless future began to set in. The coffee famine had begun.

Management initially reacted with calls for patience and restraint. The next shipment was coming, just make do with tea and freeze-dried coffee. But tea is not coffee and anyone who’s tasted coffee from a machine knows that it’s difficult to return to the freeze-dried stuff. This was made worse by the fact that the silent machine and the empty pod dispenser stood in every kitchen, reminding everyone of the shortage.

Some enterprising individuals, whether through foresight or their earlier desire to ensure a steady supply of their favorite coffee flavor, had small stashes of pods in their desk drawers. These stashes became an open secret, carefully locked away in the evening. The owners of these hoards began to enjoy the small amount of power that their coffee savings had afforded them, giving out pods in exchange for favors.

The next shipment of pods eventually came, but was exhausted even faster than the last. More people had realized the value in saving, and started to accumulate their own stashes. This led to a cycle of boom and bust as people realized the foolishness of not saving.

Relief came in the form of an increased supply. At first, management thought that a modest increase in supply would be enough to end the crisis. But the relief came too late and the surplus was quickly absorbed into private stashes. Polite requests to avoid hoarding were largely ignored. Only a fool would stop hoarding while the public supply was running out before the next shipment.

More drastic intervention would be needed in the form of a much larger increase in the subscription. It wasn’t until people began seeing a steady supply that the cycle broke, at a much greater cost to the company. But the damage had been done. Remembering the bad times, people maintained and rotated their stashes. The trust had disappeared from the system and few serious coffee drinkers would be caught out again.

What’s happening here?

I’ve heard people compare the coffee famine to the quantitative easing that took place just after the Great Recession. To stabilize coffee consumption, management needed to inject lots of currency (in this case coffee) into the system. Because they were slow to act they ended up having to add more coffee than they would have had they acted quicker.

It also resembles the economic theory of the tragedy of the commons. The benefits of hoarding coffee pods is concentrated in the individual doing the hoarding, but damage done is distributed to the rest of the coffee drinkers. Because the damage is not focused on one individual, it seems like one person hoarding isn’t a big problem. But everyone choosing to hoard depletes the shipment and destroys the whole system.

The coffee famine is a good example about how trust makes a system work and can cause its collapse when that trust breaks down. Before the famine, people didn’t need to hoard coffee as a matter of course (unless they really wanted a steady supply of cafe lungo or some other variety). After the famine, there was a need to not only hedge against future shortages, but also to protect one’s share of the collective supply against other hoarders. Even when the supply problem was fixed, memories of the shortage were long.

It just goes to show how systems of trust and human interaction can dominate even the small aspects of our lives.