When Will We Ever Learn

December 11th, 2009

I was wondering this morning about what it takes to learn life’s lessons. We hold ourselves out to be the most advanced species on the planet. Yet our behaviors just don’t seem to uphold this point of view.

Think of it this way, a zebra is walking along the edge of the jungle when he looks up through the brush and sees a lioness racing after one of his cousins. The lioness, far swifter and more powerful than the zebra, pounces on her prey and voila – lunch. Do you think that the zebra watching all this unfold will be as careless as his cousin? I doubt it. Animals learn from what they observe or they die.

On the December 11th Business Matters program, we talked about the S&L crisis of the late 80s and early 90s. A bit of refresher on the consequences of that national dilemma. Over 700 institutions were shuttered and the U.S. Government shelled out $125 Billion to make sure that none of these Samp;L depositors were left holding the bag. The year after the depth of this terrible crisis, the number of new homes built was the lowest since WWII.

As the situation unfolded there were the usual congressional investigations and industry self-examinations. As Bill Black ,a key regulator during this time, pointed out, the root cause of situation was well- understood and provided the basis for new laws and regulatory oversight such as the Financial Institutions Reform, Recovery, and Enforcement Act of 1989. Even the S&L industry group, The US League of Savings Institutions concluded that this crisis was caused by many of the same issues that are at the bottom of the current financial crisis.

Yet we find ourselves in an even worse situation. The Big Banks have been bailed out and the vast majority of Americans have seen a dramatic decline in their net worth, income and job possibilities.

We have been unwilling to correct the real cause of the problem. Its not that we don’t know how to regulate complex systems. We learned from this program’s interviews that’s not true.

We are unwilling to confront an underlying premise that our financial and political systems is founded upon – greed, which is a human condition, will be managed by a free market system. Seems that that’s just not so.

For example, the US political system is fueled by monied interests rather than serving its electorate.. Large financial institutions and very wealthy individuals use their financial position to fund the campaign machine needed for officials to be elected. They use fear to maintain control of the game. Just like Henry Paulson telling congress if they didn’t give him $700 B without any rules or accountability there would be rioting in the streets.

I don’t know, maybe rioting in the streets is a good thing. Maybe we need to have the voice of those who are not being served by our congressional and government leaders heard so that they realize the system can’t continue. Here we are in the third year of the financial crisis and NO NEW LEGISLATION HAS BEEN PASSED TO REGULATE WHAT IS CLEARLY NOT WORKING.

Its clear that the current structure serves very few at the expense of many. Reforming this structure requires mature and honest controls that recognizes the power of greed and puts in place consequences for the abuse of financial or political power. This change is not easy and calls for extreme courage and determination. The benefit is the end of the dramatic cycles of boom and bust that lay hidden in fraud and deception. It also send a message to those who abuse power that there are real consequences for their actions.

Think about having your voice heard in the halls of congress. Our politicians will respond when the voice of the electorate is loud. Write or call your congressional delegations and let them know what matters to you.

Let’s show we are the smartest species on the planet. Let’s make sure we learn from the past and don’t become some predator’s lunch.

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