New, Different … and Potentially Better
Change happens fast, especially when it is in dire need. Right now the change the world is facing is new, different and arguably better. "Better?" you may ask yourself doubtfully, "what could be better about a week of bank failures, rescue take-over, hasty regulations and wide scale government financial intervention … with more to come?" It is "better" because it will force businesses, banks, government and everyone in-between to produce proactive and decisive change. The system that produced the credit crunch and a series of bubbles (dot com, commodity, real estate, etc.) had grown in complexity and beyond repair. Taking a piecemeal approach by dealing with single problems as they materialized did not work.
The fingers are pointing and the scapegoat search is in full gear. It is claimed; government and financial managers ignored the mounting problems or did not understand the scale and complexity of the escalating banking fiasco. The latter is more convincing than the former. One can only ignore and deny something if it is known. Very few decision-makers in Washington knew the magnitude of risk facing the economy, to be able to intervene appropriately, and many on the finance side were too close and had too much interest in it to see the problems. The prevailing ideologies, models, processes and procedures that govern did not come anywhere close to accounting for the meltdown the global economy faces today. Time to de-anchor from the past and assemble a financial structure that is comprehensively global, truly transparent and flexible enough to adapt to the endless iterations of change the future guarantees.
A good place to start is with thinking though the entire problem and making sure the solutions are not legislated mandates that have more to do with political pandering and election cycles. Legislation and regulation imposed today to deal with the global credit crisis should account for the fact its relevance will undoubtedly wane over time.
The complexity and uncertainly the world is exposed will not go away, so it is best to avoid simplifying (simptortion). We are now at an unavoidable crossroads that provides an unprecedented opportunity to build a future that reflects the future, and allows for continuous change on all levels. Since we are still in the mist global restructuring we can do more than just hope for a positive outcome, we can actually have the chance to create something completely new, different and better.
Orginally published October 15, 2008