An Interesting Perspective on the Financial Crisis
Sharif Abdullah, author of Creating a World that Works for All and The Power of One, is a member of the team I worked with in Sri Lanka and a good friend. He also runs Commonway Institute in Portland, Oregon. He offers the following observations on the current financial crisis:
We are [yet] unable to grasp the magnitude of the problem. In America’s financial tsunami, the real wave hasn’t even hit us yet. Several years ago, in the prelude to the horrific tsunami in Sri Lanka, the water went OUT, instead of coming in. People were startled by seeing the shore line recede, sometimes hundreds of yards, and were delighted that they could walk out into the now dry ocean floor and pick up fish. People were standing there, amused, amazed and bewildered at this site, when the water returned — with a vengeance. We are similarly stunned by the news of financial turmoil on Wall Street and elsewhere. So much is happening, so fast, that the collapse of two major banks just in the past few days barely registers in our consciousness. Lehman Brothers, Merrill Lynch, AIG, Fannie Mae and Freddie Mac, last week Washington Mutual and a short while ago, Wachovia. Americans watch this carnage, but don't react. This is because we don't know HOW to react. It's like being in a redwood forest, watching the giant trees crashing all around you. But, so far, they're not crashing on you. So, what do you do? Do you run for cover? Do you stay put? Do you make some popcorn, get a lawn chair, and enjoy the spectacle? What is the real problem? (You may not like my answer.) The problem is NOT mortgage-backed securities, credit default swaps, collateral debt obligations, or any of the other gobbledygook cobbled together by Wall St. whiz kids. Yes, they have created a wall of opacity compounded by incomprehensibility. But, that’s not the problem. The problem is not even “greedy” corporate CEO’s with golden parachutes. The real problem is… you and me. I say this for 3 reasons: 1. We have created a society that profits from greed and waste. Wall St. didn’t create it, we ALL are complicit in its creation. (Yes, some of us are more complicit than others, but that does not change the fact that almost all of us participated in this orgy.) Every one of us who bought a bigger than needed car or house (“We just needed a little more room”), who lingered over those advertisements for the $80,000 car or the $10,000 watch (even if you didn’t BUY it, your lingering created the ALLURE, the DESIRE of the unattainable) contributed to the “you can have it all” mentality. We look at these huge Wall Street hogs, all lined up at the trough. Although we are just little piglets, we are lined up at the same trough. 2. We have created a nation of debt. We ALL created it. Our political and economic leaders have mortgaged our children’s future to pay for their addiction-induced wild partying. (In my book, “Creating a World That Works for All”, I talk about money addiction as the only form of addiction where the supply of the addicting substance is completely controlled by the addicts themselves.) But, our leaders are US. Don’t you run your household on a debt basis? Don’t your credit cards, car bills and mortgage greatly exceed your fixed assets? That bubble had to pop at some point in time. What you’re seeing is simply the check that has finally come due. 3. We maintained the silly belief that we could grow forever, without any consequences. In Nature, the only entity that grows forever is cancer. And that is only until it kills its host. But, we said, “We’re different.” Now, as it turns out, we’re not. The real problem is not an economic or financial crisis. Our real problem is a moral and spiritual crisis that has manifested itself, this time, in the financial arena. And, in these troubling times, we lack the moral and spiritual leaders and institutions to even address it – most of our “religious” institutions are just as complicit in this crisis as we are. Our “religious” leaders looked the other way as the collection plates filled up and the “churches” get larger, fancier — and richer. It’s hard to denounce greed and money addiction when you are the direct beneficiary of it. It is time for confession, repentance and forgiveness. All of us. As a pre-condition of any bailout or rescue, the CEO and senior officers of each troubled institution should go before the public and confess their addiction. Confess how greed, the quest for power, the addiction of having MORE drove them to make risky and foolish gambles. Promise that, if given another chance, they won’t do it again. (And no, this public confession shouldn’t be used in a lawsuit – that’s just more of the same old mindset.) If they aren’t willing to admit their addiction… don’t bail them out. Without confession and a sincere request for forgiveness, the responsible actors will simply do the same thing all over again. They are ADDICTED. Addicted to money, addicted to power, addicted to “more is better”, addicted to “having it all”, with no consequences. People who are drug addicted will do anything for the next fix. They will jeopardize their health, their family, even their lives for the sake of their “high”. Addicts lie, cheat, steal, even sell their own children to satisfy their addiction. The money addicts go one step further – they are willing to sacrifice the health of their entire country for their money fix. The addiction of the Wall St. players has just been exposed. They have nowhere to hide. So, what do we do? The “bailout” offers the drug addicts all the heroin they can shoot, no (few) strings attached. That’s what the bailout is… a free supply of highly addictive drugs. There must be an answer. This crisis is too important to do nothing. But, the “bailout” is worse than doing nothing. With our collective house on fire, Congress shows up with a tanker truck filled with gasoline. After the confession, what comes next? The Democrats talk about “re-regulation”. The Republican mantra is “de-regulation”. Both miss the point. Instead of taking over the “toxic” debts, leaving them free to screw up again, the answer is to take over the BANKS. The answer is to turn our nation’s banking system into a “Mondragon” type system, where the banks are owned by the people, managed by the people, and exist to start small, human-scale businesses. (If the CEO’s of these financial institutions were people like you and me, they wouldn’t have any multi-million dollar salaries in the first place.) Think this sounds too much like “socialism”? Well, get over it. “Socialism” is just fine when it is the rich and powerful who receive the benefits of state welfare. Here in the 21st Century, it’s time for us to move beyond the “Breaker” concepts of “capitalism” and “communism”. (Even the Communists aren’t communist anymore!) Creating a “Mondragon” style banking system would mean a complete restructuring of our economic system, converting down to a system that works by and for the people, and is understood by regular human beings. This will mean a lot fewer millionaires – and a lot fewer bankruptcies. Our economy, every part of it, must be re-oriented away from greed and material acquisition. Our entire society must be re-oriented toward the most pressing problems of our times: ending violence in all its forms, and healing the harm that humans have done to this planet. With all of us pulling in the same direction, with all of us providing leadership and a high moral example for the rest of the world, we can achieve truly great things. If, though, we keep up our current delusional excesses, we will be a different kind of example to the world: what NOT to do. What we do, at this time, is our choice. Let’s choose wisely…
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10/19/2008 10:07 AM
www.AsymptoticLife.com wrote:
Sharif Abdullah argues that the Dow distracts our focus from the "real" economy. Here are some excerpts: We are being told that “the global economy” is troubled because these 40 companies represent “the Market”. They do. But, WHAT market? The mainstream media, the business colleges, the Wall St. types all pay attention to ONE type of “market”, and that market is very well represented by the Dow Jones Averages. But, it’s not the only market, and (from the point of view of regular human beings) is not the most important one...You have choices. You ...
The image of the financial crisis as a tsunami is very apt. I would argue that we are still standing on the beach watching the waters dramatically recede, and the returning flood has only begun. We shall soon experience its full effect.
But however much I admire a principles-based system, I also believe it is doomed to failure. Whether a regime is economic, political, or religious -- in the hands of man it will become corrupt.
The majority of people I've dealt with do not ask themselves "what is the principle and how can I conform to it," but instead, "where does it say in the principle that I can't do what I want?"
Take accounting regulations as an example: they began as a set of principles. Then very clever people who make it their life work to get around such regulations, developed and exploited as many loopholes as they had brain cells. When challenged, they asked "show me where it says I can't". Many regulatory bodies were established, which passed many rules, and the Courts were filled with challenges and violators. The rule makers and regulators were fiercely pressured by the body politic, who sought their own gain above all else.
This has been the primary cause of all of the accounting and market scandals and collapses of the last two centuries (all that I have studied). As a result, the accounting profession has proven to be primarily a self-interested body, and is now the only profession in the United States which has lost the right of self-governance. We can't be trusted to do the right thing.
Those who embrace good principles struggle against a fierce tide of human desire and selfishness. It doesn't mean we can't try -- but I think it means we *will* fail.
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I understand the sentiment-- I also work in accounting. Yet it's the same sentiment that says a war cannot be ended, only won; or that nonviolence as a strategy cannot work. Yet it has worked.
Sharif suggests that the solution is a spiritual experience of sorts-- a "conversion," as religious people might put it. Personally I don't believe in societal conversion, because spirituality is an individual experience and we're not born "converted." Also what Sharif describes is an intentional community, which you cannot (successfully) force people to join.
But the sentiment is valid: a war can only be ended when a significant portion of the population moves past revenge and begins to see violence as the enemy. Likewise if the root problem is greed (as you seem to agree), only when a significant portion of the population begins to see greed as the problem can a real solution be implemented. THAT'S an awakening that, though it would take a great deal of work, is not out of the question.
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I'm with you 100%. Conversion & redemption needed. But how is that to be accomplished?
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We must be convinced, to the core of our beings, that greed has failed us. Paul Tillich called this kind of realization "existential disappointment." Others have called it "pitiful and incomprehensible demoralization." It cannot be manufactured, but it CAN be encouraged. The great American evangelical preachers of the late 18th century boiled this down to a science-- bringing a person's inner despair to the fore and creating the opening for conversion. For over 200 years, the method has been used and misused worldwide by religious teachers, crackpots, dictators, and even sports teams. Maybe it's time to put it to its proper beneficial use again.
But where are the spiritual leaders with the integrity and selflessness to lead us? When the student is ready, the teacher will appear; perhaps we haven't lost enough yet.
(And yes, whatever movement arises, people will eventually corrupt it and water it down. But that doesn't negate the Truth. All human existence demonstrates a tension between teaching and structure, between peace and power, between sacrifice and self-interest, between the Ultimate and self.)
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