After looking in my last post at what won’t work, here is what must be done.
Business leaders must change the way they think about customers, suppliers, shareholders and their public responsibilities to our government (which means you and I as citizens). The root of all these issues is the appalling absence of a fiduciary sense on the part of people working in these institutions. It is simply taken for granted that there is no moral dimension to our economic life.
The only people who seem to speak to the moral dimension of economic life approach this from an antiquated Marxist or soft shoe socialist perspective. Please don’t misunderstand me. I am not saying we shouldn’t have laws and regulation. I am what a philosopher might call a cultural determinist. I am asserting that unless we change what goes on in the minds and the hearts of the people responsible for leading and working in business, the future looks a lot like the past.
All businesspeople face the same choice we all face each day. We can proceed under the assumption that customers, employees, shareholders and suppliers exist to fulfill our financial designs or we can proceed on the understanding that our duty is to help them fulfill their legitimate goals in return for a just reward for our skill, capital and work.
At the risk of being too blunt we face the daily choice to exploit or to serve. The economic dimension of our lives does not exclude this fundamental choice. How we think does drive our actions. What dies with this crisis is the false idea that there is no moral dimension to economic activity.
The antidote for “too big to fail” is “small is still beautiful”. I am very concerned that coming regulation changes will tend to further support the growth of large institution because they are easier to regulate. This is the opposite of what will fix the problems and lessen the public risk. Regulatory changes must support and facilitate the smaller institutions which tend to be self-reliant.
I wish I could offer easier solutions, but this is how I see it. I believe the Feds latest interventions will stabilize markets long enough for us to map out a healthier future for the financial sector. I wouldn’t be too hasty to short sell the American people. I also wouldn’t underestimate the difficulty of learning the right lesson and acting on them. What we don’t need is regulators acting like they bear no responsibility and Congress pretending solutions that cost money and don’t solve the problems.