Wall Street - as with many government, quasi-government, and much of the social and financial infrastructure - is dead. Any system which cannot respond, purposively, to its environment is not alive, and cannot respond no matter what stimuli.
The principal purpose of Wall Street was to mobilize and allocate capital for business enterprise. The nature of the economy has shifted from industry to services and government. Unlike an industrial economy, output of a services and government-based economy is hard to measure. Hence the productivity of capital becomes an enigma with no measures that can be directly linked to output, effect and efficiency of a business.
In reaction to this new reality, most government, quasi government and financial systems have increased regulation focused on eliminating abuses, cheats and possible fraudulent behavior as measurement of productivity. When this happens, systems die, purposively, because the focus becomes more on the process than the purpose: New Orleans, homeland security, efforts to eliminate poverty and economically empower the poor and minorities, efforts to save Wall Street etc. All of these efforts fail to achieve their purpose because the arteries of these systems are clogged with red tape, paper work, rules, regulations, sub optimization, duplication, and the left hand not knowing what the right hand is doing. The point is, purposive focus is displaced with regulatory activities. In the absence of hard goals and output measures, systems die of their own lack of purposive focus.
The only way to save Wall Street - and prevent this crisis from recurring - is to redefine what its goals are in the expansion of capital to meet future needs. If such definition had been made, mortgages would never have been viewed as securities to be traded and speculated on Wall Street. It would have been clear that the highest purpose of a mortgage is to facilitate home ownership; widespread home ownership then fosters demand for capital to produce housing, not vice versa.
The principal purpose of Wall Street was to mobilize and allocate capital for business enterprise. The nature of the economy has shifted from industry to services and government. Unlike an industrial economy, output of a services and government-based economy is hard to measure. Hence the productivity of capital becomes an enigma with no measures that can be directly linked to output, effect and efficiency of a business.
In reaction to this new reality, most government, quasi government and financial systems have increased regulation focused on eliminating abuses, cheats and possible fraudulent behavior as measurement of productivity. When this happens, systems die, purposively, because the focus becomes more on the process than the purpose: New Orleans, homeland security, efforts to eliminate poverty and economically empower the poor and minorities, efforts to save Wall Street etc. All of these efforts fail to achieve their purpose because the arteries of these systems are clogged with red tape, paper work, rules, regulations, sub optimization, duplication, and the left hand not knowing what the right hand is doing. The point is, purposive focus is displaced with regulatory activities. In the absence of hard goals and output measures, systems die of their own lack of purposive focus.
The only way to save Wall Street - and prevent this crisis from recurring - is to redefine what its goals are in the expansion of capital to meet future needs. If such definition had been made, mortgages would never have been viewed as securities to be traded and speculated on Wall Street. It would have been clear that the highest purpose of a mortgage is to facilitate home ownership; widespread home ownership then fosters demand for capital to produce housing, not vice versa.
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2 comments:
Right on point. A renewed mindset that focuses on purpose instead of process will do us all a great good.
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