Platt Perspective on Business and Technology

Addressing a common thread running through our recent economic and marketplace challenges – 2

Posted in macroeconomics by Timothy Platt on September 19, 2012

This is my second posting to a short series on business practice integrity and market stability, and on how publically perceived widespread failure in the former can and will lead to widespread failure in the later too (see Part 1.)

Yesterday, and separately from this series, I posted on how short-term perspective on the part of senior executives and the boards they report to, can lead to pursuit of short term gain with a blindness of long term consequences (see When Shareholder Value Becomes an Enemy of Strategy and Strategic Planning.) In a real sense this posting serves as a continuation of both, though I approach the issues of risk blindness from a more explicitly macroscopic perspective here and in this series, than I did yesterday when writing about over-reliance and inappropriate use of short timeframe stock market analyst reports.

In Part 1 of this series, I focused on the businesses involved in risk-creating practices themselves. Here, I turn to consider the role that politicians and governmental leadership play in this, as elected and appointed officials carry responsibility for developing and enacting regulatory responses or for preventing that from happening. For a country like the United States that means Congress and the office of the President – the President himself and his Cabinet officers and senior appointed officials, and particularly appointees such as the Chairman of the US Federal Reserve Board.

Yesterday I wrote about the impact and influence of short term here-and-now business performance analyses on long-term business decision making. If I were to summarize my focus of attention for today in a single short label it would be realpolitik, or at least realpolitik as this concept is more frequently cited in practice, and the lack of political will and foresight needed to challenge a short-term easy path forward for its long term deleterious potential. And in this I state that while realpolitik as such might at least in principle be about politics freed from the guises and distractions of ideological, moralistic or ethically-phrased justifications, in real world practice it is more often more about pursuit of ideology and from a strictly here-and-now short term perspective – and about challenging any competing voices as being ideologically and dogmatically driven. So realpolitik in practice is also often more about politics stripped of the leavening influence of long term judgment as much as, or more than it is about stripping away extraneous sources of bias.

And with that said, and with recent and still ongoing “realpolitik” at play in the United States in mind, I find myself looking at the ideological and legislative gridlock that the United States is currently caught up in where as a country we are unable to acknowledge let alone effectively address our real and growing need for more up to date financial institution regulatory law. We do not, I stress face a lack of will to act. At the risk of making a pun out of this, what we suffer from is more an excess of a “won’t to act” where Republicans in Congress are so averse to taking any action that a Democrat might gain political benefit from for its success, that they would block even what they ideologically see as serving the common good. Yes, that should qualify as the exact opposite of realpolitik. But what is real is in the eye of the beholder, and both Democrats and Republicans claim they are simply seeking to promote the common good and for the country as a whole.

And the United States is not alone in this for gridlock and a failure of vision or will to act. Consider the European Union and the currently 17 member Eurozone that operates within it, and the ideological and political debates and disagreements that play out there, and particularly between member countries with weaker national economies such as Greece, and their stronger partners such as Germany. Germany insists on severe fiscal austerity on the part of Greece and countries like it as a prerequisite for further help, offering types of assistance that have already proven not to be working when and as their demands are agreed to.

A failure to stem the tide of toxic and predatory business practices in the United States runs a significant risk of pushing the overall US economy back into deep and even profound recession. The risk that the European Union and Eurozone nations face is if anything much worse: the potential rise of political extremism and in the form of terrorism and even state terrorism, and the demolishing of one or more partner democracies in the process if those weaker national economies completely fail.

Collectively we all face real opportunity and we also and at the same time face real risk. And the decisions that we make here and now and in the coming next few years will do much to shape our economies and societies in general and for the 21st century and for all of us and our children.

You can find this and related postings at Macroeconomics and Business.

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