Thursday, June 11, 2009

A Shift Beginning

Thomas Kuhn’s The Structure of Scientific Revolutions (1962) brought the notion of the paradigm shift into the discourse, and skipping the details, its implications extend to the social sciences and humanities as well. Peter Senge’s distinction "mental models" in his classic, The Fifth Discipline (1990), is among the most powerful presentations of the concept.

The 2008 financial meltdown brought about by the systemic betrayal of the nation by long trusted organizations has led to a paradigm shift that remains to be fully understood. In the past we expected corporations to operate in ways that serve the country’s best interests, thinking the market rewarded adept and ethical behavior. We have painfully learned that in exchange for a short term windfall, self-serving executives will (and did) throw both company and country off a cliff. They have eliminated all doubt that they are no longer ethical, responsible, or competent. In light of this, the American public has lost trust in corporate America.

A recent poll asked whether insurance companies or the government should be trusted with respect to health care:

The Government: 92%
Insurance Companies: 8%

Profit ravenous insurance companies seek a system of fat premiums for plans that don’t cover anything. American auto companies have refuted any notion that competence, vision, and merit climb their ladders, and our financial institutions? Scum rises to the top on criteria having nothing to do with generating the long term success of an enterprise, which used to be the chief concern of top executives. Sadly and with tragic consequences, the culture has changed to one concerned only with short term personal gain in an orgy of obscene salaries and bonuses while the building burns. They got theirs, and now a furious nation screams in outrage as the rest of us must pay for their carnage with our life’s work, 401K, pension, savings, employment, home, health insurance, and that of our children. Corporate hot shots raped the nation raw and left it for dead. The country will never be the same, and it will never forget.

At least nationally, the GOP has yet to figure this out or even figure out that it has to figure something out. They STILL think their ideas work, "Just get the government off the backs of GM, AIG, ENRON, Countrywide, Pfizer, ExxonMobile, and prosperity will be had by all."

They still talk like this, advocating corporate based health care and not seeing that Big Pharma and Big HMO also have the cancer infecting GM and AIG only not as advanced. How can a company survive when run by those with little to no regard for its survival? Barring a mechanism that truly causes a course correction transforming the current corporate culture, the government will end up running large corporations anyway, since they have clearly lost the capacity to generate leaders with a conscience or the slightest interest in anything other than their own compensation.

Tick Tock.

9 Comments:

Blogger The Navigator said...

Terrific post, but I think what you are saying will go farther with the distinction "large corporation" because (if I understand) the cancer you are distinguishing is infecting the very large corporations with massive organizational structures that insulate top executives from the teaming masses of the rest of the operation.

Not every company has what you are talking about. No small companies are involved. In fact, I would think a company has to get quite large (at least 1000 employees if not 10,000) to be vulnerable to leadership completely disconnected from the need to provide some tangible contribution to the organization.

ENRON, GM, AIG, and Worldcomm are the flagships of your post, and those who think Pharma and HMO don’t have the issue should consider the brilliant sentence you wrote at an earlier post, which I think captures the cancer perfectly: Making money has been replaced with taking money.

If society devolves into a pathetic set of dysfunctional groups each trying to outtake money from each other, we’re f***ed.

6/11/2009 4:56 PM  
Anonymous Anonymous said...

If the US government isn't a dysfunctional group trying to outtake from everyone else, I don't what is.

6/11/2009 7:08 PM  
Anonymous xls said...

I'd bet good money Anon has no idea what x4mr or Navigator are talking about.

X4mr's images are the best I've ever seen at a blog, and the drawing at this entry is a work of art.

6/11/2009 9:05 PM  
Anonymous Anonymous said...

I agree that the images here are a significant cut above most blogs of this type. The men stuffing money into each others pockets is great.

Without question it is severely problematic that we allowed corporations to become "too big to fail." Failure is the corrective mechanism that gets rid of the bad apples. By rescuing AIG, GM, and the rest, we are rewarding the criminals who brought the armageddon about, and then they give themselves bonuses!!

The merger mania and expansion of these huge companies is a major part of the problem. As Nav notes, small companies do not suffer from the "cancer" x4mr is describing. I don't know what the fix is, but I agree that these mega-corps that "can't fail" probably will end up partially or wholly owned by the government.

Obama has named someone to oversee executive compensation of all companies that received rescue money because they were too incompetent to survive on their own. Obama fired the CEO of GM.

Without question this represents a paradigm shift. I consider myself a Republican but must concede x4mr's point that at the national level Republicans currently look like morons. Their complete lack of insight on the economy ("Cut taxes!") is bad enough, but the Sotomayer situation is a PR disaster. I cannot believe they are so stupid as to alienate the entire Latino population.

6/12/2009 8:17 AM  
Anonymous Anon2 said...

Interesting post.

The cataclysmic breakdown of our financial system and the obscene behavior that led to it (unchecked greed in a system created by the rich for the rich) has led to a paradigm shift regarding the regulation of the economy and the clear need for government involvement. I don’t know how anyone can argue for deregulation from this point on. Weak minded Republicans want to point the finger at the Obama administration for the onslaught of regulation that is about to be implemented, but they have no alternative for tending the store in a way that prevents the wolves from devouring the hen house.

That we "cannot afford" to let AIG and their ilk flat out fail and die is a travesty. These disgusting CEO’s run their company into the ground and then cry for rescue, damning the very hand saving their asses for getting involved in what has to be greatest hypocrisy to ever unfold.

Back to your individual/collective theme, there has always been a conflict between individual liberty/accountability/responsibility and the right to enjoy the fruits of hard earned results, and the need to establish controls and safety nets. Ayn Rand proposes we should free the "movers" from the "looters" who free load if a system provides social welfare programs at taxpayer expense. I can get as upset as any free market proponent when I see freeloaders fail to earn their keep and live on my nickel. They deserve poverty. Unfortunately, reality is infinitely more complicated as you have noted.

Somehow, the solution must continue to reward what truly produces, and the flaw with Ayn Rand is that her distinction between "mover" and "looter" has totally blurred as you have also noted with "Making money has been replaced with taking money." Our pharmaceutical companies with their $35B advertising programs for dick medicine, along with massive lobbying efforts (watch the upcoming health care carnage as AMA and other health care profiteers fight for the kitty) show this "money taking" in full force.

American prosperity (in fact all prosperity) is built on the billions of every day decisions and hard work of good people truly wanting to contribute to society, and value deserves to be amply rewarded and supported. Somewhere (I suspect the deregulation of the 80s) we allowed decency and common sense to morph into a "greed fest" with the insider elite (ENRON..) getting theirs (with no sense of restraint) in any way possible, not caring if "the building burns."

6/13/2009 11:16 AM  
Blogger TexPatriate said...

Anon2 @ 11:16a said what I was thinking all along, only much more eloquently.

It has always been a balancing act between those that produce and those that do not. That balance is completely lopsided now. Additionally, lack of character and ethics are rewarded daily, which just burns me. It's the 80/20 rule, only perverted. 80% of people are decent, hardworking, and productive, but the 20% that are not are consuming resources, cash, and compassion at an ever-increasing rate.

I don't need to know when to say when. . . I just need to figure out HOW. Your "Cloth" series illustrates, in spades, the difficult of "how".

6/13/2009 11:37 AM  
Anonymous Anonymous said...

The solution lies within the problem. It is the system itself.

6/13/2009 3:28 PM  
Anonymous Williton said...

Making money has been replaced with taking money.

That is exactly what has happened. The freeloaders sucking the wealth from this nation are not the poverty stricken welfare cases the Republicans like to envision living on the public dole. They are the white collar scum like those x4mr calls the cloth. The freeloaders and looters are the lobbyists (Abramoff), cronies, and the corrupt executives of GM, AIG, ENRON, and the others (Madoff – a name that is perfect) who produce nothing and pilfer billions for themselves.

This was made possible by the free for all insider gets everything system set up by the same Republican hypocrites who spout about accountability and responsibility. It is funny how they rile against the "redistribution of wealth" when it means from rich to poor, but when regressive taxation robs the poor to fatten the rich, they’re just fine and dandy with redistributing wealth. The Republican Party deserves nothing short of extinction for its treason against the American people.

I pray that history develops the hindsight and wisdom to expose these traitors and criminals for what they are. May Phil Gramm and the rest behind the Gramm Leach Bliley Act live long enough to see themselves on the list of the most hated monsters in American History.

6/13/2009 6:37 PM  
Blogger x4mr said...

This thread has material that blends responses to several posts. Just for sake of clarity, we have the following going on:

1. The tension between individual liberty / economic independence and the now obvious need for regulation. We can no longer ignore the pack of ravenous wolves which will not hesitate to devour the hen house given the slightest opportunity.

2. The needles draining the nation’s economic blood are highly connected white collar well dressed insiders exploiting the system.

3. Large corporations have lost the capacity to generate ethical leadership that forwards the interests of their organizations. Corporate executives and boards now take money without regard for the well being the enterprise. Any corporation "too large to fail" must be strictly regulated if not entirely run by the US Government, since it is has demonstrated it has no capacity to run itself.

4. The gluttonous taking instead of making transcends specific companies and applies to entire interests groups as we will see in the upcoming health care debacle which will pit insurance beasts against the AMA against the government against … in a clash of the health care trough titans.

5. At the federal level, Republicans have shown no vision or creativity whatsoever in addressing any of these issues. In fact, they have not demonstrated any understanding of these issues.

That said, Williton, while I like your comment, the inference that the GOP is solely responsible for this mess just isn’t accurate. While it seems plausible considering touted philosophy and policy preferences, in the day to day rubber on road reality there is plenty of blame to go around. Democrats had their fingers in the mortgage mess, legislation favoring certain interests, and you do know that Clinton signed Gramm-Leach-Bliley. Granted, I don’t think Clinton had any idea of that Pandora’s box. He fell for the same trap that Greenspan did: These finance geniuses are smart. We can trust them not to do anything that would burn down the building.

Regarding THAT paradigm:

The time has come for us to say sayonara.

6/13/2009 8:03 PM  

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