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  • “Uncertainty Management”

    Posted by Jonathan on December 30th, 2008 (All posts by )

    A discussion about the financial crisis, Wall Street, management and accountability at Neptunus Lex. The initial post is merely the starting point for some insightful comments by readers. Worth reading in full.

    There seems to be a trend toward diminished accountability for top members of our political and business elites. People who should resign don’t. Leaders who should fire those people don’t. The military still seems pretty good (perhaps it’s no accident that the discussion I linked is on a blog written and frequented by military people). Accountability standards in small business and many professions, where failure tends to be immediate and personal, still seem OK. But things appear to be on the decline in big institutions and government. I don’t know if that’s because government has grown so big and intrusive that it drags down standards everywhere, or because our society has deteriorated, or both. It’s a bad trend either way.

     

    3 Responses to ““Uncertainty Management””

    1. Shannon Love Says:

      First, people who blame “greed” are simply stating that they have no idea what is going on. They might as well blame evil spirits. The idea that business people are uniquely greedy or that people who seek power are uniquely virtuous. is just childish.

      Second, I think accountability in large organizations becomes a problem because no one person has final say on any major decisions. Decisions result from broad compromises between numerous inputs. Even in a single organizations, dozens of people, if not hundreds of people contribute to the decisions. The average executive holds any particular office for less than four years. Organizationally failure usually take longer.

      Thirdly, an industry failure occurs due to decisions made in many different companies (and the government). People make decisions which work for their individual companies in isolation but in collectively they cause failure. Individual corporate officers can make the best decisions for their own companies but if everyone else makes he same decision for their companies problems ensue.

      The problem is even worse in government. Government by design has separation of powers which automatically means diffusion of responsibility. It is not as any particular member of congress is likely to lose their seat over this mess. Worse, the effects of bad decisions do not become widely evident until years later often long after the principles have left office.

    2. sol vason Says:

      Shannon Love said “The movement of money allows people to communicate to one another the value they place on different economic activities.” Obama’s Keynesian error.

      In small businesses these valuations comes through loud and clear. In big businesses it is easy to never notice that values have changed until the company suddenly runs out of money and credit. Government never heeds changing valuations. It assumes it can dictate values. Governments would rather destroy an economy than be governed by its changing valuations. It is a matter of sovereignty. This is why little, ineffective governments are best.

      Military organizations survive only if they can immediately detect changes on the battle field. Integrity has military value.

    3. Stephen Houghton Says:

      A major problem is the ending of the partnership form on wall street and its replacement by the corporation. That gives senior management less incentive to keep a close eye on what is going on. Ask anyone who has been around the street for a long time about how partners were back in the day (when the partners were liable for the partnership’s debts) and they will tell you the partners were on them like stink on shit.