How Matters

Tom Friedman did not have to work too hard to convince me that How matters. See his op-ed column: "Why How Matters."

After all, when I described the difference between therapy and coaching on my website I said that therapy was about the Why while coaching was about the How.

Therapists want to know Why you get things wrong; coaches want to show you How to get them right.

My approach there, and throughout this blog, has had a strong ethical component. What matters in life is how we treat other people, how we conduct our relationships, whether we are loyal, trustworthy, and responsible.

So I was also pleased to see Friedman directing our attention to the work of Dov Seidman, CEO of LRN, a man who is in the business of promoting ethical behavior in the workplace.

Seidman wants to improve how people behave. See link. He emphasizes the importance of connecting with other people, treating them with respect and courtesy, and making them feel valued. In Seidman's view, and in Friedman's and mine, behaving ethically is an essential element in any business transaction.

At one time we had it. We do not any more.

Many people in the financial services industry were so interested in pursuing their own self-interest that they forgot their duty to maintain the viability of the financial system. They forgot that they had a responsibility to the the business community and to the community at large.

Most of them did give gobs of money to charity. But that could hardly make up for the fact that they were running the financial system into the ground.

Certainly, this is not true of everyone in the financial world. Yet, if you play a perfect game and your teammate fumbles the ball you are still on a losing team.

Having discussed these points on this blog, I immediately found Friedman's argument persuasive: "You cannot tell tens of thousands of people that they can have the American dream-- a home for no money down and nothing to pay for two years-- without that eventually catching up with you. The Puritan ethic of hard work and saving still matters."

Indeed it does.

Friedman is also correct to offer this prescription: "We need to get back to collaborating the old fashioned way. That is, people making decisions based on business judgment, experience, prudence, clarity of communications, and thinking about how-- not just how much."

This is a radical prescription. For decades now the culture has been drumming it into everyone's head that the Puritan ethic leads to sexual repression, neurosis, and cancer. To say nothing of imperialism, colonialism, and oppression.

The therapy culture has contributed mightily to this effort, but its more important contemporary manifestation is the cult to celebrity.

Celebrities do not earn money the old fashioned way. They do not get rich by a lifetime of hard work and savings.

Their culture disconnects work from wealth; it tells us all that we can all be rich because we might all hit the jackpot or win the lottery.

Celebrities are rewarded because they do not work hard and do not save. They earn the most for doing the least. After all, didn't Alex Rodriguez earn $25,000,000 for playing Kabballah with Madonna? And how many of those who were going berserk over the pay received by executives batted an eye at the millions celebrities were making for being entertaining?

Today's celebrity is a model for profligate spending. Now, you might not have enough money to spend like a celebrity, but the banking system has been kind enough to give you enough credit to make a good go of it. You too can live beyond the value of your productive labor.

In a world that drools over celebrity notions like showing respect, being trustworthy, and tempering emotion feel retrograde.

Celebrities live out psychodramas. They are supposed to have conquered repression; in fact, they have merely numbed themselves to shame. They do not set an example of good behavior, respect for others, or even respect for themselves. Celebrities will never be pillars of the community.

Friedman asks the right question: How did we lose touch with the values that made for a functioning financial system and a functioning national community?

My answer is simple: we became postmodern. We learned in the best universities that everything was a social construct. Deep thinkers taught us that there was no such thing as intrinsic value. An object was said to be valuable when a lot people or a lot of influential and powerful people said that it was valuable, and acted accordingly.

Apply the same principle to creditworthiness. Wasn't it just another social construct? Your credit score, your income, your savings, the evidence of your responsible monetary behavior... these were merely what the power elite took to be measures of value. They had been constructed to discriminate against people who had no money. Clearly, the situation had to be rectified.

And it was, in subprime mortgages, liar loans, zero down payments, and so on.

Now, the number on the mortgage was also a social construct. Pieces of property did not have any intrinsic value. If the bankers said the house was worth a million dollars, it was worth a million dollars. Value was what these powerful people said it was.

And when the worthless mortgages that had been given to people who were-- by fiat-- declared creditworthy, and that were collateralized by properties that were declared to be worth as much as the mortgages, were repackaged into debt instruments... lo and behold, ratings agencies were so postmodern in their thinking that they declared these packages to be AAA. With that imprimatur investment banks could borrow against them, with 40-1 leverage.

So, the current crisis is simply a reality check. It does not mean that capitalism has failed. It should be the death knell of postmodernism and social constructivist theory.

Obviously, the people who hold to these ideas will not accept that the crisis is a reality check; they believe that reality is a social construct... especially when it contradicts their precious ideas.