Oct
06

Lake Superior’s solutions for the economic crisis.

by Katie Kieffer

Lake_Superior_Rocks

Waves crash against the rocky shores of Lake Superior, MN.

Our mind comes up with creative solutions and connections when it has a chance to rest, studies show. Just like sleeping is part of a healthy day, vacations are part of a healthy life. The Scientific American’s article, “An Easy Way to Increase Creativity” reports how social psychologist, Lile Jia, and colleagues at the University of Indiana at Bloomington discovered that psychological distance from a problem – achieved in ways such as traveling – can increase creativity.

This summer, I took a personal retreat up to the Minnesota’s North Shore to visit friends. They live on Lake Superior, the largest freshwater lake in the world. For as far as the eye can see from their beach, there is water: It looks just like the ocean.

I sat on the cliffs and watched the waves crash against the rocks. Sitting there, I realized that nature has some wonderful tips on how to solve our global economic crisis.

Natural change happens slowly. The “beach” surrounding Lake Superior is not sandy – it is composed of many small, smooth rocks. I picked up a few of the rocks and felt their incredibly smooth surface. I realized the rocks didn’t acquire their smooth texture overnight – obviously it happened over a long period of time. If we want to see “smoothing” and improvement in our economy, we may need to be patient and let the natural market forces do their work. I think we should question politicians who propose “quick and dirty” solutions to solve our current economic crisis.

In Steven Pearlstein’s article, “Wall Street’s culture unscathed,” published in the St. Paul Pioneer Press on Sept. 13, 2009, he discusses a term called “short-termism.” The Aspen Institute arranged a panel of 28 leaders – including John Bogle, Warren Buffett, Lester Crown, Barbara Hackman Franklin, Bill George, James E. Rogers and Ira Millstein who believe that our society and corporate culture has become pervaded with a focus on trading and investment strategies, technology, fee structures, and techniques that are short-term driven. They maintain that unless our country addresses this short-term focus as a whole, we will not be able to improve our economy in the long haul. The panel identified the following three areas for the U.S. to focus on in their statement:

  1. Market incentives: encourage more patient capital through tax policy.
  2. Alignment: better align the interests of financial intermediaries and their ultimate investors.
  3. Transparency: strengthen investor disclosures.

The Aspen Institute’s panel should not be taken lightly. It was composed of decision-makers in business, investments, academia and labor industries who have years of experience and track records of success to back their recommendation. We should think carefully before we try to induce quick, short-term financing techniques to improve the economy. Pearlstein concludes, “And while their recommendations may not be as sexy as a cap on Wall Street bonuses or a ban on high-frequency trading, they get to the root cause of the financial crisis in ways that other reform proposals have not…”

Government forces and stimulants are artificial thus their impact is small and can only impact a tiny portion of the economy. We need a global solution to solve this global economic crisis.

Lately, we’ve watched the government’s efforts to inject life into failed portions of the economy. We can’t presume to solve our financial crisis by selectively trying to “refine” or fix businesses such as auto makers who have poor business models by artificially injecting them with financial assistance and creating clumsy, short-term programs such as Cash for Clunkers

I think we need to take a step back and look at the way nature does things. She unapologetically tosses rocks, shells and other lifeless debris that she’s done with on the beach and continues her course. Likewise, we shouldn’t let businesses and programs without life, purpose or a proven track record for success linger in our economy. We should let them dissolve on their own and use valuable taxpayer money to support new growth and innovation.

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