Tough Road Ahead? Simply Lower the Standards

One of the more obvious causes of our economic mess is the creative changes applied to the banking rules and standards.  According to Adam Davidson, “banks were lending money to people who couldn’t afford it so they could buy houses that should never have been built.  The banks then turned the mortgages on those houses into ever-more complex financial instruments that are now nearly impossible to value.  Then the banks sold all that bad debt all around the world and made sure they got into every nook and cranny of the global economy.”   The path to prosperity–a new home, better returns, quicker profits–were all stymied by the old rules that governed our economy.  In the name of progress we deregulated those systems and created a new standard that lowered the requirements, the rules, and the overall governance of our economic system.

It seems like we haven’t really learned anything yet.  Government Motors (the ‘new’ GM) fearful about the real and impending doom it faced as a result of generations of gross mismanagement, takes a shortcut and coaxes what will be $100 billion out of the federal government to get it through a managed bankruptcy.  Once again the rules are changed to make businesses less accountable and to lower the standards for competition and executive oversight.

Finally, this past weekend featured the last of horse racing’s Triple Crown, the Belmont Stakes.  There has not been a Triple Crown winner since Affirmed in 1978.  It has been over 30 years since there has been a Triple Crown winner prompting legendary horse trainer D. Wayne Lukas to call for a change in the standards to make the Triple Crown more competitive (read achievable).

Why change the rules?  When there wasn’t a winner from 1948 until 1973 were people clamoring for a change in the rules?  No.  The standard was set and accepted and passionately chased.  Just like much of everything in our society today, the standards seem too high, too hard, too improbable, so let’s just lower them or change them.

We are starting to establish a dangerous precedent for our society.  If things get too tough, too competitive, too long to achieve, we simply want to change the game–block foreign competition, protect jobs from going overseas, prevent the import of a better educated worker, create new accounting standards, etc.  Face it, this is a global economy and the competition is fierce.  You want to win at this game, work harder, be more innovative, change your game–don’t simply take shortcuts or try to change the rules.   It is time for our society to step up and toughen up.  Put some accountability, responsibility, and innovation in your life and your business at today’s standards and you will be amazed at the results.