Friday, October 10, 2008

Our Time is Now

I'm doing this off the cuff so bear with me on any typos :-)

I want to use my day to talk about how we, as citizens, can make government work better. Everyone has a different expertise so I'd like people to weigh-in and make my ideas better, throw them out for a better alternative or offer your own in areas I don't cover.

While I agree that these needs to be more regulations, I think it needs to happen in a particular way that minimizes the role of government and politicans to creating incentives and oversight, and allows for the private sector to take more of a lead role. I think each industry should establish ethical committees made up of its leaders to create its own standards that they agree to abide by. That way the experts in each industry can do what they know is best and keep each other accountable. Second, I think the Congress should establish a policy that stipulates that various audit firms will conduct random audits on all industries. The random nature allows for it not to be too intrusive to the point of stagnating business, but provides enough fear that people act right. In addition, companies should be given a time frame to get themselves in compliance. That way the government and businesses are being proactive instead of reactive. Lastly, I'd prefer the industry committee members have term limits, multiple audit firms engaged in regulation w/o working with the same companies for more than a specified number of years, and some way to make this a non-partisan effort. I think one issues that sends things down hill is the comfort and temptation to collude when relationships are built and sustained. That's why there has to be term limits, randomness, and non-partisanship. That's how we deal with human nature. I don't think this requires a new government department. I'd rather it be a new initiative that can be lead privately w/ gov having a seat at the table.

I think one of the major issues we deal with regarding politics is trust. Having worked in an education and service capacity my whole career, save the failed attempt at playing ball :-), I can honestly say that I love what I do and I do it for the love (clearly), not the money (there is none). I think ethics reform is very necessary. In my job, there are strict regulations on gifts, information sharing and anything that could compromise the integrity of my work. In that way, I think the gov should run the same. While C. Dodd and B. Frank have been very vocal in this bailout mess, my understanding is they played a role is us getting in this mess to begin with. Whether they are or not, they can't expect us to trust them when they're taking tens sometimes hundreds of thousands dollars from the likes of fannie and freddie. In the same way that I shouldn't be trusted if one of our TV partners gave me gifts and one day they end up with all the best games for a season. Leaders have an even greater obligation to be transparent and free from the appearance of foul play. Politicians need to become servants again and I think Washington has become a place where they become rich first and serve second. That needs to be fixed and right away. There is too much at stake right now for Americans to continue not trusting its gov because we need citizens to be more involved regardless of who wins.

Read the following:

1) I BELIEVE the strength of our nation lies with the individual and that each person’s dignity, freedom, ability and responsibility must be honored.
2) I BELIEVE in equal rights, equal justice and equal opportunity for all, regardless of race, creed, sex, age or disability.
3) I BELIEVE free enterprise and encouraging individual initiative have brought this nation opportunity, economic growth and prosperity.
4) I BELIEVE government must practice fiscal responsibility and allow individuals to keep more of the money they earn.
5) I BELIEVE the proper role of government is to provide for the people only those critical functions that cannot be performed by individuals or private organizations, and that the best government is that which governs least.
6) I BELIEVE the most effective, responsible and responsive government is government closest to the people.
7) I BELIEVE Americans must retain the principles that have made us strong while developing new and innovative ideas to meet the challenges of changing times.
8) I BELIEVE Americans value and should preserve our national strength and pride while working to extend peace, freedom and human rights throughout the world.

Then this....

1) We believe that the promise of America is equal opportunity for all and special privilege for none.
2) We believe that economic growth generated in the private sector is the prerequisite for opportunity, and that government's role is to promote growth and to equip Americans with the tools they need to prosper in the New Economy.
3) We believe that government programs should be grounded in the values most Americans share: work, family, personal responsibility, individual liberty, faith, tolerance, and inclusion.
4) We believe in community; that we can achieve our individual destinies only if we share a commitment to our national destiny.
5) We believe in an ethic of mutual responsibility in which government has an obligation to create opportunity for citizens, but citizens have an obligation to give something back to the commonwealth.
6) We believe America has a responsibility to lead the world toward greater political and economic freedom.
7) We believe that as advocates of activist government, we need to reinvent government so that it is both more responsive and more accountable to those it serves and to the taxpayers who pay for it.

These are the ideals of our two political parties. It shouldn't be hard to figure out which is which. I shared that because I don't think many of us disagree with either side. I consider myself a moderate because I believe the differences are not in the ideals but in the execution. I don't believe we have to be either or but both and. I watch mostly CNN, and Glenn Beck on Headline News mostly. I try to watch Fox and MSNBC but they're both too extreme for me. I try because I want to understand the point but it gets lost in the partisanship. Glenn Beck and Lou Dobbs are equal opportunity IMO so I can at least understand both sides.

Its sad to me that news is so opinionate now. They're just as bad as the politicians. That comes back to my point of trust. If we can't trust our media to be objective and hold our politicians accountable, we lose the very essence of the role they're supposed to play. And on the politicians end its sad to me that during the debate, neither candidate could say that the economy would get worse before it gets better. We all know that to be true, but saying so could lose them the elections. In an ideal world, we as citizens would demand to hear the truth and not support partisan news outfits. If we want to trust gov again, we have to force the issue. We can't expect it to just happen out of the kindness of their hearts. That's our personal responsibility and a way we can contribute to making our country better. Now I know that pie in the sky (i'm an idealist) but I believe if we know where we want to go, we at least know its possible and can work toward it.



Will Hill said...

I think you are right and always good at presenting the ideal. The reality is that after Enron, the government responded by the Sarbanes Oxley Act (SOX) which was implemented as an audit mechanism to prevent inaccuracies in financial reporting and other business workflows. What you're proposing in an Ethics Audit, which I think might be too gray of an area. Consider the decision to adjust underwriting requirements on loans. You would have a committee that would audit individual business decisions like that? The problem I see is that the impact of those individual decisions might not be realized until years later. Hindsight would not be available to this committee which is where I think we'd get the bulk of the information.

Secondly, I think we're talking about how to prevent this from happening again in the future. I don't think every industry is in the same boat. Banking and Housing are so fundamental to survival that they are in a different category than, say, the auto industry, technology, etc. Or health care, for instance, would ethics be more of an issue than the overall management (i.e. we need a solution first before we can start monitoring the ethics of that solution).

So I think the most important question is, what is the solution to the mess. Only then can we start looking at what oversight should be put in place. We really don't know what's going to happen. We don't know if we're going to nationalize banking like other countries have done.

I don't know if it's a trust issue, or opinions and partisanship running wild per se. I just think nobody really knows the answer. We just don't know the best ways to use that $700B yet, and I hope they make some progress this weekend at the G7.

I also think it's interesting that Bush was voted in twice and single handedly presided over the collapse of the world economy. I wonder if that will be in the movie?

Vaughn Bryant said...

I actually think people within their own industry know the issues they face and where the pitfalls lie because they're in it. They'd be best prepared to create their own level playing field and promote a meritocracy better than gov. Take the NFL as an example. We don't have all the rules but we continue to adjust every year to insure the integrity of the game and promote its help. I'm suggesting every industry create the framework that works best for that industry.

For example, insurance companies covering preventative procedures and covering pre-existing conditions with the stipulation that the client participate in preventitive work. Insurance providers and doc's know best how to make that happen and maintain the integrity of their industry and practice. As time goes on they continue to update their policy to address the needs of the day.

If private sector regulates itself and operates in a more transparent fashion, they make a better case for keeping the gov out of their biz. I don't feel sorry for them when they cheat and cover up. We all lose when the gov intervenes.

More on the trust in a few.

Will Hill said...

I think what we already have today are private sector organizations where people gather within an industry to collaborate and share information for the purpose of establishing consistency, promote ethics, etc. You are basically asking for the same thing but with government involvement to put governance measures in place to directly influence how the companies within those organizations operate. Not sure that would work. That would basically amount to nationalizing every industry in some respect.

I think what you're saying is tangential to the problem. This article below talks about how at the roots of this issue is the question of capitalism itself, and our application of it. It talks about world governments who are affected by this and what their thoughts may be. They are not saying this was caused by lapses in corporate ethics. Nobody could forsee this, and I'm not sure an ethics committe would have been able to either. What we're seeing now is the govt being forced into the private sector, we have no choice, so whatever we do we will have to do so under a new and yet to be fully understood paradigm.

Vaughn Bryant said...

I do think trust and partisanship is a major issue. When you listen to these pundits and surrgates rally behind unqualified candidates, you don't think that makes us distrust this system? For example, for the Obama campaign to say its in anyway unfair to bring up W. Ayers is crazy. They know everything can/will be vetted even if unfairly. No one is going to after the John Hagee but if they did, they'd see some Reverend Wright style remarks from him.

Another example is McCain's pick of Sara Palin. Do we think she'd be his pick if Obamo chose Clinton as his running mate? He picked her to win, not to govern. While I understand the winning part, winning at all cost and pushing Sara Palin sacrifices the American people for the win. Either that or being VP job simply isn't that hard, leaders are overrated, which again goes back to mistrust of gov because they're unnecessary. Either way you slice that decision, its negative. That is, of course, unless you are comfortable with Sara Palin leading you. That's an indiv call.

I could go on but I'm sure you guys won't be reading this on the wkd :-)

Will Hill said...

I guess I am trying to steer this away from what everybody thinks is the root cause, i.e. greedy lenders and irresponsible spenders.

If this is the case then why aren't we cracking down on the credit card industry that sends pre-approved cards to 18 year old college students? That is fundamentally the same exact dynamic, and it's been there for decades, it just doesn't have the same impacts.

The problem is more deeply rooted in much broader, global banking systems. It's not just that we let the housing bubble burst, but that we did so as the cog in an interdependent global financial system. Housing bubbles have burst in the past, there have been congressional committees in place to provide oversight.

Let's say this problem is resolved, only then are we going to know what we should put in place to manage it for the long term. Until then we don't know because we don't even know what the solution looks like. That has to come first before we start talking about maintenance.

Vaughn Bryant said...

I'm going to read it but I can tell you disagree with two things. One, you know through our discussions that I've warned against corp greed for a long time so this was forseeable. I just watched Glenn Beck last night and he showed a clip of a show from June '07 where he predicted this. I'm sure far more people could see this coming. Obviously no one know exactly what it going to look like, but we know the behavior will lead to negativity.

I'm not convinced there's a problem with capitalism itself. I think pure capitalism doesn't work because inherently creates two classes of people. Its policy that promotes the middle class that allows capitalism to sustain itself. I think the core of the problem is human behavior, our dishonesty, greed, entitlement that's the biggest issue thus my plan is meant to address that. If you think the problem is something else, of course you'd reject my ideas for solutions which is fair. Let you know when I read the article.

Will Hill said...

I hear you Vaughn. I'm just making a distinction between a) what may have prevented this from happening, and b) what could prevent this from happening again.

I think a) is hindsight, and I think b) is something we can't know until we see what these financial systems look like after we make it through this crisis. I am assuming that we will see some fundamental changes in policy as a direct result of implementing the solution, e.g. government propping up banks by buying stock, that creates a new dynamic. The article talks about what kind of uncertainty we're looking at.

So I'm just saying we don't really have the ability to know what b) looks like right now, and which parts to address here, and which parts to address globally.

Nelda Brown said...

You expect us to believe that 5 page manifesto was "off the cuff?" You're funny.

That said, I think you raise some interesting points. But in regards to term limits and increased rules to regulate accountability between industry and politicians--we have all of that stuff in place.

Term limits are inherit in our electoral system. If an elected official is not doing her/his job or is engaged in less than honorable activites--don't vote them. It's that simple.

And there are lots of rules meant to curb collusion between elected officials and the people and industries they oversee. The problem is that there are loop holes the size of football fields in most of the regs and folks know how to get in and around them. And, while I'm not an expert in this, I think part of the reason there are such loopholes in the process is because industry insiders DO play such a large role in setting their own rules.

It's like when I let my four year old decide his punishment...I get suggestions like "Two pieces of candy instead of 10" or "Only TV before bedtime instead of a movie."

Pure comedy. The only difference is that when E does it people's life savings, jobs, homes, and financial security aren't put in jeopardy.

Will Hill said...

Just so you know I am not trying to be disagreeable. I think you bring up a valid conversation and that is - how do you manage/govern ethics?

You are saying that managing ethics from a governmental standpoint (congressional committees, legislation) is not sufficient because it is tainted with the subjectivity of partisan politics and the influence of special interests and other hidden agendas.

Rather than hit you back so disagreeably :-)... I should have just asked follow-ups, such as:

1) When would be the ideal time for this to be proposed: immediately or sometime later after things have settled?

2) What powers would this entity have, could they impose penalties for non-compliance, or simply make recommendations?

3) If there are penalties for non-compliance, then this is by definition a government entity, enacted by legislation, right? How could a private entity in essence "police" an entire industry without being commissioned directly by the government, therefore making it a gov't entity even if it's run by civilians?

I know you are just not at all feeling my responses!!! :-)

The point you bring up about regulating ethics is a valid one, but how you do it is the question? Can it really be done outside of the existing legislative process?

Vaughn Bryant said...

Nelda...clarification, the term limits I was suggesting have to do with the committee of folks from the specific industries charged with setting the ethical standards, not politicians.

I'll respond to the rest later.