Big Oil, Big Finance, and Big Atom exemplify global-scale institutions that are out-of-control, focused on self-enrichment at society’s expense rather than on making the contribution to society that justifies their existence. Society needs to take charge.
It sounds great to say that modern society is defined by its ability to link everything—trade, finance, international defense, energy nets, but the surge over the past generation in our ability to link all the traditional local or national components into global monopolies threatens our survival: we are learning how to link far faster than we are learning how to manage the monstrous institutions thus created.
One analogy would be dominoes…just knock over one. The Asian financial crisis that became a global crisis a decade ago and the on-going recession are good examples.
Another analogy is this: it’s wonderful when you link up with your friends and have a pool party, but what if you are all dangling your feet in the water when lightening strikes? Everyone gets fried. Sometimes, disconnected means protected.
Big Oil, Big Finance, and Big Atom cannot regulate themselves: society must do it.
Among the prime examples of networked institutions on a global scale are Big Oil, Big Finance, and Big Atom (the nuclear energy industry). All three provide benefits to society, but all are increasingly organized not to accomplish that but to maximize profits for CEOs and investors. All three also share another characteristic: they cannot regulate themselves; society must do it.
Linking mandates recognition of a broader responsibility. But that recognition is increasingly difficult for reasons that are only slowly become apparent. One reason is that technology is facilitating, indeed making virtually inevitable, reactions that are faster and faster…too fast to cope with, as Paulson and company discovered to their horror when the financial ground kept shifting under their feet as they tried to cope with the rising tide of financial institution failure. It was not just that the institutions were too big and their way of business too irresponsible but that they were all linked (both by common perceptions on the part of investors who figured that if one was weak then they all were and by investments in each other). Reactions to failure anywhere in these huge global institutions now occur faster than management or governments can react if not faster than an individual can even think.
A second reason why recognition of the need for taking greater responsibility with global institutions is hard lies in time frame. These institutions are gaining such longevity that problems may build up for a period not just longer than the term of an official but for a period longer than a person’s whole career. Decisions made during one’s career may have horrendous consequences that will only become obvious during the career of one’s successor, very possibly after one’s death. The seeds of the recession were planted by Reagan when he popularized deregulation. A deadly example is the terrifying tendency to allow nuclear power plants—aside from nuclear bombs, the most dangerous devises ever devised–designed to be shut down after 25 years to be kept in service for an extra decade or two even while being allowed literally to rust away. Since the people who make those decisions will quite likely no longer be around if a meltdown results, they have trouble caring and, more, have trouble even focusing on the issue. But this is no academic hair-splitting: a nuclear plant in Illinois came within millimeters of disaster from exactly that: a rusting pipe.
A third obstacle to recognizing the degree of responsibility mandated by the global size of our institutions is that as the institutions get bigger, so does the “responsible” bureaucracy. The man who decides to permit a nuclear power plant to remain in business is probably not the same man who decides to ignore some rule that requires regular inspection and replacement of rusty pipes. Indeed, there may not actually be any single individual who even is aware of the necessary details to see the connections that breed disaster. Is the CEO of a nuclear plant informed of every rusty pipe and the action taken? Was the CEO of every out-of-control Wall Street gambling firm aware of the consequences of every new financial product his mathematicians devised? Who has the legal authority to arrest the CEO of BP when he is British but poisons U.S. coastlines?
For work already done to restructure the U.S. financial system away from gambling and back toward stimulating the economy, see the short article “How to Liberate America From Wall Street Rule” and the New Economy Working Group’s full report.