In the summer of 1982, large American banks lost close to all their past earnings (cumulatively), about everything they ever made in the history of American banking - everything. They had been lending to South and Central American countries that all defaulted at the same time - 'an event of an exceptional nature.' So it took just one summer to figure out that this was a sucker's business and that all their earnings came from a very risky game. All that while the bankers led everyone, especially themselves, into believing that they were 'conservative.' They are not conservative; just phenomenally skilled at self-deception by burying the possibility of a large, devastating loss under the rug. In fact, the travesty repeated itself a decade later, with the 'risk-conscious' large banks once again under financial strain, many of them near-bankrupt, after the real-estate collapse of the early 1990s in which the now defunct savings and loan industry required a taxpayer-funded bailout of more than half a trillion dollars. The Federal Reserve bank protected them at our expense: when 'conservative' bankers make profits, they get the benefits; when they are hurt, we pay the costs.

- Nassim Nicholas Taleb, in The Black Swan, April 2007

Faith and hope are as much a part of political reality as they are in change programs within businesses. As I reflect on the daily political landscape that pretends to offer us information to make sense of the 'most important issue' in the upcoming election (the economy), I offer the following two articles for your consideration. I think these two articles are important to digest together. Both have the feel of the kind of unbiased analysis, reflective discourse, and unvarnished truth that must accompany any true reform in our national debate on such topics (a reform that is desparately needed).

The term health care reform has diverse meanings for the many stakeholders involved in the US health care system. The underlying issues associated with implementing such reforms are quite complex, but pressures for reform are high. In this context, such reforms are similar in nature to many large improvement initiatives which are pursued within large businesses (though these are each dramatically different in scale).

In 2005 alone, the United States spent more than two trillion dollars on health care, or over $7,100 per person, and are growing at over twice the rate of growth of our overall economy. Government and private insurance fund about 80 percent of those costs, and the rest largely comes directly (rather than indirectly) out of our pockets. About a third of these expenditures occur within hospitals; clinicians get another third, and the rest is spread across nursing homes, prescription drugs, and the costs of administering our insurance system. Read more »

Spin is the process of selectively interpretting a situation in a biased way, in order to drive a particular agenda. When a particular data measurement value or trend is not well defined, in business or government, this can be particularly dangerous. This is because such spin drives decisions based upon one perception of the world, when in fact another reality may be actually occurring. For a particularly troubling example, consider this alternative view of the current economic situation. For another, consider the many financial institutions that maintained excellent credit ratings, despite large portfolios of Subprime lending.

The underlying elements which enable such spin are: Read more »

Every year our governments spend a lot of money to attempt to successfully forecast hurricanes, even though such forecasts are not useful. As a nation, we raise a fit (understandably) about the threat of nuclear proliferation, yet continue to suppress evidence or learn effectively from such situations in the past.  Pressure on both world oil and food supplies is increasing, yet we inefficiently transform food into an oil substitute, a process that is not environmental or economic, but political. We have a national train system that is inefficient by all measures, yet we continue to pour tens of billions of dollars per year into subsidies of it.