A Learning Approach to the Buy-Out

September 28, 2008

by Robert A. Letcher

As a long-time student of Don Michael (see his “On learning to plan — – and planning to learn” orig. 1973, 2nd edition 1997), I find myself inclined to look for problems — solving strategies centered on learning. In the midst of financial turmoil all around us these days, I struggled to find a way to apply what Don had taught me about social learning — with much frustration and little success. Then, I recalled Richard Norgaard’s “Development betrayed: the and of progress and a co-evolutionary revisioning of the future_1994. Now, I am not sure that I recall Norgaard correctly, but in the recesses of my mind I recall something about approaching problem-solving has a series of parallel experiments undertaken towards the purpose of learning which solutions work better. (My apologies to Richard Norgaard if I’ve gotten him wrong.)

They key difference here is that instead of going for a single, global solution that either completely meets the objective or completely fails to meet the objective, numerous solutions are undertaken, knowing that some will succeed better than others, some will fail worse than others, with the hope being that the overall combination of solutions and learning from the second approach is more favorable than the combination from the first approach.

Not being very savvy in matters of finance, I’m not sure whether this makes any sense, but — – short of implementing a “small is beautiful” solution — – it makes sense to me, and it may make sense to you.

Let me add one further comment, from von Bertallanfy’s general systems theory. I think I first heard this axiom from Don Michael: “the regulator of a system must be at least as complex as the system it regulates.” If this is so in this case, then *no* nationally based system of regulatory institutions could be expected to manage problems created by increasingly complex international finance and globalized capitalism. And, if that’s the case, then some kind of Norgaard — inspired solution strategy might help us learn that institution-challenging result.

I guess that’s the problem I see with the Paulson approach: it may succeed, and it may fail — – but, either way, we don’t get much opportunity to learn.

In simpler terms… look, this situation has never occurred before. Yet, everyone I’ve heard speak about remedying the problem seems to understand “remedy” as a single approach/strategy, applied across the breadth and depth of the problem. In other words, despite our never facing this situation before, we are still looking for, arguing about, and probably even expecting ourselves to find, a single “THE BEST” solution; even when, as Alan Meltzer pointed out on PBS’s Newshour (aired September 23, 2008), “No one, no one has said this will solve the problem. No one has said it will solve the major problem in housing and finance.”

How about re-conceiving the problem as an opportunity to learn: an experiment? This could be done by dividing up the various problems that collectively comprise “the problem”–and would allow different groups to attempt different “solution strategies”. We don’t need an optimal solution–which is fortunate, because we’re unlikely to find one; but a sub-optimal favorable outcome overall would surely be preferable to a total failure–plus, we might actually learn something about the problem in the very act of working on it.

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Written by Robert A. Letcher, Ph.D. · Filed Under Economy

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Letter to the Editor: Good Cars need Good Teams - by R. A. Letcher, PhD

Good cars need good teams -- designers, engineers, line workers… and learning-oriented managers by Robert A. Letcher, PhD [Author’s note: I submitted the following as a letter to the editor of The New York Times, after that paper carried an article under the headline, "To Fix Detroit, Obama Is Said to Drop Plan for ‘Car Czar’", 02/15/2009.] It is widely accepted that you can't win a horse race without a good horse. Of course, it helps to have a lot of money and a good plan for spending it. But, you still need a good horse. The authors reminded me of this when they wrote: “The companies’ plans are required to show progress in cutting long-term costs as a condition for keeping their loans.” I doubt GM and Chrysler can win this most important "automobile race" merely by having better accountants and more muscular negotiators: they still need a good "horse". That means the companies will have to show that their teams can still design and build cars that people are drawn to buy and willing to pay for: winners. I doubt they can. The problem isn't that they didn't know how to; it's that they don't know how to break out of the group-think that ensnarled them, their managers, their whole organizations, decades ago. I would be more optimistic, had the government also required the companies to include plans for transforming themselves into learning organizations. Aye, there’s the rub: learning entails risk-taking, not “yes people”.
Bob's Bail Out Plan by bobl-tlm
Fiscal Therapy - Getting the economy back on its feet, giving taxpayers a break, saving your retirement fund and your kid's college tuition? Done. And it won't cost you a penny.

For years now, whenever I've been invited to lecture students on how our tax system works, I have asked a simple question: What is the purpose of the United States of America? The most common answer, be it at prestigious universities, elite prep schools, rural community colleges, or crowded urban high schools, is this: To make people rich. This should come as no great surprise. For anyone born after, say, 1970, the world has been shaped by Ronald Reagan's remaking of government's relationship with private interests—a vision of lower taxes, less regulation, and maximum economic leeway for those at the top. In this view, the pursuit of wealth is the warp and weft of America; everything else will follow. By contrast, the preamble to the Constitution tells us the nation's reason for being in 52 words that can be reduced to six principles: society, justice, peace, security, commonwealth, and freedom. Individual riches don't make the list. They are a product of American society, not its guiding purpose. Progress, then, must begin with a return to the best of the values that created this Second American Republic—one born, it's worth remembering, from the failure of the Articles of Confederation, whose principles (weak government, unfettered capitalism) found their resurrection in the economic policies of the past three decades.
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How Do You Like Deregulation Now? graphic politics by Dicky Neely
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