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Tuesday, May 17, 2011

Markets, Politics, and Personal Perspective

Today I had a bit of a rude awaking at work, a complete disaster of bad communication all around. I had a hand in it, I think others are guilty also.

But it showed me how at a very basic level that people at different levels of responsibility have completely different levels of perspectives. And that the higher you go, the increasing likelyhood the more detatched from detail and depth is required to make a decision.

Notice I say required. The higher you go, the more "issues" bubble to you. Messages as you go up must be simplified. I equate this to how organized decision making occurs in the brain. A great book to read how the brain works is "On Intelligence". But by the very nature of requiring less detail, and (over?) simplification of work/effort/effect any one decision to be made increases the risk of deciding poorly.

It is such that I am becoming more accutely aware that in life, and organizations, decisions are basically coin tosses. Sometimes the right answer is chosen based upon deep knowledge OR shallow understanding. Sometimes the wrong choice is made by being too close (not having broad perspective) or shallow understanding.

The decision is boiled down to guessing. And when you guess wrong.....you will learn your wrong and return back to the other choice. All guessing correct does is save time of revisiting the original decision to go down the other path.

As a techie, I tend to place too much emphasis on trying to make the right decision the first time. I sometimes spend years watching the price of a product to buy it on super sale. Or maybe I research heavily about which product is better.

But in the end, what do I really truly know? Do I know the lowest price for a product available anywhere on the globe? What is the chances I learn of a sale at the right time? When I research products, how do I know if the information I am using for a decision is legitimate?

Such questions could be applied to your daily job or life. In the end we are all guessing.
The critical quality for success isn't about making the right decision, it is about how quickly you recognize a wrong one and react to change course.

This brings me to the macro view of the global economy. For those trying to play "lets control the global economy", how realistic is it that these people and organizations are really making correct choices? The question is really more a probability exercise, how long will it take that enough wrong choices in a row tips the global economy into another tailspin.

The answer is clear. As long as we allow individual institutions and people to have undo influence on the global marketplace, the HIGHER chance multiple mistakes in a row will happen. If the decision making/process was distributed in a purely capitalistic way, the net result, which is likely contrary to common sense, is to DECREASE the chance of multiple mistakes in a row. The prejudices of the few increases the likelihood of failing to recognize bad decisions and change course.

The more decisions are distributed, the more "random" the decision process. The more controlled, the more likely prejudice or agenda's of individuals make a pattern of decisions...right or wrong...to occur. (For techies reading this, think open source vs big software companies)

To me, this makes it clearer to me than ever, that the IMF, the Federal Reserve Banking system, and those like Ben Bernanke are by construct, setting the rest of us up for one whopper of a series of mistakes and failure to recognize bad decisions.

Let's hope that we as a race are smart enough when we pick up the pieces to create an open, transparent, capitalistic system where all market participants have equal influence on the marketplace of bonds, stocks, currencies, futures, and commodities. And recognize it was the control of the few, not the many, that are the root cause of the problems.

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