Tuesday, June 3, 2008

Systemic short-termism

In his recent article in Foreign Affairs, former Singapore Ambassador and now Dean of the Lee Kwan Yew School of Public Policy at the National University of Singapore Kishore Mabubani asks whether Western democracies have been "hijacked by competitive populism and structural short-termism"?

"Structural short termism" - now there is a concept worth pondering.

How can short-termism be structural and therefore more insidious a departure from wise strategic thinking?

One way of course if for it to be institutionalized in the goals and compensation patterns of government and business. Clearly, the notorious single-minded focus by many Americans in business on quarterly earnings and hitting the very numbers expected by "Wall Street" is institutionalized short-termism.

But a more dangerous location for structural short-termism is cultural. If short-term thinking drives our beliefs and our values, then our actions will follow along accordingly like sheep to the slaughter.

No law of nature that I am aware of requires that business focus exclusively on immediate earnings. In fact, better heads who have made a lot of money like Warren Buffet expressly look to the long run and the underlying fundamentals of valuation more than to short term results.

I would suggest that our culture is the source of "structural short-termism". A culture that has few if any truths to sustain us, many moral quandries to delude us,and a foundation of nihilism that expresses itself in the seeking of sensation and the accumulation of experiences, is nothing but short term. As John Maynard Keynes once retorted "In the long run we are all dead." So, he inferred, thinking about the long run is a waste of time.

Yet as Kishore suggests, if short-termism is a short-cut into the shallows and miseries of fate, then we should examine our culture more carefully to restore some deep sense of truth and of a sustainable sense of purpose to our lives.

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