What a diff’rence a crisis made..

I hope you recognized the adaptation in the title, after Dinah Washington’s lovely song. Let me tell you a little story about 3 people. There’s Jonas, an experienced merchandise trader who owns a warehouse at the quay, there’s Andrew, a young and promising artist who is at the forefront of the new “urban art” movement, and then there’s Misha, Andrew’s brother, who is a libertarian soul, adept of an “alternative” life style, and in love with social movements. Currently, he is doing his best to run a small downtown grocery for a living, but now here comes the Big Bad Crisis.
Andrew struggled for a long time, trying to find a decent place to exhibit his latest creations. The posh downtown galleries were asking for crazy amounts (in line with the current real estate rental rates) and the adequate space, the kind of surface that would really put Andrew’s work in the right perspective, wasn’t even being offered.
In the meantime, on Jonas’ side of the story; after enjoying quite a long streak of successful business he experienced a sudden drop in demand, with most of its long-standing customers cancelling orders, with imported merchandise becoming prohibitively expensive due to a strengthening of the local currency. After a couple of months in the serious red, he was pretty desperate; especially considering that he needed to catch-up with his mortgage along with the tuition for his four children. One day, while Andrew was wandering the quay, precisely in search of a deserted warehouse that might be converted with little investment into exhibition space, he was immediately struck by the 18th century-style brick warehouse that Jonas used to own, but was no longer much use to him considering the current circumstances. The rest is details. Andrew rented the place, and after a light reconversion he displayed his work;the place becoming a smashing hit among the critics and art consumers alike. Jonas in fact, after hearing about the languishing grocery business of Misha, took over the place and transformed it into a really successful business, based on his previous knowledge of perfectly synchronized commerce, while Misha found a position with an NGO and immediately left for Africa, where he would become the most successful project manager the philanthropy industry has ever seen (maybe his brief experience as a lousy grocer helped out here, who knows). The morale of the story thus being: A crisis implies a lot of disruption in the economy and in the people’s lives, but it is the only mechanism which can shake and unwind sub-optimal processes, reshuffle and free resources and bring new skills onto the market, at the same time as it sends rotten business practices to the garbage bin of history.

CRISIS!!!

I believe that the unfolding of the current events can be attributed, to a large extent, to the precipitous measures taken by governments to support faltering financial institutions and try to boost confidence in the stock market and ultimately prop the stock prices. They were, of course, looking at the 1929 events, when a series of uninspired governmental decisions did nothing but bad to the developing crisis. Well, 2008 is not 1929. The level of integration and coordination of economies worldwide is incomparably higher today and the cooperation of governments is at a different level now than back then. The smartest way to deal with the crisis today would have been to let the stock prices fall in an unprecedented manner, because in my opinion, prices would have bounced back once they have reached the psychological bottom. This, coupled with a slight alteration of the central banks’ interest rates would have certainly led to a quick recovery. What is happening today is that investors are still searching for the real bottom, after a series of false rallies each triggered by the various measures taken by governments. This has lead to an escalating uncertainty and people, rightly so, are looking for safe heavens, waiting for the crisis to consume itself. This waiting, of course, is translated in the real economy through suspended investments, postponed expenditure and decrease in consumption.
In any case, contrary to many pundits’ beliefs, I do think that, however deep, recession will be short in time and the recovery will be rather quick, bringing the world development to unprecedented levels. This would be so because today we have a much higher number of informed and eager consumers, all over the world, with increased purchasing power and with a willingness to increase their life standard. The only real risks ahead are an uneven spread of wealth, exhaustion of natural resources, depreciation of natural environment and climate change.

The gangs of..Wall Street

I am not a top-notch financier but let me tell you this: the current development on the financial markets stinks of fraud. And it stinks really badly: Picture this: my neighbor has a boat, or better yet: this guy Joe that lives in the other side of my town has a boat. I do not personally know him. He goes fishing from time to time, and some say that he has pretty good skills. Now, what interests me is the following business: I want to purchase an insurance that covers Joe’s boat. This means that if Joe’s boat sinks, I will be reimbursed the boat’s value. Remember: I do not have any interest in Joe’s boat and I hardly know him. Do you think that there will be any insurer willing to sell me this insurance policy? I guess not. But that is because I am not living on the Wall Street. Should I be living there, many companies would be more than happy to sell me this type of insurance. This is similar to what they call credit-default swaps. Moreover, it is not only me who would have bought this policy, but also my neighbors, my friends and many others. Now, what do you think the chances are that Joe’s boat will sink by this time next year? When Lehman Brothers was allowed to sink, it had triggered a series of claims for the purchasers of CDS related to its bond. This immediately destabilized AIG, one of the main issuers of CDS. It was very convenient for AIG to sell CDS, since they were not even required to set aside the capital needed to cover a potential loss, given their AAA rating and in accordance with the regulation in place at the time. The fact that Mr. Paulson decided to “save” AIG with taxpayer money had only closed the vicious circle of this extremely convenient situation for some. Sinking Joe’s boat seems easier than sinking such a powerful player as Lehman. But that is until the gangs of Wall Street come together to work for a common interest.

The crisis in the people’s mind

Let me put things in the right perspective. What we experience today it is a crisis. And it’s on its way to become a monstrous one. But it is not an economic crisis. Not yet, at least. However, the wide range of economic measures taken by political (!!?) leaders certainly have the potential to transform the whole crisis into an economic one, an unprecedented one.
The stock markets are falling because people’s confidence is falling. No economic measure will help people’s perception about crisis. We know that people’s mood makes a lot of the movements in the financial markets. Behavioral finance is an established field in the academia. But my opinion is that no particular economic decision can change the mood of the people. Sometimes the most comprehensive measures will not help, but other times remote and insignificant measures will trigger market rebounds. In is true that high-level financial arrangements have become a mess that clogs the natural flows in the banking industry and these have to be sorted out. However, my feeling is that many of today’s measures are taken with the specific purpose of propping up the stock market, and this is ultimately wrong. I believe that the markets should fall down to the level where investors will confidently feel that it is time to move back in and then .. up you go.
The wide range of political decisions, however coordinated, will solve nothing in the stock market. They will only undermine people’s confidence in the resilience of the system and its ability for self-healing. This is something serious. This is a belief that will be left in the people’s minds for a long period and it’s difficult to assess its consequences for the years to come.
I would not go so far as to claim that we do not and we will not experience an economic downturn. It is here already and many people feel it directly. But that is OK. People have since long learned that the capitalist economy has a cyclical evolution. Upturns are followed by downturns. It’s part of the game. Moreover, it’s something that the free-market system needs, in order to flush away laggards in terms of productivity and the flawed business practices. Some may not realize this, but one of the virtues of the free market system, aside from prices emerging out of the dynamics of supply and demand, and perhaps more important that that, is the famous Schumpeterian rule of creative destruction.

Weak leadership and corruption

In my exalted previous post I was expressing admiration towards the American people and their values. I also noted that the Americans have been blessed with inspired leaders who contributed to the fortune of their great country. The development of the events that followed showed that I was wrong in crediting today’s lawmakers with the vision that characterized their more famous predecessors. By passing the bill to save the troubled financiers, the US congressmen embarrassed themselves and the great country they represent. While the economic benefit of their vote is uncertain, what is certain is that America and the values it stands for, are seriously jeopardized. It is an indicator that today's political leaders are weak and easily to be confused. It is true that the circumstances are exceptional, but it is the difficult times that show the great virtues in men. I will be watching with great interest the unfolding of the crisis that many believe it is the greatest after the Great Depression and the very fundamental principles of the free market and of the western world are at stake. I would not go that far. If it will be a recession it will be short lived and it will not bring to peril anything but weak businesses and inefficient companies. It will probably set new standards for the way the banking business is conducted, which is an absolutely great thing. Overall, it could be the case that the benefits will out weight the losses. Before all this will end, I have draw attention to something related to weak leadership. When a society's leaders become weak and ineffective, there is a great danger that the core values of that society will fade out, and the corruption will invade at every level. This is something that even scholars failed to notice: not only corruption leads to ineffective government, but also a weak leadership will give birth to corruption. When people fail to see in their leaders the guarantors for the society's values, then they will turn to their own personal interests and the societal priorities will be disregarded. This means the corruption will become widespread and this phenomenon will further generate weak leadership, in a self-enforcing loop. Beware, congressmen!

I believe in America

America is the country that taught us the spirit of freedom, social commitment and entrepreneurship. A great country with a great destiny, America’s great fortune was its blessing with great leaders. From Thomas Jefferson to the regretted JF Kennedy, America's leaders had the vision and the power to commit to and fulfill the legacy bestowed upon them by their Founding Fathers. Yesterday was a historical day. Once again, the leaders of the great nation rose to the expectation. By rejecting the bill to help crippled banks with 700 billion $, the Congress showed that the Americans are no nation of whiners, as one top political figure commented not so long ago. In fact, all the whiners are to be found on the Wall Street, jittering behind their desks, watching how the Dow is melting, along with their not-so-long-ago pried skills of talented investors and financial innovators. Not being fooled by the pathetic lamentations of Mr. Paulson, seconded by Mr. Bernanke, I believe that the American congressmen took the right decision, a decision that will restore America’s might and integrity, a decision that will wipe out the ineffective institutions and rotten business practices, clearing the path for a solid and healthy growth and for a reassessment of the role of financial institutions in the overall economy. If I could, I would convey to Mr. Paulson the advice that Mr. Corleone gave to Johnny Fontane when the singer was complaining about the misfortunes in his life, in the legendary Mario Puzo’s opera: –What to do, What to do?..Be a man, that’s what you should do! And to the American people, who, no doubt, will once again be confronted with hard times ahead, I could remind the message (adaptation) that another legendary leader delivered to its fellow compatriots, when faced with difficulties far greater that today’s misfortunes: “…Let us therefore brace ourselves to our duties, and so bear ourselves that, if this country was to last for two hundred thirty years, men will still say, 'This was their finest hour.' ”

The Irish (lame) duck and the baby Euro

In my country there is a funny story: An upscale guy went on the local market where he wanted to buy a duck from a peasant. He then asked the peasant: - How much might you ask for that duck you are holding for sale? The peasant said: 20! The guy generously wanted to help the poor-minded peasant and he said: I want to help you so I will pay you 25 for your duck! The peasant replied: No, I won’t sale it for 25! The stunned guy said: Well, you wanted to sell it for 20 but you won’t sell it for 25, which is actually more money? This is non-sense!! The peasant was not touched a bit. Finally, the guy said: Ok, I will pay the 20 you have asked in the first place. The peasant calmly replied: No, the duck is not for sale anymore. This story is, seems to me, very similar to what happed when Ireland rejected the new EU treaty. Although Ireland is rightfully considered to be one of the absolute winners from the EU membership, with the consistent financial support received as one of the main contributors to its impressive economic development, when faced with the proposal of a Treaty that would undoubtedly have contributed to an even better function of the EU, it bluntly rejected it.The event was later dismissed as irrelevant by EU officials but it had, nonetheless, delivered a stunning blow to the EU consolidation efforts. And today more urgent issues clutter the EU agenda: the Georgian crisis, the financial crisis, and etcetera. What some might fail to recognize is that the evolution of European Union, especially since the launch of EURO, back in 2002, was extremely fortunate. This was a relatively calm period that should have been used by EU bodies to work hard on consolidation and stabilization issues. As the financial crisis spreads and the economic crisis seems to feel pretty much at home, the challenges that the EU will face will increase tenfold. In many ways, EU is a successful project and it is here to stay. However, the resilience of the euro and the euro economic area has not yet been tested much in the same way the US economy has been, on numerous occasions in the recent or more distant past. If the monstrous financial crisis that is unfolding will not lead to the collapse the fragile euro area (and odds are pretty high that it might do just that) then this will be the Christianization with fire for the baby Euro. Regardless of how things will evolve, a YES vote in Ireland and a new treaty in place would have been a great help, anyhow.

American Investment Banks and Russian Roulette

I was pondering for a while whether to write about the turmoil in the financial markets. My intention is to write on this blog about general issues with long-term implications. However, I do have something to say and I believe that it is related to long-term developments, rather than the short-lived turmoil present these days on the stock markets.
The US government decided to step in and take actions to tackle what many dubbed the “greatest financial crisis after the Great Depression”. I would not subscribe to this dramatic nomination, if only for the simple fact that I have not yet seen any Wall-Street financier jumping out on the window, like they used to, back in the thirties.
But what troubles me most is the disappearance of what used to be called investment banks. These institutions were at the heart of the financial crisis and probably one of its main catalysts. But the decision of US government to step in and impose deep changes to the business of investment banking, I believe it is not wise. It is clear that the government’s decision to intervene before the financial crisis is propagated in the real economy is a good one, and this move obviously requires tighter regulation. But to completely change the nature of the investment banking, by imposing regulation similar to commercial banks, it is not good. Investment banks used to play a vital role on the Wall-Street and they were at the forefront of financial innovation. They were experts at taking risks and identifying opportunities in real-time without the constraints of a supervising authority. That they can be wrong at estimating risk and they can go over-the-top with the scale of their operations, it is absolutely clear to me and it should have been clear to all market participants and especially to the rating agencies.
I think a fair way out of this crisis would have been to let the investment banks go bust, even if that would have induced losses to third-parties. An even wiser approach would have been to save some investment banks and let some other to go bankrupt. The criteria for choosing which to save and which to let fall should have been completely random. In this way, continuity and a fragile stability would have been created in the system, at the same time with avoiding the infamous moral hazard. Above all, investment bankers play a game of chance, much like a roulette player. It is the nature of their business, and they should be able to estimate and engage those risks that they can actually manage. And they should be allowed to learn the game the hard way, much like the players of Russian-roulette do. Belive it or not, but for some people this is a catchy game.

The economist has no clothes

In the Scientific American article ”The economist has no clothes”, Robert Nadeau despises the science of Economics because of its flawed foundations, namely the initial artificial borrowing of the methods and tools of physics with the purpose of using them in studying social phenomena, which have an entirely different nature. Needless to say, the modern researcher in Economics has broadly expanded his tools range and the complexity of these tools is sometimes higher than the current practice in natural sciences. However, Mr. Nadeau might have a point in arguing that certain limitations of the internal logic of the paradigm could lead to failure in tackling problems that, at least recently, have been proved to have a capital importance for the humanity.
However, a lengthier discussion might be required here. The point I would like to make is the following: studying natural sciences implies studying a set a laws and rules that have a certain consistency and a fundamental pattern that encompasses the motion of all known (or yet unknown) naturally occurring phenomena. The burden of the natural scientist is to correctly identify and provide a consistent and, if possible, unitary explanation for these phenomena. In contrast, I would argue, there is no such fundamental pattern that could be identified when studying the laws of social phenomena. The reason is that the underlying fabric of the social phenomena evolves at the same time with the evolution of humankind and in close connection with the technological evolution. The answers that the modern economist has to provide are not to age-old phenomena but to brand new challenges brought about by rapid development and by rapid technical progress. The modern economist has to provide real time answers (or models providing those answers) to real time phenomena, phenomena that never occurred in the past and do not have an immutable nature. Today the hot topic is climate change or the depletion of natural resources. Of course, the depletion or scarcity of natural resources has a somewhat permanent nature, and it has already found its place on the desktop of eminent economists, but it really might not be the hot topic or the priority for tomorrow’s society, when people would have learned to produce the necessities of life from a scant of the resources required today (think of Startrek-the SF movie, when you push a button, and the matter generating device will instantly provide you with the steaming hot and spicy favorite food).
In conclusion, the failure of the modern economist to provide useful answers to modern day problems might not reside in the limitations or the “wrong assumptions” of the paradigm but rather in the lack of preparation in recognizing and adequately modeling the newly emerging phenomena. In it also understandable why outstanding economists failed to provide answers, or worst, provided answers that were proven to be wrong for the problems we are confronting today: the reason is that certain phenomena simply did not exist at the time they used their prodigious minds to provide adequate and brilliant answers to the problems of their contemporaneous society.In the light of the arguments presented above, the recipe for the successful modern economist would be: work harder (i.e. read the classics), think faster (i.e. read the latest issues of the economic journals), and be prepared for the unknown (i.e. be prepared to change your mind and give up your dearest ideas)…but hey, THIS IS an age-old recipe:).

The Olympics of dopes

Doping is a major problem in sports these days. With the Beijing Olympics on-going, we will certainly witness new evidence of illegal substance use by athletes. What is worst, this could only be the tip of the iceberg. The reason is that the rate of developing new enhancement substances is likely to be higher than the development of the means of control and testing.
Certainly, the Olympic spirit should be kept. This means that there should be sports events where only the genuine athletic capabilities should be displayed. But I think that there should be an alternative series of events where all kind of enhancement drugs should be allowed, except maybe those with proven high toxicity levels. After all, chemical compounds are part of our daily life. Not everyone can use them. Just a fortunate few can tremendously benefit from them. It is part of the evolution. It should be clear by now that evolution means accepting new challenges, even in the form of chemical compounds.
Of course, the spirit of the games requires that one should not have a competitive edge that is not accessible to others. But as long as every athlete is allowed to use whatever suits him best, and he is aware of the situation I think it is a fair game. The flip side of the coin is the eventual health hazards for the athletes. But this is also part of the game. After all, conventional training might not be all that healthier either. It will be up to the athlete to decide how much to push its limits.
Along the same line of thoughts, maybe a discussion of what kind of apparel should be allowed for use in certain disciplines would be necessary very soon. Certainly, a number of sports depend crucially of the quality of the gear the human body needs in order to perform that specific sport, for example tennis or skiing. In other sports, the distinction between what is really needed and what is used precisely to expand the natural range of human capabilities is less clear. The obvious example is swimming: since the introduction of the new swimming suits (Speedo is one leading brand), world records fall one after another. It is clear these high-tech suits changed the name of the game. Who would dare not to use them, while maintaining hopes for a good result? The use of these new materials is commonly accepted, but what if you have an outstanding swimmer who happens to have a severe allergy to the fabric of these new swimming suits? What then? Even more, as research for new technologies evolves, it is likely that devices like artificially engineered red cells would be common place. These are deemed to be ten times more efficient at transporting oxygen than their organic counterpart. If there are no side-effects what-so-ever, should they be used or forbidden?
I say: let the athletes decide and make the alternative Olympics of dopes a reality, and who knows, it might be a whole lot of new kind of fun. Even more, maybe then we will finally be able to enjoy traditionally drug-free Olympics, like they used to be in Olympia almost 3000 years ago.

Competition vs. cooperation

One of the ingredients of the success of humankind is cooperation. Humans have learned from early stages to organize and coordinate individual efforts towards common goals and this provided them with lasting advantages over other species. Today’s complex society requires an ever higher level of integration, coordination and cooperation between individuals. Somewhat paradoxically however, one of the important forces of the free market economy is competition. Competition between firms in the context of perfectly competitive markets it is known to bolster productivity and innovation, which ultimately leads to the desired progress. It is however wrong to assume that competition should be stretched at every level of society. Certainly, a certain degree of competition between individuals, even within the same firm, or between countries might have some positive effects but the risk of serious problems increases exponentially with the increase in competition between these entities. I have written before about the line that should be drawn (in red) between the corporate world and the private citizen. Competition has positive effects in the corporate world, but not necessarily outside it. In fact, I would argue strongly in favor of cooperation over competition and the future belongs to those societies that favor cooperation over individualism.

About regulation of GMOs

The intense debate around genetic research and genetically engineered organisms will continue for the years to come, probably alongside with the work done by researchers anyhow. One frequent argument of the people opposing this kind of research is that the design of the living creatures that exist today is the result of a long and complicated evolutionary process, whose nature we do not understand completely, except recognizing as its main driving force the continuous adaptation to the environment. This adaptation took millennia to occur and so did the evolution of species.
However, something that many fail to recognize is the speed at which our habitat is changing, and today our natural environment is actually man-made and it poses a huge variety of new features (if we are only to count the chemical compounds that show up every year, chemicals that were not existing freely in nature before). Should we not then see the same rate of adaptive beneficial mutations taking place? Of course, this is not possible, because for a mutation to become prevalent, millennia are required. Carefully conducted research could certainly induce mutations that are beneficial beyond doubt. Somewhat paradoxically I believe that a rule of thumb should be: do not regulate what we do not understand thoroughly, and regulate what we understand and when we know precisely the outcome of the regulation imposed. This rule could be applied in the economy as well.

Humans as pets

Recently, the UK parliament voted in favor of a series of laws that will allow researchers to push the embryo and steam cell research to new boundaries. Basically, embryos, whether a mixture of human and animal, or straight human, could be used to create spare-parts for adult humans. More daring scenarios even predict the creation of transgenic living creatures. Of course, the range of speculation is unlimited as is the number of ethical, moral or legal issues that are raised by this type of research and its products. As one anonymous reader puts it, an individual who has 99,9 percent human genome will in have human rights or not? I have written before about how serious we should consider a charter of animal rights, if not for more reasons, for the simple fact that we might be “the animals” in some not very distant future. This connects to the broader issue of how we should treat all forms of life, defined in the broadest possible way.
Now, a simple answer to this endless stream of problems would be to out rightly reject any form of further research in this field. The UK MPs didn’t seem to agree with this, and rightly so, I believe. If we look back, any revolutionary idea and technological progress has had its doomsters. And again, rightly so. It could well have happened that a new invention meant for good deeds and for the benefit of the whole society could have had a negative impact to an extent that might lead to our complete extinction as a specie. In fact, the threat of global warming is still with us. Things are not simple. We know of apparently extraordinary useful inventions that have proven to have disastrous consequence years apart (for example, leaded gasoline or chlorofluorocarbons). On the other hand, the creation of atomic bomb, however malefic it might have appeared, in fact it is very likely that has had an enormous contribution to the creation of peace and stability, as Nobel laureate Thomas Schelling graciously argued.
My humble opinion is that we have to be open to research and its products, because nobody can foresee the potential of a new product for an extended horizon of time. Being critical and cautious, however, it is not ruled out. In fact, it is a desired attitude. And if it turns out that a new discovery will have cataclysmic effects and our entire specie or planet will disappear, well, so be it. The story of humans is interesting as long as there is someone to tell it. Otherwise, it is meaningless. But I believe in the human ingenuity and I believe that we are meant for a greater goal and I believe that there will always be someone to carry the torch and to learn from the past mistakes and errors. What is important is tolerance and respect for other forms of life, regardless of the way they have come into existence.
To conclude, I again quote an anonymous reader who was concerned with the kind of a pet he would become, should his genes be mingled with his dog’s genetic material? I agree this is a mind blowing question.

Declining the verb “to blogg”

I have not added anything to my blog since some time. The reason is that, well, I had had little extra time lately. But I have also considered whether it is worth to keep writing since I have seen that many of the bloggers declare that they hope to become famous or at least rich based on their blogs. This is fair enough, except I don’t feel very comfortable about getting famous this way, or even being suspected trying. This is a subtle point and would require a lot of explanation. After all, any author hopes to get to be known someday and eventually materially rewarded. And I would also like to get my ideas noticed and get some recognition if they are original. But I still think that the blogosphere should be a space for sharing ideas and expressing solidarity with others or with some goals, without seeking immediate reward.
However, since I do have a little extra-time I would write a little more as a sort of letters to my future self. I mean it would be interesting after a number of years to see how my views have changed and how I perceived the world when I was a little younger. If you happen to read this, I sure hope you will enjoy it (and feel encouraged to provide any feedback – as comment or e-mail, both allowed). One matter of concern is my posted survey, which kindly asks the reader to vote on the quality of English used on my blog. I have received one vote on the “completely hopeless” entry. And completely hopeless means completely hopeless, no matter how you take it. I am not a native English-speaking person, but I do write scientific articles in English, and some of them passed through peer review processes.
Well, I will surely try to improve on my readability. On the other hand, I don’t know if you have noticed but every technical innovation has a selective effect on humans: some get the most out of it as it improves their native skills, while some they get the worst of it. It’s like a natural selection process, although it is man-made. Take computers: some found them to be crucial for advancements in their career or in their private life while some were certainly adversely affected. They were transformed in drooling monkeys with a keyboard (I apologize for the harsh words). Being able to express freely is one fundamental right that any person should enjoy, even under the cover of anonymity. However, in order to get the most out of it, it would be advisable not to shout out to loud or else this fundamental right will be of no real benefit.

The future is Borg

I am a scholar in economics. Sometimes I am finding it pretty hard to explain what exactly it is what I am doing. I think I would like to call myself a social engineer. Engineers design and build new and improved systems. A social engineer should be able to design new and improved social systems or at least some parts of the system. The big difference is that a social engineer, unlike a mechanical engineer, might find it impossible to put to proper use and see if it is really of any worth whatever he designed. Consequently, social engineers spend most of the time providing explanations for what is already functioning and why it functions the way it does.
I was fortunate (or unfortunate) to experience two major social systems of the XX century. That is, command economy and free market economy. An anecdotic difference between the two would be that while the communists were trying to tell people what to do, like how to live and what to produce, the free market regulators were merely trying to tell people what NOT to do. For whatever reasons, it seems that people are better at NOT doing things rather than at doing. Consequently, the free market economy prevailed:).
Leaving the anecdotic register, I think that we are experiencing tremendous transformations of societies, under the pressure of globalization and under the pressure of the gigantic informational wave. Changes in society are not new but the speed with which these take place today, are unseen before. I think the two key words for the future organizations are transparency and cooperation. This stands for individuals too. Transparency stems from the penetration of the new IT systems and whatever informational advantage a company or an individual might have had, and benefited from it, it will soon disappear. Those who can survive a transparent environment will adapt better. Cooperation was always important but the cooperation I am referring here is at a different level, much more engaging that what was seen until now. Changes of information should be almost simultaneous and at all levels, much like the Borg in the popular Star Trek TV series. Their remarkable power, a real threat for the humans, was the way they were interconnected. The decisions were taken involving all individuals in an instant. But that was SF. However, my feeling is that the future belongs to Borg-like organizations and societies.