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Once upon a time, long ago in a fair land, people worked hard, saved, and lived a good life. In the United States, they called it the American Dream, that any hard-working, diligent citizen could create a middle-class life.

Then, things changed and real estate began to inflate dramatically. The game changed, and saving made you a loser – if you saved you probably didn’t get on the escalator of rising home prices. Making money was now about borrowing, acquisition, timing, and making a play at the right time. Hard work and thrift seemed to no longer be a road to financial success, except as a house down payment.

The rules had changed, and slowly many people began to understand the new rules. Real estate became the best investment a family could make. Then, the rules changed again for the banks and financial institutions. You didn’t even have to save or have money to buy a house; the new game was getting and making loans – using other people’s money.

Lending institutions found out they could sell loans to others to hold and no longer have any risk on the performance of the loans. They just had to make loans and then get rid of them – they began to push loans to whoever could sign the papers. As an example, in Bakersfield, California, a Mexican strawberry picker with an income of $14,000 was lent every penny he needed to buy a house for $724,000 [i].

And the seeds of the 2008 financial crisis were planted. Bad loans became an industry, and the ratings agencies rated these loans as safe due to a weird logic that groups of bad loans were somehow safe as a pool of loans. It became a feeding frenzy of making money by moving more loans and deferring the risks to others.

When the default rates started to rise, as they had to, an awakening dawned on all the players that huge blocks of investments were going to fail. When the realization happened, Bear Stearns, for example, a global investment bank and securities trading and brokerage that held considerable subprime mortgage securities went out of business in a matter of days. The financial system was rocked, some other huge companies disappeared, but most credit from the banks dried up and the financial fuel supply for the entire economy was shut down.

The International Monetary Fund later estimated that losses from the subprime market collapse amounted to a trillion dollars. But what the collapse triggered is many times that amount in its continuing economic impact. The period of 2008 and 2009 is now referred to as the Great Recession, bringing us TARP, bail-outs, and the stimulus package in faltering attempts to get the economy functioning again.

And at this date, the U.S. government is generating record deficits of over a trillion dollars a year, the debt ceiling has become a political battleground, Standard and Poors are downgrading the rating of US government debt, and the stock market is wobbling with uncertainties. Recent polls find that over eighty percent of the American population has no trust in government to effectively deal with these economic issues.

What happened? And what can we do in this era where the world can shift to such craziness? How do we manage our future in this world and help our organizations and clients to do the same?

Is More Really Better?

I believe that we are seeing the consequences of a discourse that has pushed our world to its limits.  This discourse is called “More.”  This discourse says “More is Better,” and “Only Now Matters.” These are such strong messages and assumptions in the current common sense, they are not even questioned. In fact, they are the default answers – we must grow the economy and do it now – regardless of future consequences. Growth is the answer. Somehow our addiction to More makes it the solution to the very problems it has created.

But growth is already pressing at what scientists call “the carrying capacity” of the planet. We are on a trend to outstrip our water supplies, we are eroding and reducing the fertility of farmable soil, global warming is happening, with calls to reduce global carbon emissions we continue to increase them, with China building two coal-fired electricity plants per week, and have passed or are quickly approaching “peak oil,” the point where over half the oil reserves of the planet have been exhausted.  We are running out of the planet.

What has More produced so far? As GNP’s grow, so do the rates of depression, teen suicide, and alcoholism. The U.S. GNP has doubled since the 1990’s, but the bottom 90% of the population has seen their average income decline during that period. The wealth concentrates in the top ten percent of the population, and mostly in the top two percent. Fifty percent of the wealth of the planet is currently owned by one percent of the population, not a trend suggesting future stability. Depression was identified in 2007 by the World Health Organization as the most significant chronic global health issue, outstripping heart disease, asthma, and diabetes.

Studies show that increased income does not produce greater happiness. In fact, happiness measures in developed countries have continued to decline as GNP has grown. More is not better, it is just more, and apparently more burden. When you are poor, more is better, but studies show that increased income does not produce greater happiness after about $10,000 annual income. In other words, our richer lifestyle does not make us happier.

The addiction to the growth story is linked to the narrative of “the better life.” If we are always seeking a better life, we will never have a good life.

I believe that each of us must revive the conversation of a Good Life, not only a better life. What is a Good Life? We must take responsibility for the future consequences of our choices. What future are we giving our children and grandchildren?

In German, there is a phrase meaning “The flood comes after me.”  It’s a mood that we don’t have to worry about future problems from our choices. I propose that what is needed is another ethic, one that inhabits our awareness and choices, not just our good ideas. One is suggested by the tradition of the Iroquois Indians. When the tribe makes an important decision, their standard is to ask “what will be the consequences for the next seven generations?” And separate from the theme of stewardship for future generations, I believe our deeper challenge is to learn to be where we are in gratitude, and not always need to be somewhere else.

What is the Good Life we can have that is not always the life we don’t have?

To listen to the audio recording of this conference call about Leadership for a Good Life, CLICK HERE.


[i]
Lewis, Michael, The Big Short, Norton Press, 2011,2010, p. 97.