Over the last few weeks I have been doing a slow re-read of M. Scott Peck's masterpiece The Road Less Traveled, which continues to rank as one of the most influential books on my life and philosophy. In the first section of his book, the one dedicated to Discipline, he discusses several techniques of dealing with the pain of problem-solving "which must continually be employed if our lives are to be healthy and our spirits are to grow." One of those tools he terms "dedication to reality."
Peck writes:
Superfically, this should be obvious. For truth is reality. That which is false is unreal. The more clearly we see the reality of the world, the better equipped we are to deal with the world. The less clearly we see the reality of the world--the more our minds are befuddled by falsehood, misperceptions and illusions--the less able we will be to determine correct courses of action and make wise decisions. Our view of reality is like a map with which to negotiate the terrain of life. If the map is true and accurate, we will generally know where we are, and if we have decided where we want to go, we will generally know how to get there. If the map is false and inaccurate, we will generally be lost. While this is obvious, it is something that most people to a greater or lesser degree chose to ignore. They ignore it because our route to reality is not easy.
How timelessly true this is, not only in our individual lives but in our corporate life also (I use this term in its original meaning, not in its modern economic context, though it certainly applies to that context as well) . Collectively, corporately, whether it is in our public policy-making for society as a whole or in our investment strategies, or our capital allocation strategies, we must be dedicated to reality, no matter how painful it is. Many people are much happier with living in a fantasy land. They want life to be as myopically twisted as Michael Jackson's Neverland Ranch.
These are the people, however, who bear the blame for the irresponsibility of the boom years. They were the Federal Reserve analysts and policy-makers who advocated continuing to hold interest rates artificially low in the aftermath of 9/11. They were the CEOs of Lehman Brothers, Bear Stearns, and AIG, who either willfully or negligently believed that unbridled debt could propel their firms to historic prosperity in perpetuity. They were the realtors who sold houses to unwitting homebuyers with the promise of flipping the house for a mega-profit in only a few months. They were the homebuyers who left their common sense at the door and bought the snake oil the realtors were peddling. They were the investors in Bernie Madoff's ponzi scheme who never bothered to ask questions when their returns were too good to be true. They were the SEC investigators who ignored warnings that Madoff was a bad guy.
Unfortunately these people are not gone, they are simply with us in a new form today. They are the politicians promising us pain-free government panaceas to our economic woes. They are the Federal Reserve policy-makers who are repeating the mistakes that led to the 2001 tech bubble burst and the 2008 credit crisis. Yet the mistakes are simply being repeated on a much larger scale. They are the politicians promising "free" government health care with no cost to 98% of Americans. They are the people who are buying into this false promise.
How can we be so quickly forgetful? Rudyard Kipling, in his timeless poem, "The Gods of the Copybook Headings" observed this phenomenon thusly--
As it will be in the future, it was at the birth of man,
There are only four things certain since social progress began:
That the dog returns to his vomit, and the sow returns to her mire,
And the burnt fool's finger goes wobbling back to the fire.
There can be no optimism without brutal, transparent honesty. Optimism should arise out of a confidence in what we are going to do in response to our own problems, and how we will respond to the world's problems. That is warranted optimism, for it is something that is within our control. When our map reflects the way the world actually is, then we can respond accordingly. We do not have to worry about disappointment, because when we are dedicated to reality, there will be fewer unforeseen obstacles. What You See Is What You Get. Even when what you see is not what you like.
I am most optimistic when I am most real. Real about the present and about the future.
Is it pessimistic to say that the European Banks are insolvent? Is it pessimistic to discuss the $1.6 Trillion price tag of President Obama's health care plan? Is it pessimistic to acknowledge the prospects of inflation?
Not if these are the realities. And in acknowledging these realities we can find a source for warranted optimism: coming up with the alternatives and solutions to the negative reality we may face. I am not filled with hope when I hear a political speech full of empty promises and meaningless rhetoric. I am filled with hope when I spend an hour with my white board solving the next facet of the problems I face. That means acknowledging the problems I can't solve and coming up with a way to work around them, rather than locking myself in my room and crying because I can't wave a magic wand and make the problem go away.
I will close tonight with a final thought from Peck. It should be etched in our consciousnesses, both individually and collectively. It should guide our policy-makers, our business leaders, our voters, our households, our private equity & hedge fund managers, our bankers, and everybody else. It should also motivate us not only to dedicate ourselves to reality, but also to transparency about reality with all around us. This transparency, predicated on honest reality, is the source of trust, whether in a marriage or in a business partnership. If we all take Peck's counsel to heart, our world will be a far better place:
Truth or reality is avoided when it is painful. We can revise our maps only when we have the discipline to overcome that pain. To have such discipline, we must be totally dedicated to truth. That is to say that we must always hold truth, as best we can determine it, to be more important, more vital to our self-interest, than our comfort. Conversely, we must always consider our personal discomfort relatively unimportant and, indeed, even welcome it in the service of the search for truth. Mental health is an ongoing process of dedication to reality at all costs.
No comments:
Post a Comment