The Interconnected Economic Crisis
Our multinational banks are incredibly interconnected. As a result, if a few of the big ones make bad decisions, they take the rest down with them. We lived this reality in 2008; some of us are still experiencing the aftershock. James B. Glattfelder recently gave a TED Talk on a study he and colleagues conducted that analyzes the organization of multinational companies in our global economy. The thesis: At the core is a small group of tightly interconnected companies, with a small less-connected periphery, an arrangement that's unbalanced and unstable. How did we end up in that arrangement?
A Big Game of Follow The Leader
When people make decisions they often take shortcuts. Brokers, loan officers and even consumers were following the leader when they were selling securities, making loans, and buying homes. Multipy those decisions by millions of brokers, loan officers and consumers and you get the picture. The value (or lack of value) of mortgage-backed securities could be calculated if the time was taken to do so. Many people did, and in doing so predicted the economic crisis (Ron Paul and Peter Schiff, Ten People Who Predicted the Economic Crisis). Many rational consumers opted not to buy, because they had a more intimate understanding of the risk involved. There are numerous scholarly studies on the concept of Herd Mentality and how it leads to busts and booms in economies. So, how dangerous is this game of follow the leader?
Beyond Economics
If a winning strategy is identified, the company that employs it quickly rises in the market. Then other companies follow. The first few to do this may even benefit, but as soon as everyone is employing the same strategy, the gains evaporate. And it's not just companies that drink this Kool-Aid. Go to College. Benign advice? Not anymore. Having a college degree was a strategy employed to differentiate yourself from other job seekers. It doesn't work if everyone does it. Any time we take advice we are essentially allowing someone else to gather and weigh evidence, conduct experiments, make observations and come to sound conclusions on our behalf. To be fair, there's plenty of advice that's great even if everyone else is doing it, like eating healthy or exercising.
Innovators
In our super modern world, we still have people who take the time to make discoveries from raw observation and experimentation: Scientists, investigative journalists, experimental psychologists, engineers, tinkerers, and kindergarteners. (To be curious and pursue discovery is a gift we all have when we're young. It's amazing that some of us can hold on to it for so long in our stressful world.) It's important that we get our data straight from these folks, and major news outlets are doing less and less of that. There's an entire tier of knowledge and news resellers. If you cite an article that cited a documentary, that's based on a study, you're not doing an ethical job of sharing information or knowledge.
Leading our Leaders
Firstly, we need to get our knowledge from close to its source and with less filters. TED does a wonderful job of this, by putting scientists on stage to share their discoveries with the world directly. Secondly, we need to make leadership a two-way street. Influence has to go both ways, control needs to go both ways, power needs to go both ways. Not top-down or bottom-up, but both. Wikipedia is an incredible example of this. Every single user is empowered to make an edit to the online encyclopedia. We've disconnected from our thought leaders for too long, and technology has sped up the world too much. Our busts and booms are going to get more frequent, and our education will dilute if we don't put an effort forth to connect to our thought leaders and lead our leaders.