Noah denkt™  -
    Project for Philosophical Evaluations of the Economy
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A market-based concept to reform financial markets
Strategic Statement, drafted in Dec. 2009 and published on Jan. 21. 2010

Abstract: The de-constructive force of highly self-reflective, open markets and societies is way too overwhelming
for anyone therein to still get away with overly aggressive profiteering.

In the aftermath of the current financial crisis, researches and financial specialists all over the world are putting
together their heads to find the perfect solution for a regulatory overhaul of the financial system. Yet the answer
to remedying the defects of the current financial markets may not be as difficult as most experts seem to think.
For what is needed here is not so much a new set of rules of regulations that won’t be able to stop the next crisis
anyway but what is required is much rather a convincing piece of scientific evidence which irrefutably details that it
is in deed impossible to enjoy the spoils of an irresponsible profiteering in this interdependent world. After all, it’s
the lack of such undeniable household evidence that has led sup-prime vendors to sell predatory mortgages to
buyers of whom they knew, even at the time of the sale that said buyers would never be able to pay them back
with their own funds. And it has been the absence of clear proof that a business strategy which is build on the
notion that you should not do to others what you don’t want them to do you actually pays off in the end which has
led highly-trained investment bank CEOs to support the purchase and sale of complex CDOs which they
themselves did not understand.

That such undeniable scientific evidence is not available at this time is somewhat puzzling. After all, there is
enough anecdotal proof available even now which shows that highly interconnected markets are quick to
castigate those who have been overly aggressive in their pursuit of profits. In this respect, it is not only the
shareholders of AIG and Citibank, but also the bankers of Lehman Bros, BearStearns and Merrill Lynch and the
majority of hedge funds that can vividly testify towards the painful consequences of excessive greed.

Now, some people, who dispute the self-cleansing capability of modern markets like to point out that, while some
companies did in deed get castigated by the current downturn, the leading perpetrators of the disaster were still
let off the hook. And so they take pride in listing amongst others the example of ex-Lehman CEO Richard Fuld,
who after losing his prestigious job at the investment bank was quick to find a new position in another financial
firm. This kind of example however tends to forget that the new jobs which disgraced ex-CEOs tend to find are
with second tier companies. And so these former star executives will now have to make up with considerably less
money and prestige than they would have been able to generate for themselves if they had managed to continue
their career in a first-league environment.

Anecdotal evidence therefore points towards the assumption that it would be foolish for any business strategy to
discount the awesome de-constructive, turn-around powers that an advanced open society can bring to bear.
Much rather do the aforementioned examples suggest that a sound profit making strategy has to factor in the
incredible fast pace in which highly self-reflective markets create and discard fashionable trends, produce and
undo inflation bubbles and support and destroy theories and justifications that eventually turn out to be flawed
and insufficient. (For more information on the de-constructive powers of modern societies,
please also read
Robert Wright’s article “Sex and the Digital Society, posted on January 19, 2010, in the online edition of the New
York Times,)

If it could, in deed, be established that personal gains are sustainable and beneficial only as long as they have
been generated in a responsible way then the real question in our volatile world would no longer be whether you
should or should not take highly-leveraged risk. Much rather would one have to ask oneself what standard it could
possibly be that one could reasonably measure the feasibility and responsibility of one’s risk-taking against. In this
Noah denkt™ argues that there is not better way to determine the soundness of a business strategy than
to consistently apply the wisdom of the Golden Rule of Reciprocity, which stipulates that you should not do to
others what you do not want them to do to you.

After all, the current financial crisis would not have happened if all parties concerned had applied the subject
standard. For it is not only the aforementioned predatory sub-prime vendor and the less than careful investment
bank CEO who have been in violation of the Golden Rule philosophy. But the current disaster has also been
by overworked credit rating agents who were to quick to provide a misleading triple A rating to
questionable investment vehicles, by
overly jubilant financial reporters who conveniently did not do enough to
question the conventional wisdom of the bubble build-up phase, by politicians that did not sufficiently exercise
their supervisory powers over Fannie Mae and Freddy Mac, and by central bank officials who did not do enough
to stop banks like BearStearns and others from taking on an excessive risk.

All these incidents lead us to believe, that it is high time for private financial players to finally accept, that their
earlier logic according to which it’s entirely up to others, i.e. the government, the central bank or the self-healing
forces of a free market, to preserve an economic balance whereas they themselves have no other obligation to
the common good than to maximize their profits is flawed. Instead we trust that even hard-knuckled capitalists will
eventually see the light and understand that a sustainable profit can only be made if their business activities are
de facto based on a balanced Golden Rule approach.
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