Been There, Seen That
It’s been a grim couple of weeks out there. Personally, I’ve had more déjà vu than I’ve seen in a long time, as Yogi Berra might have said, especially after losing a string of tough doubleheaders.
My own sobering twin bill has consisted of revisiting, in recent days, graphic foreshadowing of (1) the energy crisis, and (2) the economic meltdown.
I’ve been rereading Energy Future, HBS professor emeritus Robert Stobaugh’s 1979 best-seller that predicted America’s dependence on foreign oil could well lead the country into serious geopolitical and economic peril. The book also suggested that global warming was a looming catastrophe. Lo and behold, here we are in 2008: war in oil-rich Iraq, $4 a gallon gasoline, an economy in free fall, and melting ice caps.
On the economic front, the recent 500-point drop in the Dow in one day recalled Black Monday’s 504-point plunge on October 19, 1987. We ran a Bulletin article (PDF, 4mb) a few months after that, in April 1988, in which we printed highlights from a roundtable conversation of HBS professors discussing that October crash. Twenty years later, it is still instructive, and provocative, to read. Here, for example, is panelist HBS professor emeritus Sam Hayes:
“The October 19 crash also calls into question the de facto rules and regulations that we’ve been working with for the last fifty years or so…and how far we have come from the assumptions underlying the reform legislation of the 1930s….We need a thorough rethinking not only of the appropriate market structure for raising capital, but of the role of government and regulatory oversight in managing those structures.”
And here is another panelist, HBS professor Joe Bower: “To what extent here at HBS are we researching these worrisome trends in many of our banking institutions? Are we talking loudly enough about what we are finding? We tend sometimes at HBS not to write the final chapter, in which we’re critical. We tend to be polite.”
Ironically, in the current September issue of the Bulletin, in a conversation that predated Wall Street’s implosion, Bower examines possible threats to market capitalism. He will also lead sessions on the topic at the upcoming Business Summit at HBS in October, when no doubt new and pressing dangers will be the subject of passionate discussion. But sadly, at the end of the day, much of it may sound all too much like eerie echoes of the past.
