Jeff Immelt, Chairman and CEO at GE …

JEFF IMMELT: On May 20th, I delivered the keynote at New York University’s Stern Business School convocation. Here are excerpts from my message to the graduates. 

Preparing for What’s Next

We’re in a volatile, global economy — the most uncertain I have ever seen. There is distrust of institutions. Protectionism is rising. Globalization is being attacked as never before. For those looking to succeed, the playbook from the past just won’t cut it. It’s time to pivot, be bold, and not fear criticism. 

I built my career at GE in a time when productivity, innovation and globalization were the way to win. When I joined the company in 1982, 80 percent of our revenue came from the U.S. Now, 70 percent of our revenue will be global. We have customers in more than 180 countries. We export over $20 billion worth of goods to the world each year. We have become woven into the global economy.

https://i1.wp.com/breakingenergy.com/wp-content/uploads/sites/2/2014/02/138888099.jpg?resize=656%2C437

You would think that companies like GE that give people good jobs, make good products, and contribute to their communities would be valued. That governments would try to nurture growth and address big problems like income inequality and unemployment. That global integration would be seen as a force of good and would continue to grow.

You would be wrong. Today, big companies are distrusted; governments and global institutions are failing to address the world’s challenges; and globalization is being attacked as never before.

This is not just true for the U.S., but everywhere. These sentiments have traction in Europe and Latin America, on both the right and the left. The future of the EU is an open question. Protectionist barriers are rising in Asia and Africa. China is repositioning its economy to be more sustainable and inclusive.

The global economy is growing too slowly, and many people feel left behind. Some workers have been displaced by outsourcing, the middle class has been squeezed, and income inequality has risen to unacceptable levels. As technology and globalization race forward, people understandably fear their impact on jobs and incomes, and distrust the motives of companies and government.

There are many causes, and business bears some blame. Productivity has slowed to a crawl and capital investment is declining. Financing is more difficult to get, particularly for infrastructure projects. Investment is required for productivity, which in turn, supports higher wages.

Part of the fault also lies with technology. Innovation has driven growth but also leads to greater instability. The internet can connect people, but doesn’t necessarily give them jobs. Technology has raised the competitive requirements for companies and people. This exacerbates economic insecurity.

Finally, Government is also responsible. In the U.S., regulation has expanded while infrastructure has lagged. Our trade deals are languishing in Congress, and we remain the only developed country in the world without a functioning Export Bank. Our tax code is 30 years old; our immigration system is broken; and a huge structural deficit clouds the future. In the face of this headwind, we are having a raucous Presidential election where every candidate is a protectionist, and globalization is being blamed for unemployment and wage inequality.

Globalization is still essential to growth. But, the globalization I knew, based on trade and global integration, is changing, which is why it’s time for a bold pivot. And in the face of a protectionist global environment, flexible thinking is required, and companies must navigate the world on their own. We must level the playing field, without government engagement. This requires dramatic transformation. This is how we will lead:

We will localize. In the future, sustainable growth will require a local capability inside a global footprint. At GE, we will always be a strong American manufacturer, but we also have built factories in China, India, South Africa, Nigeria, Hungary and elsewhere around the world. We are managing extended supply chains. We are not pursuing low wages; we are using a manufacturing strategy to open markets. We will produce for the U.S. in the U.S, but our exports may decline. At the same time, we will localize production in big, end-use markets like Saudi Arabia.

Our competitive advantage is digital productivity. When we digitize power plants and hospitals by connecting them to the Industrial Internet, we improve global productivity. In Pakistan, we are using analytics to improve energy efficiency and expanding capacity. In India, we can use the internet to deliver healthcare to remote regions. In China, engine analytics are improving airline productivity. Every industrial company must also be a digital leader. This is the next wave of competitiveness.

We accelerate growth by solving local problems. We can make the world work better when we innovate to solve problems with local capability. Our GE technologists around the world have come up with new ways to produce cleaner energy that’s more accessible and to give remote communities access to healthcare. Solutions from the developing world improve outcomes in developed markets.

Financing is the new oxygen of global growth. Capital is the fuel for globalization of the future. We have positioned GE to capitalize on investment flows from new sources. China’s “One Belt One Road” initiative is building new relationships in Central Asia, the Middle East and Africa. Most countries are increasing their export financing. We’ve learned how to invest in these countries, access those pools of capital to support export growth. This is critical as we cannot count on the U.S. EXIM Bank. Companies need to globalize on their own and control our destiny.

Winning requires simpler organizations. Change requires new business models that are leaner, faster, more decentralized. Complex and centralized bureaucracies are obsolete. GE is pushing capability to local teams who are empowered to take risks without second guessing.

We tend to think of globalization as a philosophy, but it is much more about what you do on the ground. Success requires hundreds of little things, and decisions made with a local context. A good global leader has an appreciation for how people do their work in a local culture. They try to make a teams’ work meaningful to their country. This allows us to hire the best talent in every country where we compete.

By taking these bold actions — by pivoting — I am confident we can continue to grow. One thing I know about globalization is that there will always be plenty of critics. Early in my career, I worried way too much about what people thought. Over time I realized that progress counts for more than perfection and that anything worthwhile takes persistence and resilience.

My shield consists of competency, hard work and fairness. I run a meritocracy with the highest standards. Discrimination has no place in business — in the U.S. or anywhere else in the world. Similarly, our factory teams know that, while we cannot guarantee markets, we can guarantee effort; we always play to win.

So be flexible, be bold, don’t fear criticism. We are going through a transformational change in globalization, which will require fresh, new thinking. Our goal is to build an economic ecosystem that is the most competitive in the world. To create great jobs through private enterprise and ingenuity. To give back competency and innovation directed at solving the world’s toughest problems. There is nothing elitist, or establishment, about this task. Only by being in the arena can you create work for others.

The discord we see in the U.S. today is primarily due to slow growth and the wealth discrepancy it creates. This problem will not be solved by any bureaucracy. It requires leaders who see the world as it is and are willing to drive change.

Are you being hypnotized by your smartphone?

FROM:  MEDIUM CORPORATION:

— Estimated reading time: 12 minutes. It’s worth it to save your sanity!!

Tristan Harris is an expert on how technology hijacks our psychological vulnerabilities. That’s why he spent the last three years as Google’s Design Ethicist caring about how to design things in a way that defends a billion people’s minds from getting hijacked 。。。

 

When using technology, we often focus optimistically on all the things it does for us. But I want you to show you where it might do the opposite.

Where does technology exploit our minds’ weaknesses?

I learned to think this way when I was a magician. Magicians start by looking for blind spots, edges, vulnerabilities and limits of people’s perception, so they can influence what people do without them even realizing it. Once you know how to push people’s buttons, you can play them like a piano.

 

That’s me performing sleight of hand magic at my mother’s birthday party

And this is exactly what product designers do to your mind. They play your psychological vulnerabilities (consciously and unconsciously) against you in the race to grab your attention.

I want to show you how they do it.

Hijack #1: If You Control the Menu, You Control the Choices

 

Western Culture is built around ideals of individual choice and freedom. Millions of us fiercely defend our right to make “free” choices, while we ignore how we’re manipulated upstream by limited menus we didn’t choose.

This is exactly what magicians do. They give people the illusion of free choice while architecting the menu so that they win, no matter what you choose. I can’t emphasize enough how deep this insight is.

When people are given a menu of choices, they rarely ask:

  • “what’s not on the menu?”

  • “why am I being given these options and not others?”

  • “do I know the menu provider’s goals?”

  • “is this menu empowering for my original need, or are the choices actually a distraction?” (e.g. an overwhelmingly array of toothpastes)

 

How empowering is this menu of choices for the need, “I ran out of toothpaste”?

For example, imagine you’re out with friends on a Tuesday night and want to keep the conversation going. You open Yelp to find nearby recommendations and see a list of bars. The group turns into a huddle of faces staring down at their phones comparing bars. They scrutinize the photos of each, comparing cocktail drinks. Is this menu still relevant to the original desire of the group?

It’s not that bars aren’t a good choice, it’s that Yelp substituted the group’s original question (“where can we go to keep talking?”) with a different question (“what’s a bar with good photos of cocktails?”) all by shaping the menu.

Moreover, the group falls for the illusion that Yelp’s menu represents a complete set of choices for where to go. While looking down at their phones, they don’t see the park across the street with a band playing live music. They miss the pop-up gallery on the other side of the street serving crepes and coffee. Neither of those show up on Yelp’s menu.

 

Yelp subtly reframes the group’s need “where can we go to keep talking?” in terms of photos of cocktails served.

The more choices technology gives us in nearly every domain of our lives (information, events, places to go, friends, dating, jobs) – the more we assume that our phone is always the most empowering and useful menu to pick from. Is it?

The “most empowering” menu is different than the menu that has the most choices. But when we blindly surrender to the menus we’re given, it’s easy to lose track of the difference:

  • “Who’s free tonight to hang out?” becomes a menu of most recent people who texted us (who we could ping).

  • “What’s happening in the world?” becomes a menu of news feed stories.

  • “Who’s single to go on a date?” becomes a menu of faces to swipe on Tinder (instead of local events with friends, or urban adventures nearby).

  • “I have to respond to this email.” becomes a menu of keys to type a response (instead of empowering ways to communicate with a person).

 

All user interfaces are menus. What if your email client gave you empowering choices of ways to respond, instead of “what message do you want to type back?” (Design by Tristan Harris)

When we wake up in the morning and turn our phone over to see a list of notifications – it frames the experience of “waking up in the morning” around a menu of “all the things I’ve missed since yesterday.”

 

A list of notifications when we wake up in the morning – how empowering is this menu of choices when we wake up? Does it reflect what we care about? (credit to Joe Edelman)

By shaping the menus we pick from, technology hijacks the way we perceive our choices and replaces them with new ones. But the closer we pay attention to the options we’re given, the more we’ll notice when they don’t actually align with our true needs.

Hijack #2: Put a Slot Machine In a Billion Pockets

If you’re an app, how do you keep people hooked? Turn yourself into a slot machine.

The average person checks their phone 150 times a day. Why do we do this? Are we making 150 conscious choices?

 

How often do you check your email per day?

One major reason why is the #1 psychological ingredient in slot machines: intermittent variable rewards.

If you want to maximize addictiveness, all tech designers need to do is link a user’s action (like pulling a lever) with a variable reward. You pull a lever and immediately receive either an enticing reward (a match, a prize!) or nothing. Addictiveness is maximized when the rate of reward is most variable.

Does this effect really work on people? Yes. Slot machines make more money in the United States than baseball, movies, and theme parks combined. Relative to other kinds of gambling, people get ‘problematically involved’ with slot machines 3—4x faster according to NYU professor Natasha Dow Shull, author of Addiction by Design.

But here’s the unfortunate truth – several billion people have a slot machine their pocket:

  • When we pull our phone out of our pocket, we’re playing a slot machine to see what notifications we got.

  • When we pull to refresh our email, we’re playing a slot machine to see what new email we got.

  • When we swipe down our finger to scroll the Instagram feed, we’re playing a slot machine to see what photo comes next.

  • When we swipe faces left/right on dating apps like Tinder, we’re playing a slot machine to see if we got a match.

  • When we tap the # of red notifications, we’re playing a slot machine to what’s underneath.

 

Apps and websites sprinkle intermittent variable rewards all over their products because it’s good for business.

But in other cases, slot machines emerge by accident. For example, there is no malicious corporation behind all of email who consciously chose to make it a slot machine. No one profits when millions check their email and nothing’s there. Neither did Apple and Google’s designers want phones to work like slot machines. It emerged by accident.

But now companies like Apple and Google have a responsibility to reduce these effects by converting intermittent variable rewards into less addictive, more predictable ones with better design. For example, they could empower people to set predictable times during the day or week for when they want to check “slot machine” apps, and correspondingly adjust when new messages are delivered to align with those times.

Hijack #3: Fear of Missing Something Important (FOMSI)

Another way apps and websites hijack people’s minds is by inducing a “1% chance you could be missing something important.”

If I convince you that I’m a channel for important information, messages, friendships, or potential sexual opportunities – it will be hard for you to turn me off, unsubscribe, or remove your account – because (aha, I win) you might miss something important:

  • This keeps us subscribed to newsletters even after they haven’t delivered recent benefits (“what if I miss a future announcement?”)

  • This keeps us “friended” to people with whom we haven’t spoke in ages (“what if I miss something important from them?”)

  • This keeps us swiping faces on dating apps, even when we haven’t even met up with anyone in a while (“what if I miss that one hot match who likes me?”)

  • This keeps us using social media (“what if I miss that important news story or fall behind what my friends are talking about?”)

But if we zoom into that fear, we’ll discover that it’s unbounded: we’ll always miss something important at any point when we stop using something.

  • There are magic moments on Facebook we’ll miss by not using it for the 6th hour (e.g. an old friend who’s visiting town right now).

  • There are magic moments we’ll miss on Tinder (e.g. our dream romantic partner) by not swiping our 700th match.

  • There are emergency phone calls we’ll miss if we’re not connected 24/7.

But living moment to moment with the fear of missing something isn’t how we’re built to live.

And it’s amazing how quickly, once we let go of that fear, we wake up from the illusion. When we unplug for more than a day, unsubscribe from those notifications, or go to Camp Grounded – the concerns we thought we’d have don’t actually happen.

We don’t miss what we don’t see.

The thought, “what if I miss something important?” is generated in advance of unplugging, unsubscribing, or turning off –  not after. Imagine if tech companies recognized that, and helped us proactively tune our relationships with friends and businesses in terms of what we define as “time well spent” for our lives, instead of in terms of what we might miss.

Hijack #4: Social Approval

 

Easily one of the most persuasive things a human being can receive.

We’re all vulnerable to social approval. The need to belong, to be approved or appreciated by our peers is among the highest human motivations. But now our social approval is in the hands of tech companies.

When I get tagged by my friend Marc, I imagine him making a conscious choice to tag me. But I don’t see how a company like Facebook orchestrated his doing that in the first place.

Facebook, Instagram or SnapChat can manipulate how often people get tagged in photos by automatically suggesting all the faces people should tag (e.g. by showing a box with a 1-click confirmation, “Tag Tristan in this photo?”).

So when Marc tags me, he’s actually responding to Facebook’s suggestion, not making an independent choice. But through design choices like this, Facebook controls the multiplier for how often millions of people experience their social approval on the line.

 

Facebook uses automatic suggestions like this to get people to tag more people, creating more social externalities and interruptions.

The same happens when we change our main profile photo – Facebook knows that’s a moment when we’re vulnerable to social approval: “what do my friends think of my new pic?” Facebook can rank this higher in the news feed, so it sticks around for longer and more friends will like or comment on it. Each time they like or comment on it, we’ll get pulled right back.

Everyone innately responds to social approval, but some demographics (teenagers) are more vulnerable to it than others. That’s why it’s so important to recognize how powerful designers are when they exploit this vulnerability.

 

Hijack #5: Social Reciprocity (Tit-for-tat)

  • You do me a favor, now I owe you one next time.

  • You say, “thank you”– I have to say “you’re welcome.”

  • You send me an email– it’s rude not to get back to you.

  • You follow me – it’s rude not to follow you back. (especially for teenagers)

We are vulnerable to needing to reciprocate others’ gestures. But as with Social Approval, tech companies now manipulate how often we experience it.

In some cases, it’s by accident. Email, texting and messaging apps are social reciprocity factories. But in other cases, companies exploit this vulnerability on purpose.

LinkedIn is the most obvious offender. LinkedIn wants as many people creating social obligations for each other as possible, because each time they reciprocate (by accepting a connection, responding to a message, or endorsing someone back for a skill) they have to come back to linkedin.com where they can get people to spend more time.

Like Facebook, LinkedIn exploits an asymmetry in perception. When you receive an invitation from someone to connect, you imagine that person making a conscious choice to invite you, when in reality, they likely unconsciously responded to LinkedIn’s list of suggested contacts. In other words, LinkedIn turns your unconscious impulses (to “add” a person) into new social obligations that millions of people feel obligated to repay. All while they profit from the time people spend doing it.

 

Imagine millions of people getting interrupted like this throughout their day, running around like chickens with their heads cut off, reciprocating each other – all designed by companies who profit from it.

Welcome to social media.

 

After accepting an endorsement, LinkedIn takes advantage of your bias to reciprocate by offering *four* additional people for you to endorse in return.

Imagine if technology companies had a responsibility to minimize social reciprocity. Or if there was an “FDA for Tech” that monitored when technology companies abused these biases?

 

Hijack #6: Bottomless bowls, Infinite Feeds, and Autoplay

 

YouTube autoplays the next video after a countdown

Another way to hijack people is to keep them consuming things, even when they aren’t hungry anymore.

How? Easy. Take an experience that was bounded and finite, and turn it into a bottomless flow that keeps going.

Cornell professor Brian Wansink demonstrated this in his study showing you can trick people into keep eating soup by giving them a bottomless bowl that automatically refills as they eat. With bottomless bowls, people eat 73% more calories than those with normal bowls and underestimate how many calories they ate by 140 calories.

Tech companies exploit the same principle. News feeds are purposely designed to auto-refill with reasons to keep you scrolling, and purposely eliminate any reason for you to pause, reconsider or leave.

It’s also why video and social media sites like Netflix, YouTube or Facebook autoplay the next video after a countdown instead of waiting for you to make a conscious choice (in case you won’t). A huge portion of traffic on these websites is driven by autoplaying the next thing.

 
 

Facebook autoplays the next video after a countdown

Tech companies often claim that “we’re just making it easier for users to see the video they want to watch” when they are actually serving their business interests. And you can’t blame them, because increasing “time spent” is the currency they compete for.

Instead, imagine if technology companies empowered you to consciously bound your experience to align with what would be “time well spent” for you. Not just bounding the quantity of time you spend, but the qualities of what would be “time well spent.”

Hijack #7: Instant Interruption vs. “Respectful” Delivery

Companies know that messages that interrupt people immediately are more persuasive at getting people to respond than messages delivered asynchronously (like email or any deferred inbox).

Given the choice, Facebook Messenger (or WhatsApp, WeChat or SnapChat for that matter) would prefer to design their messaging system to interrupt recipients immediately (and show a chat box) instead of helping users respect each other’s attention.

In other words, interruption is good for business.

It’s also in their interest to heighten the feeling of urgency and social reciprocity. For example, Facebook automatically tells the sender when you “saw” their message, instead of letting you avoid disclosing whether you read it (“now that you know I’ve seen the message, I feel even more obligated to respond.”)

By contrast, Apple more respectfully lets users toggle “Read Receipts” on or off.

The problem is, maximizing interruptions in the name of business creates a tragedy of the commons, ruining global attention spans and causing billions of unnecessary interruptions each day. This is a huge problem we need to fix with shared design standards (potentially, as part of Time Well Spent).

Hijack #8: Bundling Your Reasons with Their Reasons

Another way apps hijack you is by taking your reasons for visiting the app (to perform a task) and make them inseparable from the app’s business reasons (maximizing how much we consume once we’re there).

For example, in the physical world of grocery stories, the #1 and #2 most popular reasons to visit are pharmacy refills and buying milk. But grocery stores want to maximize how much people buy, so they put the pharmacy and the milk at the back of the store.

In other words, they make the thing customers want (milk, pharmacy) inseparable from what the business wants. If stores were truly organized to support people, they would put the most popular items in the front.

Tech companies design their websites the same way. For example, when you you want to look up a Facebook event happening tonight (your reason) the Facebook app doesn’t allow you to access it without first landing on the news feed (their reasons), and that’s on purpose. Facebook wants to convert every reason you have for using Facebook, into their reason which is to maximize the time you spend consuming things.

In an ideal world, apps would always give you a direct way to get what you want separately from what they want.

Imagine a digital “bill of rights” outlining design standards that forced the products used by billions of people to support empowering ways for them to navigate toward their goals.

Hijack #9: Inconvenient Choices

We’re told that it’s enough for businesses to “make choices available.”

  • “If you don’t like it you can always use a different product.”

  • “If you don’t like it, you can always unsubscribe.”

  • “If you’re addicted to our app, you can always uninstall it from your phone.”

Businesses naturally want to make the choices they want you to make easier, and the choices they don’t want you to make harder. Magicians do the same thing. You make it easier for a spectator to pick the thing you want them to pick, and harder to pick the thing you don’t.

For example, NYTimes.com lets you “make a free choice” to cancel your digital subscription. But instead of just doing it when you hit “Cancel Subscription,” they send you an email with information on how to cancel your account by calling a phone number that’s only open at certain times.

 

NYTimes claims it’s giving a free choice to cancel your account

Instead of viewing the world in terms of availability of choices, we should view the world in terms of friction required to enact choices. Imagine a world where choices were labeled with how difficult they were to fulfill (like coefficients of friction) and there was an FDA for Tech that labeled these difficulties and set standards for how easy navigation should be.

Hijack #10: Forecasting Errors, “Foot in the Door” strategies

 

Facebook promises an easy choice to “See Photo.” Would we still click if it gave the true price tag?

Lastly, apps can exploit people’s inability to forecast consequences of a click.

People don’t intuitively forecast the true cost of a click when it’s presented to them. Sales people use “foot in the door” techniques by asking for a small innocuous request to begin with (“just one click to see which tweet got retweeted”) and escalate from there (“why don’t you stay awhile?”). Virtually all engagement websites use this trick.

Imagine if web browsers and smartphones, the gateways through which people make these choices, were truly watching out for people and helped them forecast the consequences of clicks (based on real data about what it actually costs most people?).

That’s why I add “Estimated reading time” to the top of my posts. When you put the “true cost” of a choice in front of people, you’re treating your users or audience with dignity and respect. In a Time Well Spent internet, choices could be framed in terms of projected cost and benefit, so people were empowered to make informed choices by default, not by doing extra work.

 
TripAdvisor uses a “foot in the door” technique by asking for a single click review (“How many stars?”) while hiding the three page survey of questions behind the click.

Summary And How We Can Fix This

Are you upset that technology hijacks your agency? I am too. I’ve listed a few techniques but there are literally thousands. Imagine whole bookshelves, seminars, workshops and trainings that teach aspiring tech entrepreneurs techniques like this. They exist.

The ultimate freedom is a free mind, and we need technology that’s on our team to help us live, feel, think and act freely.

We need our smartphones, notifications screens and web browsers to be exoskeletons for our minds and interpersonal relationships that put our values, not our impulses, first. People’s time is valuable. And we should protect it with the same rigor as privacy and other digital rights.

Tristan Harris was Product Philosopher at Google until 2016 where he studied how technology affects a billion people’s attention, wellbeing and behavior. For more resources on Time Well Spent, see http://timewellspent.io.

 

Customer Lab: WOMBAT SELLING

Nothing has changed the business environment more than the WWW, in the last 20 years. With the Apple platform and its glittering array of devices supporting the online Google, Facebook and Twitter portals the customer is not only right … the customer rules!

24-7-visibility

Customers today, in their own right, are global publishers, broadcasters, niche marketers, content-providers and network producers and they are well aware of the fact. It’s business heaven 24/7.

This environment is the ultimate laboratory for experimenting with customers. The problem is that many sales and businesspeople have been far too slow in adapting to this new environment.

To help salespeople and businesspeople solve this problem I’ve written WOMBAT Selling: How to sell by Word of Mouth.

— FREE BOOK: Click here to request your own copy of the ebook “WOMBAT Selling: How to sell by Word of Mouth”

– A WOMBAT is a satisfied customer who replicates another satisfied customer. Replicate. Replicate. Replicate.

– W.O.M.B.A.T. = Word Of Mouth Buy And Tell.

– A WOMBAT is a customer who is so satisfied about your offer or your business communication that she/he passes it on to those in his/her business or social network. Pass it on. Pass it on. Pass it on.

— FREE BOOK: Click here to request your own copy of the ebook “WOMBAT Selling: How to sell by Word of Mouth”

What is a thinker?

A thinker is a sovereign individual who consciously values the natural rights of thinkers. The School of Thinking supports the natural rights of thinkers. Here are ten thinkers rights which are supported by the School of Thinking.

A Universal Declaration of Thinkers Rights

 

1. As thinkers, we have the right to use thinking in a quiet and confident manner.
2. As thinkers, we have the right to have pride in our thinking skill.
3. As thinkers, we have the right to use that skill and to consider a “thinking reaction” rather than a reaction based on emotion or experience alone. The thinking might make use of experience and emotion, but these would be part of the thinking instead of controlling it.
4. A thinker has the right to escape from current views of situations and to search for much better views of situations.
 
5. A thinker has the universal right to be wrong.
6. A thinker does not have to defend a point of view at all costs. There is the right to see other points of view and the right to design a much better decision.
7. A thinker has the right to acquire wisdom or to seek it out wherever it may be found. Wisdom is quite distinct from the sort of cleverness that is taught in school. Cleverness may be useful for dealing with set puzzles or defending local truths but wisdom is required for designing a safer future.
8. A thinker has the right to get on with his or her own work and to get along with other thinkers and if things go wrong a thinker has the right to think things through and to fix them without creating a fuss.
9. A thinker has the right to spell out the factors involved in a situation and also the reasons behind a decision.
10. Above all, a thinker has the right to be asked to think about something, to focus thinking in a deliberate manner upon any subject. Thinking can be used as a tool by the thinker at will. The use of this tool can be enjoyable whatever the outcome. This applied thinking is practical—the sort of thinking that is required to get things done.
– Adapted from the Learn-To-Think Coursebook and Instructors Manual © 1982 Michael Hewitt-Gleeson and Edward de Bono, Capra New USA.

A Commencement Address by By Maria Popova

On the Soul-Sustaining Necessity of Resisting Self-Comparison and Fighting Cynicism: A Commencement Address

“In its passivity and resignation, cynicism is a hardening, a calcification of the soul. Hope is a stretching of its ligaments, a limber reach for something greater.”

I have long relished the commencement address as one of our few cultural forms that render us receptive to sincerity – receptive to messages we might dismiss as trite in any other context, but which we recognize here as the life-earned truth of the human being at the podium, shared in a spirit of goodwill with a group of young humans just starting out on the truth-earning gauntlet called life.

So I was thrilled to deliver the address to the 2016 graduating class at the University of Pennsylvania’s Annenberg School for Communication, my own alma mater. Speech text below.

annenberg_commencement

I want to talk to you today about the soul. Not the soul as that immortal unit of religious mythology, for I am a nonbeliever. And not the soul as a pop-culture commodity, that voracious consumer of self-help chicken soup. I mean the soul simply as shorthand for the seismic core of personhood from which our beliefs, our values, and our actions radiate.

I live in New York, where something extraordinary happens every April. In the first days of spring, those days when the air turns from blistering to balmy, a certain gladness envelops the city – people actually look up from their screens while walking and strangers smile at each other. For a few short days, it’s like we remember how we can live and who we’re capable of being to one another.

I also practically live on my bike – that’s how I get everywhere – and the other week, on one of those first days of spring, I was riding from Brooklyn to Harlem. I had somewhere to be and was pedaling pretty fast – which I like doing and must admit I take a certain silly pride in – but I was also very much enjoying the ride and the river and the spring air that smelled of plum blossoms. And then, I sensed someone behind me in the bike path, catching up, going even faster than I was going. It suddenly felt somehow competitive. He was trying to overtake me. I pedaled faster, but he kept catching up. Eventually, he did overtake me – and I felt strangely defeated.

But as he cruised past me, I realized the guy was on an electric bike. I felt both a sort of redemption and a great sense of injustice – unfair motorized advantage, very demoralizing to the honest muscle-powered pedaler. But just as I was getting all self-righteously existential, I noticed something else – he had a restaurant’s name on his back. He was food delivery guy. He was rushing past me not because he was trying to slight me, or because he had some unfair competitive advantage in life, but because this was his daily strife – this is how this immigrant made his living.

My first response was to shame myself into gratitude for how fortunate I’ve been – because I too am an immigrant from a pretty poor country and it’s some miraculous confluence of choice and chance that has kept me from becoming a food delivery person on an electric bike in order to survive in New York City. And perhaps the guy has a more satisfying life than I do – perhaps he had a good mother and goes home to the love of his life and plays the violin at night. I don’t know, and I never will. But the point is that the second I begin comparing my pace to his, my life to his, I’m vacating my own experience of that spring day and ejecting myself into a sort of limbo of life that is neither mine nor his.

I grew up in Bulgaria and my early childhood was spent under a communist dictatorship. But for all its evils, communism had one silver lining – when everyone had very little, no one felt like somebody else was cruising past them motorized by privilege.

I came to Penn straight from Bulgaria, through that same confluence of chance and choice (and, yes, a lot of very, very hard work – I don’t want to minimize the importance of that, but I also don’t want to imply that people who end up on the underprivileged end of life haven’t worked hard enough, because this is one of our most oppressive cultural myth and reality is so much more complex). In any case: When I came to Penn, I had an experience very different from my childhood. Suddenly, as I was working four jobs to pay for school, I felt like everybody else was on an electric bike and I was just pedaling myself into the ground.

This, of course, is what happens in every environment densely populated by so-called peers – self-comparison becomes inevitable. Financial inequality was just my particular poison, but we do it along every imaginable axis of privilege and every dimension of identity – intelligence, beauty, athleticism, charisma that entrances the Van Pelt librarians into pardoning your late fees.

But here’s the thing about self-comparison: In addition to making you vacate your own experience, your own soul, your own life, in its extreme it breeds resignation. If we constantly feel that there is something more to be had – something that’s available to those with a certain advantage in life, but which remains out of reach for us – we come to feel helpless. And the most toxic byproduct of this helpless resignation is cynicism – that terrible habit of mind and orientation of spirit in which, out of hopelessness for our own situation, we grow embittered about how things are and about what’s possible in the world. Cynicism is a poverty of curiosity and imagination and ambition.

Today, the soul is in dire need of stewardship and protection from cynicism. The best defense against it is vigorous, intelligent, sincere hope – not blind optimism, because that too is a form of resignation, to believe that everything will work out just fine and we need not apply ourselves. I mean hope bolstered by critical thinking that is clear-headed in identifying what is lacking, in ourselves or the world, but then envisions ways to create it and endeavors to do that.

In its passivity and resignation, cynicism is a hardening, a calcification of the soul. Hope is a stretching of its ligaments, a limber reach for something greater.

You are about to enter the ecosystem of cultural production. Most of you will go into journalism, media, policy, or some blurry blob of the increasingly amorphous Venn diagram of these forces that shape culture and public opinion. Whatever your specific vocation, your role as a creator of culture will be to help people discern what matters in the world and why by steering them away from the meaningless and toward the meaningful. E.B. White said that the role of the writer is to lift people up, not to lower them down, and I believe that’s the role of every journalist and artist and creator of culture.

Strive to be uncynical, to be a hope-giving force, to be a steward of substance. Choose to lift people up, not to lower them down – because it is a choice, always, and because in doing so you lift yourself up.

Develop an inner barometer for your own value. Resist pageviews and likes and retweets and all those silly-sounding quantification metrics that will be obsolete within the decade. Don’t hang the stability of your soul on them. They can’t tell you how much your work counts for and to whom. They can’t tell you who you are and what you’re worth. They are that demoralizing electric bike that makes you feel if only you could pedal faster – if only you could get more pageviews and likes and retweets – you’d be worthier of your own life.

You will enter a world where, whatever career you may choose or make for yourself – because never forget that there are jobs you can get and jobs you can invent – you will often face the choice of construction and destruction, of building up or tearing down.

Among our most universal human longings is to affect the world with our actions somehow, to leave an imprint with our existence. Both construction and destruction leave a mark and give us a sense of agency in the world. Now, destruction is necessary sometimes – damaged and damaging systems need to be demolished to clear the way for more enlivening ones. But destruction alone, without construction to follow it, is hapless and lazy. Construction is far more difficult, because it requires the capacity to imagine something new and better, and the willingness to exert ourselves toward building it, even at the risk of failure. But that is also far more satisfying in the end.

You may find your fate forked by construction and destruction frequently, in ways obvious or subtle. And you will have to choose between being the hammer-wielding vandal, who may attain more immediate results – more attention – by tearing things and people and ideas down, or the sculptor of culture, patiently chiseling at the bedrock of how things are to create something new and beautiful and imaginative following a nobler vision, your vision, of how things can and should be.

Some active forms of destruction are more obvious and therefore, to the moral and well-intentioned person, easier to resist. It’s hard not to notice that there’s a hammer before you and to refuse to pick it up. But there are passive forms of destruction far more difficult to detect and thus to safeguard against, and the most pernicious of them is cynicism.

Our culture has created a reward system in which you get points for tearing down rather than building up, and for besieging with criticism and derision those who dare to work and live from a place of constructive hope. Don’t just resist cynicism – fight it actively, in yourself and in those you love and in the communication with which you shape culture. Cynicism, like all destruction, is easy, it’s lazy. There is nothing more difficult yet more gratifying in our society than living with sincere, active, constructive hope for the human spirit. This is the most potent antidote to cynicism, and it is an act of courage and resistance today.

It is also the most vitalizing sustenance for your soul.

But you – you – are in a very special position, leaving Annenberg, because your courage and resistance are to be enacted not only in the privacy of your inner life but in your outer contribution to public life. You are the creators of tomorrow’s ideas and ideals, the sculptors of public opinion and of culture. As long as we feed people buzz, we cannot expect their minds to produce symphonies. Never let the temptation of marketable mediocrity and easy cynicism rob you of the chance to ennoble public life and enlarge the human spirit – because we need that badly today, and because you need it badly for the survival of your soul.

So as you move through life, pedal hard – because that’s how you get places, and because it’s fun and so incredibly gratifying to propel yourself forward by your own will and power of intention. But make sure the pace of your pedaling answers only to your own standards of vigor. Remain uncynical and don’t waste any energy on those who pass you by on their electric bikes, because you never know what strife is driving them and, most of all, because the moment you focus on that, you vacate your own soul.

Instead, pedal forth – but also remember to breathe in the spring air and to smile at a stranger every once in a while. Because there is nothing more uncynical than being good to one another.

Thank you and congratulations.

This is the best article I’ve read this year on the wicked problem of ‘short-term’ thinking!

This article is by Rana Foroohar who is TIME’s assistant managing editor in charge of economics and business.

How Wall Street is choking our economy and how to fix it

A couple of weeks ago, a poll conducted by the Harvard Institute of Politics found something startling: only 19% of Americans ages 18 to 29 identified themselves as “capitalists.” In the richest and most market-oriented country in the world, only 42% of that group said they “supported capitalism.” The numbers were higher among older people; still, only 26% considered themselves capitalists. A little over half supported the system as a whole.

Illustration by Lon Tweeten

This represents more than just millennials not minding the label “socialist” or disaffected middle-aged Americans tiring of an anemic recovery. This is a majority of citizens being uncomfortable with the country’s economic foundation–a system that over hundreds of years turned a fledgling society of farmers and prospectors into the most prosperous nation in human history. To be sure, polls measure feelings, not hard market data. But public sentiment reflects day-to-day economic reality. And the data (more on that later) shows Americans have plenty of concrete reasons to question their system.

This crisis of faith has had no more severe expression than the 2016 presidential campaign, which has turned on the questions of who, exactly, the system is working for and against, as well as why eight years and several trillions of dollars of stimulus on from the financial crisis, the economy is still growing so slowly. All the candidates have prescriptions: Sanders talks of breaking up big banks; Trump says hedge funders should pay higher taxes; Clinton wants to strengthen existing financial regulation. In Congress, Republican House Speaker Paul Ryan remains committed to less regulation.

All of them are missing the point. America’s economic problems go far beyond rich bankers, too-big-to-fail financial institutions, hedge-fund billionaires, offshore tax avoidance or any particular outrage of the moment. In fact, each of these is symptomatic of a more nefarious condition that threatens, in equal measure, the very well-off and the very poor, the red and the blue. The U.S. system of market capitalism itself is broken. That problem, and what to do about it, is at the center of my book Makers and Takers: The Rise of Finance and the Fall of American Business, a three-year research and reporting effort from which this piece is adapted.

To understand how we got here, you have to understand the relationship between capital markets–meaning the financial system–and businesses. From the creation of a unified national bond and banking system in the U.S. in the late 1790s to the early 1970s, finance took individual and corporate savings and funneled them into productive enterprises, creating new jobs, new wealth and, ultimately, economic growth. Of course, there were plenty of blips along the way (most memorably the speculation leading up to the Great Depression, which was later curbed by regulation). But for the most part, finance–which today includes everything from banks and hedge funds to mutual funds, insurance firms, trading houses and such–essentially served business. It was a vital organ but not, for the most part, the central one.

Capitalism How to Save It Time Magazine Cover
TIME photo-illustration

Over the past few decades, finance has turned away from this traditional role. Academic research shows that only a fraction of all the money washing around the financial markets these days actually makes it to Main Street businesses. “The intermediation of household savings for productive investment in the business sector–the textbook description of the financial sector–constitutes only a minor share of the business of banking today,” according to academics Oscar Jorda, Alan Taylor and Moritz Schularick, who’ve studied the issue in detail. By their estimates and others, around 15% of capital coming from financial institutions today is used to fund business investments, whereas it would have been the majority of what banks did earlier in the 20th century.

“The trend varies slightly country by country, but the broad direction is clear,” says Adair Turner, a former British banking regulator and now chairman of the Institute for New Economic Thinking, a think tank backed by George Soros, among others. “Across all advanced economies, and the United States and the U.K. in particular, the role of the capital markets and the banking sector in funding new investment is decreasing.” Most of the money in the system is being used for lending against existing assets such as housing, stocks and bonds.

To get a sense of the size of this shift, consider that the financial sector now represents around 7% of the U.S. economy, up from about 4% in 1980. Despite currently taking around 25% of all corporate profits, it creates a mere 4% of all jobs. Trouble is, research by numerous academics as well as institutions like the Bank for International Settlements and the International Monetary Fund shows that when finance gets that big, it starts to suck the economic air out of the room. In fact, finance starts having this adverse effect when it’s only half the size that it currently is in the U.S. Thanks to these changes, our economy is gradually becoming “a zero-sum game between financial wealth holders and the rest of America,” says former Goldman Sachs banker Wallace Turbeville, who runs a multiyear project on the rise of finance at the New York City–based nonprofit Demos.

It’s not just an American problem, either. Most of the world’s leading market economies are grappling with aspects of the same disease. Globally, free-market capitalism is coming under fire, as countries across Europe question its merits and emerging markets like Brazil, China and Singapore run their own forms of state-directed capitalism. An ideologically broad range of financiers and elite business managers–Warren Buffett, BlackRock’s Larry Fink, Vanguard’s John Bogle, McKinsey’s Dominic Barton, Allianz’s Mohamed El-Erian and others–have started to speak out publicly about the need for a new and more inclusive type of capitalism, one that also helps businesses make better long-term decisions rather than focusing only on the next quarter. The Pope has become a vocal critic of modern market capitalism, lambasting the “idolatry of money and the dictatorship of an impersonal economy” in which “man is reduced to one of his needs alone: consumption.”

During my 23 years in business and economic journalism, I’ve long wondered why our market system doesn’t serve companies, workers and consumers better than it does. For some time now, finance has been thought by most to be at the very top of the economic hierarchy, the most aspirational part of an advanced service economy that graduated from agriculture and manufacturing. But research shows just how the unintended consequences of this misguided belief have endangered the very system America has prided itself on exporting around the world.

America’s economic illness has a name: financialization. It’s an academic term for the trend by which Wall Street and its methods have come to reign supreme in America, permeating not just the financial industry but also much of American business. It includes everything from the growth in size and scope of finance and financial activity in the economy; to the rise of debt-fueled speculation over productive lending; to the ascendancy of shareholder value as the sole model for corporate governance; to the proliferation of risky, selfish thinking in both the private and public sectors; to the increasing political power of financiers and the CEOs they enrich; to the way in which a “markets know best” ideology remains the status quo. Financialization is a big, unfriendly word with broad, disconcerting implications.

America’s economic illness has a name: financialization.

University of Michigan professor Gerald Davis, one of the pre-eminent scholars of the trend, likens financialization to a “Copernican revolution” in which business has reoriented its orbit around the financial sector. This revolution is often blamed on bankers. But it was facilitated by shifts in public policy, from both sides of the aisle, and crafted by the government leaders, policymakers and regulators entrusted with keeping markets operating smoothly. Greta Krippner, another University of Michigan scholar, who has written one of the most comprehensive books on financialization, believes this was the case when financialization began its fastest growth, in the decades from the late 1970s onward. According to Krippner, that shift encompasses Reagan-era deregulation, the unleashing of Wall Street and the rise of the so-called ownership society that promoted owning property and further tied individual health care and retirement to the stock market.

The changes were driven by the fact that in the 1970s, the growth that America had enjoyed following World War II began to slow. Rather than make tough decisions about how to bolster it (which would inevitably mean choosing among various interest groups), politicians decided to pass that responsibility to the financial markets. Little by little, the Depression-era regulation that had served America so well was rolled back, and finance grew to become the dominant force that it is today. The shifts were bipartisan, and to be fair they often seemed like good ideas at the time; but they also came with unintended consequences. The Carter-era deregulation of interest rates–something that was, in an echo of today’s overlapping left-and right-wing populism, supported by an assortment of odd political bedfellows from Ralph Nader to Walter Wriston, then head of Citibank–opened the door to a spate of financial “innovations” and a shift in bank function from lending to trading. Reaganomics famously led to a number of other economic policies that favored Wall Street. Clinton-era deregulation, which seemed a path out of the economic doldrums of the late 1980s, continued the trend. Loose monetary policy from the Alan Greenspan era onward created an environment in which easy money papered over underlying problems in the economy, so much so that it is now chronically dependent on near-zero interest rates to keep from falling back into recession.

This sickness, not so much the product of venal interests as of a complex and long-term web of changes in government and private industry, now manifests itself in myriad ways: a housing market that is bifurcated and dependent on government life support, a retirement system that has left millions insecure in their old age, a tax code that favors debt over equity. Debt is the lifeblood of finance; with the rise of the securities-and-trading portion of the industry came a rise in debt of all kinds, public and private. That’s bad news, since a wide range of academic research shows that rising debt and credit levels stoke financial instability. And yet, as finance has captured a greater and greater piece of the national pie, it has, perversely, all but ensured that debt is indispensable to maintaining any growth at all in an advanced economy like the U.S., where 70% of output is consumer spending. Debt-fueled finance has become a saccharine substitute for the real thing, an addiction that just gets worse. (The amount of credit offered to American consumers has doubled in real dollars since the 1980s, as have the fees they pay to their banks.)

Let them eat credit

As the economist Raghuram Rajan, one of the most prescient seers of the 2008 financial crisis, argues, credit has become a palliative to address the deeper anxieties of downward mobility in the middle class. In his words, “let them eat credit” could well summarize the mantra of the go-go years before the economic meltdown. And things have only deteriorated since, with global debt levels $57 trillion higher than they were in 2007.

The rise of finance has also distorted local economies. It’s the reason rents are rising in some communities where unemployment is still high. America’s housing market now favors cash buyers, since banks are still more interested in making profits by trading than by the traditional role of lending out our savings to people and businesses looking to make longterm investments (like buying a house), ensuring that younger people can’t get on the housing ladder. One perverse result: Blackstone, a private-equity firm, is currently the largest single-family-home landlord in America, since it had the money to buy properties up cheap in bulk following the financial crisis. It’s at the heart of retirement insecurity, since fees from actively managed mutual funds “are likely to confiscate as much as 65% or more of the wealth that … investors could otherwise easily earn,” as Vanguard founder Bogle testified to Congress in 2014.

It’s even the reason companies in industries from autos to airlines are trying to move into the business of finance themselves. American companies across every sector today earn five times the revenue from financial activities–investing, hedging, tax optimizing and offering financial services, for example–that they did before 1980. Traditional hedging by energy and transport firms, for example, has been overtaken by profit-boosting speculation in oil futures, a shift that actually undermines their core business by creating more price volatility. Big tech companies have begun underwriting corporate bonds the way Goldman Sachs does. And top M.B.A. programs would likely encourage them to do just that; finance has become the center of all business education.

Washington, too, is so deeply tied to the ambassadors of the capital markets–six of the 10 biggest individual political donors this year are hedge-fund barons–that even well-meaning politicians and regulators don’t see how deep the problems are. When I asked one former high-level Obama Administration Treasury official back in 2013 why more stakeholders aside from bankers hadn’t been consulted about crafting the particulars of Dodd-Frank financial reform (93% of consultation on the Volcker Rule, for example, was taken with the financial industry itself), he said, “Who else should we have talked to?” The answer–to anybody not profoundly influenced by the way finance thinks–might have been the people banks are supposed to lend to, or the scholars who study the capital markets, or the civic leaders in communities decimated by the financial crisis.

Of course, there are other elements to the story of America’s slow-growth economy, including familiar trends from globalization to technology-related job destruction. These are clearly massive challenges in their own right. But the single biggest unexplored reason for long-term slower growth is that the financial system has stopped serving the real economy and now serves mainly itself. A lack of real fiscal action on the part of politicians forced the Fed to pump $4.5 trillion in monetary stimulus into the economy after 2008. This shows just how broken the model is, since the central bank’s best efforts have resulted in record stock prices (which enrich mainly the wealthiest 10% of the population that owns more than 80% of all stocks) but also a lackluster 2% economy with almost no income growth.

Now, as many top economists and investors predict an era of much lower asset-price returns over the next 30 years, America’s ability to offer up even the appearance of growth–via financially oriented strategies like low interest rates, more and more consumer credit, tax-deferred debt financing for businesses, and asset bubbles that make people feel richer than we really are, until they burst–is at an end.

This pinch is particularly evident in the tumult many American businesses face. Lending to small business has fallen particularly sharply, as has the number of startup firms. In the early 1980s, new companies made up half of all U.S. businesses.

For all the talk of Silicon Valley startups, the number of new firms as a share of all businesses has actually shrunk. From 1978 to 2012 it declined by 44%, a trend that numerous researchers and even many investors and businesspeople link to the financial industry’s change in focus from lending to speculation.

The wane in entrepreneurship means less economic vibrancy, given that new businesses are the nation’s foremost source of job creation and GDP growth. Buffett summed it up in his folksy way: “You’ve now got a body of people who’ve decided they’d rather go to the casino than the restaurant” of capitalism.

In lobbying for short-term share-boosting management, finance is also largely responsible for the drastic cutback in research-and-development outlays in corporate America, investments that are seed corn for future prosperity. Take share buybacks, in which a company–usually with some fanfare–goes to the stock market to purchase its own shares, usually at the top of the market, and often as a way of artificially bolstering share prices in order to enrich investors and executives paid largely in stock options. Indeed, if you were to chart the rise in money spent on share buybacks and the fall in corporate spending on productive investments like R&D, the two lines make a perfect X. The former has been going up since the 1980s, with S&P 500 firms now spending $1 trillion a year on buybacks and dividends–equal to about 95% of their net earnings–rather than investing that money back into research, product development or anything that could contribute to long-term company growth. No sector has been immune, not even the ones we think of as the most innovative.

Many tech firms, for example, spend far more on share-price boosting than on R&D as a whole. The markets penalize them when they don’t.

One case in point: back in March 2006, Microsoft announced major new technology investments, and its stock fell for two months. But in July of that same year, it embarked on $20 billion worth of stock buying, and the share price promptly rose by 7%. This kind of twisted incentive for CEOs and corporate officers has only grown since.

As a result, business dynamism, which is at the root of economic growth, has suffered. The number of new initial public offerings (IPOs) is about a third of what it was 20 years ago. True, the dollar value of IPOs in 2014 was $74.4 billion, up from $47.1 billion in 1996. (The median IPO rose to $96 million from $30 million during the same period.) This may show investors want to make only the surest of bets, which is not necessarily the sign of a vibrant market. But there’s another, more disturbing reason: firms simply don’t want to go public, lest their work become dominated by playing by Wall Street’s rules rather than creating real value.

An IPO–a mechanism that once meant raising capital to fund new investment–is likely today to mark not the beginning of a new company’s greatness, but the end of it. According to a Stanford University study, innovation tails off by 40% at tech companies after they go public, often because of Wall Street pressure to keep jacking up the stock price, even if it means curbing the entrepreneurial verve that made the company hot in the first place.

A flat stock price can spell doom. It can get CEOs canned and turn companies into acquisition fodder, which often saps once innovative firms. Little wonder, then, that business optimism, as well as business creation, is lower than it was 30 years ago, or that wages are flat and inequality growing. Executives who receive as much as 82% of their compensation in stock naturally make shorter-term business decisions that might undermine growth in their companies even as they raise the value of their own options.

It’s no accident that corporate stock buybacks, corporate pay and the wealth gap have risen concurrently over the past four decades. There are any number of studies that illustrate this type of intersection between financialization and inequality. One of the most striking was by economists James Galbraith and Travis Hale, who showed how during the late 1990s, changing income inequality tracked the go-go Nasdaq stock index to a remarkable degree.

Recently, this pattern has become evident at a number of well-known U.S. companies. Take Apple, one of the most successful over the past 50 years. Apple has around $200 billion sitting in the bank, yet it has borrowed billions of dollars cheaply over the past several years, thanks to superlow interest rates (themselves a response to the financial crisis) to pay back investors in order to bolster its share price. Why borrow? In part because it’s cheaper than repatriating cash and paying U.S. taxes. All the financial engineering helped boost the California firm’s share price for a while. But it didn’t stop activist investor Carl Icahn, who had manically advocated for borrowing and buybacks, from dumping the stock the minute revenue growth took a turn for the worse in late April.

It is perhaps the ultimate irony that large, rich companies like Apple are most involved with financial markets at times when they don’t need any financing. Top-tier U.S. businesses have never enjoyed greater financial resources. They have a record $2 trillion in cash on their balance sheets–enough money combined to make them the 10th largest economy in the world. Yet in the bizarre order that finance has created, they are also taking on record amounts of debt to buy back their own stock, creating what may be the next debt bubble to burst.

You and I, whether we recognize it or not, are also part of a dysfunctional ecosystem that fuels short-term thinking in business. The people who manage our retirement money–fund managers working for asset-management firms–are typically compensated for delivering returns over a year or less. That means they use their financial clout (which is really our financial clout in aggregate) to push companies to produce quick-hit results rather than execute long-term strategies. Sometimes pension funds even invest with the activists who are buying up the companies we might work for–and those same activists look for quick cost cuts and potentially demand layoffs.

It’s a depressing state of affairs, no doubt. Yet America faces an opportunity right now: a rare second chance to do the work of refocusing and right-sizing the financial sector that should have been done in the years immediately following the 2008 crisis. And there are bright spots on the horizon.

Despite the lobbying power of the financial industry and the vested interests both in Washington and on Wall Street, there’s a growing push to put the financial system back in its rightful place, as a servant of business rather than its master. Surveys show that the majority of Americans would like to see the tax system reformed and the government take more direct action on job creation and poverty reduction, and address inequality in a meaningful way. Each candidate is crafting a message around this, which will keep the issue front and center through November.

The American public understands just how deeply and profoundly the economic order isn’t working for the majority of people. The key to reforming the U.S. system is comprehending why it isn’t working.

Remooring finance in the real economy isn’t as simple as splitting up the biggest banks (although that would be a good start). It’s about dismantling the hold of financial-oriented thinking in every corner of corporate America. It’s about reforming business education, which is still permeated with academics who resist challenges to the gospel of efficient markets in the same way that medieval clergy dismissed scientific evidence that might challenge the existence of God. It’s about changing a tax system that treats one-year investment gains the same as longer-term ones, and induces financial institutions to push overconsumption and speculation rather than healthy lending to small businesses and job creators. It’s about rethinking retirement, crafting smarter housing policy and restraining a money culture filled with lobbyists who violate America’s essential economic principles.

It’s also about starting a bigger conversation about all this, with a broader group of stakeholders. The structure of American capital markets and whether or not they are serving business is a topic that has traditionally been the sole domain of “experts”–the financiers and policymakers who often have a self-interested perspective to push, and who do so in complicated language that keeps outsiders out of the debate. When it comes to finance, as with so many issues in a democratic society, complexity breeds exclusion.

Finding solutions won’t be easy. There are no silver bullets, and nobody really knows the perfect model for a high-functioning, advanced market system in the 21st century. But capitalism’s legacy is too long, and the well-being of too many people is at stake, to do nothing in the face of our broken status quo. Neatly packaged technocratic tweaks cannot fix it. What is required now is lifesaving intervention.

Crises of faith like the one American capitalism is currently suffering can be a good thing if they lead to re-examination and reaffirmation of first principles. The right question here is in fact the simplest one:

Are financial institutions doing things that provide a clear, measurable benefit to the real economy?

Sadly, the answer at the moment is mostly no. But we can change things. Our system of market capitalism wasn’t handed down, in perfect form, on stone tablets. We wrote the rules. We broke them. And we can fix them.

forooharbook

Foroohar is an assistant managing editor at TIME and the magazine’s economics columnist. She’s the author of Makers and Takers: The Rise of Finance and the Fall of American Business.
This appears in the May 23, 2016 issue of TIME.

 

 

 

 

If you liked this here’s a bonus …

https://i1.wp.com/peninsulapress.com/wp-content/uploads/2015/02/IMG_91381.jpg?resize=656%2C437As a follow-up, here’s an interview between NewCo’s John Battelle and Rana Foroohar.

“This industry creates 4 percent of jobs and takes 25 percent of the corporate profit pie. That is just breathtaking. If you need one number to sum up where the problem is, it’s that.”