Student Blog: Thoughts On The Law And The Legal Field
COMPLEX PROBLEMS REQUIRE EXCEPTIONAL LEADERS
A recent blog entry for the New York Times Opinion Section entitled “Greeks, Romans, and Financial Reform” by Paul Krugman draws an interesting parallel between the Frank bill, which has been passed by the House, and the Dodd bill, and the different military responses of the Romans and Hellenistic regimes to the successes of Alexander the Great.1
Krugman explains that the Hellenistic armies were “collections of specialists,” so there were the heavy infantry, cavalry, and so on, and that, when used optimally, they had a strong advantage because they had a longer range against many opponents because of their specialties—“[the armies had] longer range if their heavy infantry confronted guys with shorter spears, longer range if their archers confronted guys with javelins…,” but that optimal use required a commander who was exceptionally skilled so as to avoid any strategic mishaps. The Roman armies, by contrast, were a mass of general infantry who used javelins, swords, and shields. Their strength, according to Krugman, was in their numbers and although they lacked strong leadership, the soldiers functioned adequately over a broad set of circumstances. So, when the Hellenistic armies, who had the superior skill, met the Roman armies, who would prevail? The Roman armies would prevail because exceptional leadership was unlikely.
Like the Romans, Krugman explains that the “pre-1980” system was relatively robust. Bank regulators did not require exceptional skill because the rules were simple and the large banking institutions faced limited competition, which essentially guaranteed profit, so banking executives were unwilling to take big risks “of killing the goose that laid the golden eggs.” However, according to Krugman, “the regulatory proposals now on the table are fairly Greek” in that they rely heavily on the skill of those who must implement and monitor the new regulatory system.
The Frank bill, according to Krugman, relies more heavily on the skill of regulators because it sets “firm, nondiscretionary limits on leverage.” The Dodd bill, however, leaves discretion up to the Fed and others.
This analogy is meaningful in that, even if we assume that economic reform is necessary, the success of any reform depends upon the skill with which it is implemented and the intelligence and understanding of those who must enforce new regulations. And, sadly, those who are given the task of implementation and enforcement may not have the requisite skill to ensure that, like the Hellenistic armies, we are not destroyed in spite of our superior potential.
COMMENTS
Be the first to comment!
You must sign in before you can comment.
