Draft of Resources (you figure it out)

The Bush administration has at least taught Us How Not to do things, which I guess may be one backhanded benefit. Here is a tirade against Contractors which has some merit. The real error in Contractors consists of a lack of Accountability, both in the general sense, but also in the specific sense of details. I once heard that F-16s had radar systems which had to be maintained after every 20 minutes of actual use, because the design Contractor knew that the system overheated, but utilized the overheating design because of the huge R&D Cost drain over a couple years when success was not ensured to cure the Problem; when the system could meet Test qualifications for the short period Military Procurement would demand. That was my classic Example, though a little research can produce such malfeasance from every sector of Contractor performance.

The role of Contractors may be the epitome of the failure of the bonus system. The Promise of an End to the lifetime struggle to maintain Income leads to erratic and inferior Workplace performance, if the Shortcuts will get past the Pay queue. The Object becomes the necessity of getting past the Paymaster, not the provision of sound practice. News Services had a field day pointing out the shortcomings of contracted Construction in Iraq, where electrical systems were not grounded, and set Concrete crumbled after mild hammering. The Investment bonuses used by Wall Street were as equally damning; the Object becoming to get the bonuses when a year of bonus was worth a lifetime of labor. Who cared if the impact would bring down the system? They needed the huge Numbers to gain the bonuses; it did not matter if the bad decisions led to Bankruptcy in the long run.

Do you know what Knightian uncertainty is? Mark Thoma presents Us with this practical manifestation of the difficulty of talking People into risking their Money, when it is not definable risk, and the potential loss cannot be determined. The current Crisis in the financial world can in one way be laid at avoidance of the Knightian uncertainty, when it should have entered the calculations of all Participants in the underlying transactions. It might not have saved Us, but it would have put an upper limit to the Capital at Risk. The authors criticize the observance of Knightian uncertainty now, but they should have studied the loss of it from previous Business practice, and proposed methodologies to forestall such loss in the future. lgl