Responsible citizens are getting higher interest rates on their credit cards and loans.  Their retirement funds and investment portfolios are evaporating.  In the midst of their attempt to deal with this financial upheaval, they are losing their jobs.  Future generations will inherit an untold surplus of debt because of our mistakes and yet no clear accounting has been made of all the problems we must fix so as to not repeat those mistakes going forward.

We must learn from our errors. Stimulus packages, tax cuts, interest rate cuts, etc., may help to stave off the immediate crisis, but what we desperately need is a thorough assessment of what went wrong so that, long term, the processes that led us to this economic disaster can be repaired or replaced.

The original reason to put a board of directors system into place was to give representation to the stockholders. The job of the directors is to act in the best interest of the company’s investors, to hire executives so as further those interests, and to make decisions so as to keep the company healthy.  The board system has failed at these tasks because it inclines members to work towards other interests even when those interests run contrary to those of the investors.  The system, simply put, requires a complete overhaul.

Such failure at the top is a problem because it sets the tone for the rest of the company.  If the board makes bad decisions, they ripple down across the entire management chain.  An incompetent board will hire incompetent executives who will surround themselves with incompetent subordinates. The system promotes a spread of bad decisions.  Moreover, if an incompetent board of directors allows executives to keep their jobs despite poor performance, it creates a corporate environment in which there are no repercussions for bad decisions.