Failure: it’s good for you!

Zerohedge ran an article this past week in which a former economist of a big financial corporation referenced the financial crisis of 2007, when the “Too Big To Fail” banks were bailed out by the US Government in order avoid a supposed nation-wide (if not global) financial meltdown. Regardless of what the outcome of a financial system allowed to fail might have meant in reality (true chaos and catastrophe versus a return to actual and appropriate values), the point of the article is that the TBTFs remain TBTF. The system has not been fixed. These institutions should not be protected to the point of an oligopoly of massive corporations that can threaten to take down an economy. For some that have interest in and understand the business cycle, allowing businesses to fail (before they become artificially massive and de-stabilizing) is healthy and proper.

I add the opinion that it is not only banks that must be allowed to fail, but also governments,… and businesses,… and people. Failure is a mandatory part of improvement, finding efficiencies, making progress. The costs, distortions, and energies that are wasted in denying necessary failures (and propping up the individuals and entities that should be allowed to return to their sustainable baselines) are infinitely greater than the costs of the failures and adjustments would be. But people (voters) LOVE to keep those wealthy and powerful ensconced in their protected and well-entrenched positions, boots securely anchored on their necks, via bailouts, corporate welfare, perpetual re-election, etc.

Even more broadly, it seems clear to me just how important a universal principle “allowed failure” is. Aside from the economic and political, the principle is vitally important in our personal endeavors, child rearing, relationships, and employment. Some pain and discomfort are very useful as reality checks and appropriate motivators. Removing uncertainty and noise in order to find the true, base value of the things, people, and goals in our lives provides necessary insight to make best decisions and improvement plans. There is some degree of pain involved in any of the above. But is not pain that is experienced in order to find growth actually an investment – a useful cost? In contrast, self-imposed pain that is suffered in the attempt to avoid a much-needed reckoning and return to true value is pure waste, procrastination, and wishful thinking. Embrace the failure. Own it. Learn from it. Traverse the pain. Let us hold our chins high and move forward with better plans and approaches. Let us not only adopt the principle of allowed failure for our own growth, but demand it from those that live at our expense and make decisions which significantly affect our lives.