The Coyotes Among Us

Posted by on 04/15/10 in Ethics, Governance, Markets, Nature, Philosophy, Risk

According to Colorado naturalist Ashley DeLaup, once you feed a wild animal—say, a coyote—you do not earn its loyalty, friendship or deep appreciation. Rather, the wild animal comes to see you and everyone who roughly resembles you as a source of food. Period. They come to expect that you will feed them, and if you do not, they are far more likely to demand that you feed them. By feeding them, you have become the provider of sustenance. You are not the “really cool guy in touch with nature.” They will not protect you when other wild animals threaten. They will not tell their young how noble and brave you are; if anything, they will tell their young to expect you to feed them. The pattern has been set.

So what if—hypothetically, of course—human beings had characteristics similar to those of our more wild neighbors? While we would never be so bold as to assume that human behavior might mimic that of wild animals—say, coyotes—we cannot help but wonder how we civilized folks from Western style democracies have been differentiating ourselves in this time of economic and social crisis. For example:

Pension Benefits
Imagine that a state—California, for example—has made lucrative financial commitments to its public sector employees that promise most of them a full lifetime of comfort and financial security. Also imagine that California will be driven into bankruptcy if forced to pay those benefits. A coyote would see the benefits as food that has already been given and must continue to be given. The coyote does not care from whence the food comes or the cost of its provision. How about us?

Wall Street Preservation
Imagine that a typical major financial services firm—part bank, hedge fund, broker-dealer, asset manager, investment bank, private equity sponsor, real estate investor, insurer—has taken on too much risk in its effort to earn higher margins; thus, the financial services firm teeters on the precipice of failure. Last time this happened—the latter half of 2008—the US Treasury stepped in, pumped taxpayer dollars into the firm and kept it alive. Bondholders were saved, shareholders rescued, and senior executives richly compensated. A coyote would expect the same sort of intervention again, indeed would demand it. The coyote is not concerned with moral hazard; the coyote is hungry and expects to be well-fed. How about us?

Voter Appreciation
Imagine that over several years, a member of the US Senate has provided the voters back home with some serious Federal cash. Through savvy negotiations and explicit earmarks, the Senator has secured for the local constituents new highways and bridges, additional funding for education initiatives, a few meaningful defense contracts, preservation of a military base, a high profile regional headquarters for one of the federal agencies, and special incentives for local farmers and ranchers. More recently, the Senator called some political favors to acquire a large infusion of Federal stimulus dollars to help fill the state’s budget gap. The Senator even played hardball during the health care debates to negotiate additional funding for the voters back home. A coyote would expect the Senator to continue delivering the goods. The coyote doesn’t care whose paying for it all or when. The coyote is hungry today. How about us?

We realize that it’s always risky trying to find commonality between human beings and other animals, particularly in personal psychology and group behavior. Clearly, human beings are far more advanced than wild creatures. We are nuanced, altruistic, spiritual, and concerned with the condition of our fellows. Our judgment is informed by our profound appreciation for the relationship between cause and effect. We consider the future, not just the present, our children and our children’s children, not just ourselves. A coyote would never be troubled by such a sophisticated worldview.

But just to be safe, perhaps those among us who set financial policy, craft regulation, and help shape the markets should assume that we civilized folks still have a bit of the wild in us at our core, that we should recognize that we may have animalistic tendencies that influence our business. In short, let’s be more judicious in determining which animals we feed and what we feed them, because they might like what they’ve tasted and come back for more. They’re wild like that.