Friday, March 12, 2010

A Tale of Two Organizations

The NY Times today carries article on two organizations:
  1. the Kansas City school system, which apparently has suffered from a total lack of leadership, so that now it has to close half its schools. "But a closer look at the school board’s recent history reveals a chaotic, almost nonfunctioning body that put off making tough choices and even routine improvements for generations."
  2. Lehman Brothers, which is kaput. "According to the report, Lehman used what amounted to financial engineering to temporarily shuffle $50 billion of troubled assets off its books in the months before its collapse in September 2008 to conceal its dependence on leverage, or borrowed money."
This encapsulates some of my thinking about organizations: The free market is fine for things and services that can be measured and priced, but it is subject to manipulation, fraud, and deceit.  Government is for services which can't be measured and priced, often because benefits and/or costs would overlap the bounds of any market, but it is subject to inefficiency, fraud, and corruption.

No comments: