Out of Bounds by Geary Leason

A boomerang is a curved piece of wood, thrown by hunters, to bring down a game bird or an animal and is famously known for its unique features if it misses its target, the aerodynamically designed boomerang will sail back to the thrower, saving the hunter a lot of walking in order to to retrieve it for the next attempt. Theoretically all good on both ends: the boomerang provides nutritional benefits to the hunter, and returned, remains available for the next day’s hunt.

The dictionary definition of boomerang however, indicates that all things may not go as planned when throwing a boomerang: picture the Aussie Aboriginal looking west skyward for the return of his thrown boomerang, not seeing the boomerang coming from due east heading for his bushy skull, he never to rise again. What happened that caught our man looking the wrong way was that he was hit by an unintended consequence. While the experienced boomerang hunter was confident upon his tossing, he failed to factor in the possibility of a sudden shift of the wind which caused the boomerang to change from its normal path to fatally blind side him.

We can now better understand the dictionary’s secondary definition of the word, “something, as a scheme that does injury to the originator,”giving us fair warning about the potential harm that often accompanies the many schemes man generates out of noble and altruistic philosophies.

To illustrate this principle, consider the two following stories in which all actions taken were generated by noble intentions but have had, and continue to have, some very negative outcomes.

Story One: In the 1980’s Soviet Russia, as part of its Cold War agenda, sent large military forces into Afghanistan, a client state of the USSR at that time, to assist the Afghan government in their fight against the mujahideen; Islamic Afghans rebels seeking to overthrow the existing government. The U.S., as part of its long ongoing conflict with the Soviets, backed the mujahideen with vast amounts of war materials and training. (This is the boomerang going out to do its good deed). Ultimately the Soviets, after suffering unsustainable casualties, exited Afghanistan in 1989. This Soviet withdrawal is much like what the U.S. is planning to do next year after ten years of trying to prop up its current client state, Karzai’s government, against today’s militants, the Taliban, who, (this is the unintended consequence) – are for the most part, the very same mujahideens we supported back in the 1980’s! Boomerang!

Story Two: We are all aware of the 2008-2009 world wide financial meltdown in which trillions of dollars were lost, putting the world’s economies on the brink of a world wide depression, ala the 1930’s. Foreclosures, bank failures, bankruptcies, massive worker layoffs, long unemployment lines, unrest in the streets – not a pretty picture with hopes on the ropes. (This is the unintended consequence of this story). The good intention part begins with one person, (a Chinese mathematician, David X. Li), educated in China and Canada, who in the year 2000, wrote an academic paper, titled “On Default Correlation: A Copula Function Approach,” which soon became a tool and a rational basis for financial institutions to package CDO’s, (a mishmash of questionable mortgages), to be “supposedly accurately priced (and marketed) for a wide range of investments that were previously too complex to price.”

The bottom line is that this formula was used to create financial instruments to the tune of 100’s of trillion dollars, that consisted mostly of subprime mortgages, packaged and sold, under exotic titles as Derivatives, CMO’s and CDO’s. When real estate prices started to fade in 2007 from their frenzied bubble levels, the shrinkage of the underlying values of all these falsely rated“AAA” investments, exposed their unworthiness and the big collapse soon was upon us. It turned out that Mr. Li’s formula was no more than a recipe for disaster, in that it could not account for the many variables that could, and did, come into play. The good intentioned Mr. Li has since returned to China. Better there than here.

Sages throughout the ages have spoken on this subject of good intentions and unintended consequences: Edward Butler, in the 1800’s, said it best. “It is difficult to say who can do you the most harm; enemies with the worst intentions or friends with the best.” Do you think that the good intentioned Obamacare might fall into this category where there are so many variables in play with this ambitious program? Food for thought.

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