2. The Wider Context
It may not be good politic to note it, but we live in a dysfunctional society.
If this was a sociology paper – interestingly enough, a box into which one of the initial Institute reviewers categorised it – I would explore the subject in rather more detail. However, as it isn’t, and at the risk of doing a disservice to years of more learned research, I instead offer this brief synopsis of the malaise that I believe sits at the heart of our modern society:too many of its members, beyond the bare essentials of their existence, have a connection with the World that is exercised largely through their bank account and a flat screen monitor.
It is a measure of our society’s dysfunction that so many of its members view the World primarily as a marketplace in which to acquire things. So ingrained has this notion become that possessions, and the means to acquire them, seem to have become our principal – and for many people only - benchmark of social status.
Moreover the dynamic by which society empowers the agents that govern it ensures that the scale of dysfunction isn’t just perpetuated, but accentuated. A socio-economic model whose definition of success knows only one measure will of course tend to promote those it believes are best placed to deliver against that benchmark. It is no coincidence that those who captain our industries and form our Government often tend to be even more driven to accumulate wealth than many of those they lead.
The social trends that have brought us to the present point (globalisation, the preeminence of greed, the fragmentation of communities, increased focus on self, the rising cult of celebrity and the growth of cyber-society) are all well-documented elsewhere so I won’t dwell on them here. What is of relevance going forwards is what consequence might flow from the increasing stress to which the society they’ve delivered is going to be subjected.
One consequence of these trends is that many people have become increasingly disaffected by, and disengaged from, what one might colloquially call ‘real world’ problems. Even among those who are still engaged, there is a tendency to regard the big challenges we all face as someone else’s responsibility to resolve. Such complacency is further fuelled by the faith that many still hold in the power of innovation and technology to address those problems without the need for any personal sacrifice or infringement of their own lifestyle choices, a belief that is as misplaced as it is convenient.
Adding to the dysfunctional fray is the central role that our present financial system plays in influencing socio-economic policy. Despite mounting evidence of the folly in so doing, our present generation of policymakers continues to dance to the tune of volatile financial markets, still apparently unaware that to serve the long term public interest - as is supposed to be their obligation - they need first to quit the dance floor and invest in some better music.
Thus has modern society created its own virtual reality, a reality that has thus far allowed the issues and risks considered later in this paper to be largely downplayed, and an illusion that has thus far managed to keep our society firmly on the path towards its own destruction.
It is to the discredit of our present generation of political leaders that they have failed to acknowledge or engage with people on the true reality of our present situation.
It is also to the discredit of the Actuarial Profession that it continues to acquiesce when confronted by such short-term thinking. The Profession, it seems, out of either a misguided sense of its own interest, deference to commercial interests or a conveniently blinkered view of what constitutes the public interest, feels compelled to dance to the same discordant tune. Whatever the reason, this is an abdication of leadership that I believe undermines the Profession’s risk management aspirations and amounts to a betrayal of the Profession’s own public interest mandate.
Financial markets should be a servant of the people, not their master, but any objective review of the