Spring Contemplations

The spring break is long over, but it is only now that the first signs of spring start to appear. Indeed, it seems that the world is returning to life. Interestingly, the best evidence of spring this week was my professors' performance, as they all delivered exceptionally good lectures. It is amazing what effect the arrival of spring can have on us!

Fed arrives

An important event took place this week, namely the guest lecture by William H. Stone Jr, the vice president and COO of Federal Reserve Bank in Philadelphia. It was probably the first time that I had an opportunity to meet such a prominent figure and will definitely not forget it. Mr Stone spoke mainly about the responsibilities of the Federal and Central Bank, the difficulty in balancing free market policies and regulations and of course the subprime mortgage crisis.

Bleak economy could use some spring colours

I will be honest, the lecture was very hard to follow. One of the things I learnt was the incredible complexity of financial systems in the market economy. I also realised how many years of practice it takes to develop the level of expertise that Mr Stone has. I can learn about the recession of 1991 and how it was handled from the books, but by no means I can learn what it really takes to handle it well in a real life situation. That is because only experience can utilise knowledge. Or is it the other way round? Or maybe both?

Well, towards the end of the talk I asked Mr. Stone what where his thoughts on the steps the US should take to maintain its economic leadership in the world. In response I heard that the US has gone through many periods in the last decades when similar concerns were raised. Nonetheless, the country always emerged from these battles, becoming stronger at each time. Mr. Stone had no doubt the story would repeat itself this time and after. And it makes sense, considering the cyclical nature of the economy.

The greater danger

But whatever is the true answer one issue here must not be missed. Namely, that, too much experience can cause people to “stick to the script”, neglecting the possibility of things going in way they never went before. That’s where the greater danger may lie. As with anything, having too much of experience seems to have downsides as well. Therefore, I would argue that knowledge is the key to experience, not otherwise, as it allows people to think perceptively, and in a truly innovative way. And it is the common truth that innovation is the only way forward. Additionally, as argued in the previous post, how much we learn from experience is determined to a large extent by how much we know prior to it.

It is a tough subject, hopefully this summer I will be able to put my hypothesis into test and learn more about it. Stay tuned!

Spring, we love you!

PHOTO: By annia316, available under a Creative Commons Attribution-Noncommercial license