Our conflict of interest with the future

This week the Securities and Exchange Commission brought an enforcement action against the State of Illinois for misleading bond purchasers regarding the desperate condition of the state’s pension funding.  While unquestionably a multi-billion dollar fraud against investors, the greater impact of Illinois’ shortfall will, I imagine, be felt by residents of the state, who will have to forgo necessary governmental services – education, health care and roads – to help make good on the debt (though pensioners themselves will presumably pay part of the price, too).

This is not a problem limited to Illinois. Indeed, in my home state of New Jersey the pension funding shortfall is more than $47 billion.  Moreover,  many cities have similar (and possibly even greater) problems of this sort.

And, the deeper evil at work here – making/failing to make decisions today for which future generations will pay an unfair price – is not unique to the realm of public pensions.  It is manifested as well in the failure to check the growth of our enormous national debt and, more ominously still, in our inaction in the face of climate change and the ruin of the oceans, both of which could make life hellish for millions of individuals in the future.

Why is this happening? This problem comes in part from the all-too-human tendency to over-discount the future and part from our tendency to be less concerned about harms where we can’t identify the precise victim in a given case. (For further reading on both phenomena see Max Bazerman and Ann Tenbrunsel’s Blind Spots.) I expect that there are multiple other causes as well.

But whatever the causes, we need a dramatic normative shift that will put interests of future generations first and foremost in our thoughts – a change that can be brought about only through a wide range of education, monitoring and related efforts to promote such thinking in a truly effective manner. In short, we need a conflicts of interest compliance and ethics program for society as a whole.