Monday, July 2, 2012

Failed Professions: Definition, Impact, Consequences

I'd like to assert that (Australian) Medicine, Banking and Finance & Investment Advisors and Information Technology (I.T.) are Failed Professions.

The fields of Management and Politics, whilst notable for their egregious actions and errors and not just failing expectations of good governance, but actively harming or exploiting the general public, are not Professions: they fail the basic tests of "Body of Knowledge" and "Entrance Requirements".

What do I mean by a "Failed Profession"?
How do I support that view?
I've posited a Theory of Professions to support this view.

Particularly, the level of Duty practitioners, organisations and the Profession owe towards their clients and their Community.

Of my list, Medicine and Banking/Finance/Investment-Advisors Professions, have the highest level of Duty towards their patients and clients: a Fiduciary Trust or Duty.

They are required to always put the concerns and welfare of their clients/patients before all else, particularly ahead of their own interests (especially pecuniary), ahead of their colleagues, employer and organisation and ahead of their Profession.

I.T., Information Technology, only has Fiduciary Duties to clients/the public in limited areas, but is now critical and essential in almost all aspects of our daily lives and business. It does have a "Fair Go" duty to clients and the Public: to provide competent, safe and effective services.

Yet it has no widely accepted "Body of Knowledge", there are no restrictions on entry to most, if not all, areas of the Profession and there is no means to assess practitioner or service provider performance.
The complete lack of data on I.T. Project outcomes within Government, for the last 25 years wholly dependant on I.T. for daily operations, underlines this.

A Failed Profession, is one that for an extended period (decades) fails in its obligations to Clients, the Public and the Government. As above, this can be failing in their Fiduciary Duties, betraying the trust in the implicit Social Contract or failing in the Internal organisation and governance functions.

The impact of Failed Professions are pervasive within our societies. From the GFC to massive hidden death tolls in Medicine and to billions lost or overspent is Government I.T.

The consequences of allowing Failed Professions to maintain their right to practice are potentially dire.

In the USA, 23% of GDP is siphoned off into Healthcare and the pockets of the Medical Profession.
Compare to Australia's mid-range cost of 9%, and what's the justification?

It isn't improved health outcomes for the US population, rather the reverse. The USA has almost universally worse health outcomes than every 'advanced' economy: it does emergency care better than anyone.

The trouble is, the USA is heading into years of financial trouble, is borrowing 30% of Federal Government expenditure and is yet to face the increased End-of-Life care costs of the Baby Boomers.

There is every reason to expect that its Medical Healthcare system will bankrupt the USA in the not too distant future.
That's the consequence of a Failed Profession.

Banking, Investment and Advisory Industries

Banking, Finance and Investment Advisors had a "Massive Fail" with the 2008 Global Financial Collapse.
In that episode, years of not just failing as Fiduciaries and "Fair Go" (equitable practices) but actively exploiting, manipulating, cheating and lying to clients came to fruition.
This was not "a few bad apples", but systemic and systematic abuse and woeful failures of Governance at every level, up to the highest political offices. [Evidence is the almost complete lack of warnings of the collapse in the financial press.]

This isn't just a small failure, but a voiding of the Social Contract and the embracing of 'sharp' or dishonest practices throughout the Profession, along with active avoidance or disassembly of Good Governance: Openness, Transparency, Accountability backed by through reviews and Audits and real consequences to those abusing, or failing in, their trust.

How does a whole Profession destroy trillions of dollars and millions of lives/livlihoods without hundreds or thousands of people in jail and every director, CEO and senior manager being stripped of their assets? Only through a lack of Political will of those charged with Governing our Nations...

None of the causes of the sub-prime collapse that caused the GFC are pardonable or possible under systems of good governance which:

  • writing NINJA housing loans that relied on a real-estate bubble to be repaid: No Income, No Job, No Assets.
  • lying to, or actively concealing from legitimate borrowers, the true nature of their loans: ARM (Automatically Resetting Mortgages). After a short 'honeymoon' period of low-interest, the true rate (often over 10%) is suddenly charged, forcing unsuspecting borrowers to sell and/or into bankruptcy.
  • The many banks who kept paying their salesmen handsome commissions and writing impossibly large loans which borrowers would never be able to sustain.
  • The two US mortgage guarantors (Fannie Mae, Freddie Mac) who kept taking on all the high-risk loans (sub-prime == high-risk == high-return) as if they were low-risk, prime mortgages.
  • The merchant banks and others who bundled up large parcels of mortgages in CDO's (Collateralized Debt Obligations) pretending that low-risk and high-risk mortgages were "all good".
  • The businesses that sold Sovereign CDS's (Credit Default Swaps) as "insurance" against the CDO's failing. "It would take the collapses of a national financial system to not get paid". Yep, and it did...
  • The many Ratings Agencies that valued all those loans and CDO's are AAA: the highest 'quality', lowest risk investment possible. In spite of those high returns with implied high underlying risk.
  • The Ratings Agencies again assessed all those Merchant Banks and Investment firms borrowing to fund these "high return but utterly safe" complex instruments as AA or better: over-leveraged and highly exposed, but not assessed as 'Junk'. At least in the 1980's crash, the Bonds were rated as "Junk".
  • Where were the Auditors who should've flagged the over-geared, over-exposed operations as unsafe?
  • The investment advisors who took big commissions and sold unsafe instruments to those wanting to build retirement nest-eggs or Utilities and small government organisations look for Safe Harbour investments.
  • Where were the Regulators and Financial Overseers? How did they not investigate nor raise the alarm?
  • And once the GFC had hit, what reaction by Legislators to both prevent the recurrence and to hold accountable (and compensate victims) those responsible, starting with those at the top?
There was a solid, connected "investment pipeline" running all the way from suburban America out all across the world to unwary investors. With thousands of people "in the Industry" all putting out their hands for a slice of the action, morals and ethics completely ignored in the feeding frenzy.
How come nobody noticed "This is too good to be true"? Where are the people now calling for a recovery of Fiduciary Duty in the Banking, Investment and Advisory Industries? Notable by their absence...


How do we count the ways?

The standard of Duty is for Medicos and their Organisations/Employers to deny all problems, to "close ranks" against public inquiry and catastrophically fail in Performance/Outcome monitoring and reporting and Quality Improvement.

How many people die each year from preventable errors in Hospitals or under G.P. care?
We just don't know...

And what is the reaction of the AMA, the peak Industry body for the Medical Profession?

A first attempt at this topic.

Aviation: A model for what can be done

Aviation is not Perfect, but it is the closest thing we have to it.

It shows that whole Industries, on a global scale, can embrace Quality Improvement and Safety programs whilst still being Profitable and advancing new technologies.

It's a culture and mindset and a willingness to admit weakness and error as a first step to correcting them.

Aviation succinctly answers the Professional Question:
When is it acceptable for a Professional to repeat, or allow, a Known Error, Fault or Failure?
When, not if, they are discovered, individuals and organisations will be held to account and suffer direct, personal consequences.

So why are other Professions allowed to practice outside this minimum standard?

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