Monday, July 20, 2009

Dr. Brett on breaking the social contract

Dr. Brett Steenbarger at TraderFeed sparked some interesting discussion this weekend with his post on, "Breaching the Social Contract".

Dr. Brett offers up some examples of this breach of trust here:

Consider the following situations that I have encountered in recent weeks:

* A young lady in college is suddenly told by her parents that they no longer have the funds for her education. She will have to go to work to come up with the tuition. She cannot find work and doesn't know how she will graduate;

* A long-time employee of a large company is downsized to a part-time job and will be losing his benefits. He doesn't know how he will afford health care for his family. He heard about the earnings possible to traders and is considering applying for a training program that will tap him of much of his savings;

* A retired couple learns that their investment adviser has put them in volatile, high load funds that were initially described as conservative. They are stunned when they see their account statement showing a large loss in their principal, and the husband is contemplating a return to the workforce...

...In each of these cases, the individuals entered situations with expectations born of an implicit social contract. With the rending of the economy, that contract is breached--and breach brings hurt, confusion, anger, and despair. Listening to each of their stories, I am reminded of spouses who experience the infidelity of a partner: with the loss of trust, nothing is ever quite the same. It is difficult to sustain optimism and confidence in the face of doubt and uncertainty..."

I'd say that this theme, one of broken social contracts, has become an accelerating trend in our country today.

What are the causes behind these developments? Have a look at the full post and judge for yourself, or add to the discussion.