Sunday, August 16, 2009

Constructing Finance and Economics Centers to Prevent Another Meltdown

What did you do this summer? Did you have a nice vacation? Travel? Go to the beach? Catch up on your reading?

I am having a wonderful summer browsing the financial and economics blogosphere. Eminent left, right, and center professors of finance and economics at Harvard, Yale, Princeton, Chicago, Berkeley, Stanford, and other leading universities are engaged in all-out civil war. They mince no words, charging each other with ignorance and illiteracy on the effects of the stimulus, monetary policy, financial innovation, too little or too much government regulation, and so on. In a mid-June visit to officially open the $115 million new academic building of the London School of Economics, Queen Elizabeth II asked the director of research at the school’s management department how professors of economics and finance failed to anticipate the credit crunch that harmed so many of her subjects.

A wide variety of explanations can be found in the blogosphere and in numerous books and articles written by financial journalists, economists, and historians. To this point, no one has yet spelled out a convincing remedy that would preclude future financial crises. In this vein, let me propose a solution.

Stanford University is constructing what will likely be the most modern graduate school of business facility in the world. The Knight Management Center, as it is known, consists of eight elegant buildings totaling 360,000 square feet. Three have already been framed. You can follow its progress and view drawings of the full complex at http://www.gsb.stanford.edu/knightcenter/

The medium can be the message. I suggest that construction of the last three buildings be delayed to enable the architects to craft new blueprints. One building could be in the shape of a big balloon to house the Center for the Study of Bubbles. A second could be a linear one-story building that symbolizes the timeline of history; it would house the Center for the Study of Economic History. A third could resemble Archimedes using a lever to move the world to house the Center for the Study of Leverage and Risk. Students would spend a quarter or semester in each of the three buildings.

Architecture can reflect the values and ideals of contemporary civilization. It can also serve to inform.

Just a thought.

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