Let's face it, people have a hard time seeing the forest for the trees. We all tend to focus on the particulars and have difficulty taking a step back and looking at the 'big picture'. Even more difficult is keeping both the particulars and the whole in mind at the same time. The inability to take a step back and see the big picture often gets us into trouble.

Take, for example, the debate over free vs. regulated markets. To headhear the pundits talk, this is an either or proposition. You either have totally free markets or have 'paternalistic' regulation of behavior. The two (exaggerated) sides of the argument are 'Free markets create the most good for the most people therefore anything goes' vs. 'Free markets result in inequities and cheating therefore all behaviors must be vetted and either explicitly allowed or proscribed'.

This is an example of a false choice that comes about through the failure to take a step back and look at the big picture. What is this 'Meta' view of markets that could inform both sides? It is that, for markets to work properly, there are some very specific things that need to be in place (read Reinventing the Bazaar by John McMillan). These very specific things have to do with the system, not individual behaviors. These are things such as transparency of information and independence of actors. If these things are in place, then individual people, both buyers and sellers, can engage in the wide variety of behaviors that we are all expect of a diverse population.

This 'meta' understanding of the system leads to a natural solution of proscribed systems but not proscribed behaviors. In other words, to have a 'free' market, there needs to be strict regulation at the system level and freedom at the individual level. The strict regulation would actually result in 'freer' markets that are more free than those that now exist. What would some of this strict regulation look like? How about strict regulation on clarity of contracts? No more fine print, legalese language and onerous terms buried on the bottom of page 5 of a contract - illegal! How about forcing electronic disclosure of ALL costs associated with a contract so that third party, independent comparisons could be made between alternatives (see Nudge by Thaler and Sunstein). No more hidden fees and obtuse claims - illegal! These strict regulations would, in fact, make markets freer, more competitive and much much more fairfairer than the existing system of loose or no regulations. It is interesting that it is precisely these types of regulations that the large market forces (read mortgage lenders, credit card companies, etc.) lobby so intensely against. One must realize that no large, established market entity is going to argue for more transparency and freer exchange of information. They are inherently against competition, It just makes their lives harder.

This ability to step back and see the system, to abstract from detailed specifics to general principles, is in short supply. If we had more of this capability, both in ourselves and in the people who lead and make decisions, we would be better off. Instead of our politicians being pressed to give finer and finer levels of detail on their proposals to 'fix the housing crisis' or 'end the war in Iraq', wouldn't it be better if they could tell us the principles they will use to make decisions in an ever evolving and changing environment? Wouldn't it be better if we could understand their 'meta' view of the situation instead of being boxed in by detailed specificspecifics that could be inappropriate if the circumstances change?

In watching an interview with Barak Obama on television, the interviewer was asking him questions about the mortgage crisis and what he would do. Now to Barak's credit, he did try to state some of his principles, but the interview, at the direction of the interviewer, quickly delved into very specific details. How much money will you provide homeowners who are about to loose their homes? Will you or will you not bail-out Fannie Mae and Freddie Mac? And on and on. Instead of setting up a framework for dealing with the situation, all we get are specific actions that may or may not be valid one week, one month or one year form now. Everyone would be better served if both the interviewer and Barak took a step back and said 'let's look at this situation at a high level and try and understand the 'whys' behind the 'whats' that are happening.

Next time you get bogged down in a situation you are struggling with, try taking a step up to the 'meta' level and think about the system and the principles behind possible actions. You will find that this is a very valuable skill to develop.develop, Oneone that is in short supply but nevertheless one that is sorely needed in today's complex environment.