(This is Part 4 of a series. Go back to Part 3.)
An interesting example of this notion has been on display recently in the various corporate fraud scandals of the last few years. A recent study compared 25 companies where fraud had occurred with 25 "control" or regular companies where it had not.
The most significant finding of the study was that the fraudulent firms had yearly growth targets of 18% while the regular firms had yearly growth targets of 7%. That is, the fraudulent companies were "reaching" much harder.
Inevitably, at the fraudulent companies the CEOs were icons noted in the press for their super-succesful style and high yearly growth rates. But that very success laid the groundwork for their demise when it led these successful executives to begin overextending and therefore setting unrealistic growth targets.
Once a company was operating with unrealistic growth targets it then became a natural progression to commit fraud in order to maintain the illusion of ever-increasing success. In other words, success led to overextending which led to downfall.
When fraudulent companies fail they cause thousands of employees and investors to lose jobs and savings. Notice that, according to the study, this "dark" or "evil" event primarily comes about through overextending.
Another example is the frantic home-buying that's going on in the U.S. and elsewhere. Creative products such as adjustable-rate and interest-only mortgages are allowing people to take on much more debt and buy much more pricey houses than they normally could.
In this case, both banks and borrowers are overextending, the banks providing looser and looser credit in the pursuit of more business and borrowers stretching their credit in pursuit of more and bigger houses.
This current example of overextending is, in my opinion, an historic one. Mortgage debt as a percentage of income is now up in the stratosphere, a classic bubble. If house and condo prices fall a lot—and that is the usual outcome of a bubble—such overextending could result in financial destruction for many of us.
If we look we can see many examples of overextending and its "dark" consequenes at the personal, institutional, government and societal level.
Thus, one way of lowering the amount of negativity, “evil”, etc. in our lives is to be wary of overextending. Interestingly enough, this principle applies particularly
if we're very successful at something—for it is then that we’re most tempted to overextend.
When we succumb to the tempation to overextend, the resulting "evil" or suffering that can befall us and others
is not caused by "the devil" or “evil forces” or whatever. Rather, it is caused by we ourselves.
(This is the end of Part 4. Go to Part 5.)
—jim sloman, 4.2.05
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