Last night (October 3, 2009) the headline of The Huffington Post, in characteristic bold red letters, said:

CALIFORNIA:
America’s first failed state?

The linked article is here, and its tagline reads:

Los Angeles, 2009: California may be the eighth largest economy in the world, but its state staff are being paid in IOUs, unemployment is at its highest in 70 years, and teachers are on hunger strike. So what has gone so catastrophically wrong?

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(A little reading soundtrack for your enjoyment, courtesy of Rufus Wainwright.)

This–California–is where I live. While it’s not a surprise to me that something has gone (and continues to go) horribly wrong, it’s still rather sobering to read about it on the front page of The Huffington Post, which linked to an article written by The Observer… in the UK. Paul Harris, the author of this article, makes some terrific points. For example, I knew California’s economy was large but never put it together that if the state of California was an independent country, it would be a member of the G8. That is ridiculously huge.

The fact that this article was written by somebody stationed halfway around the world and not by someone in, say, Sacramento, is disturbing. But a distant author might actually be indicative of the crisis itself.

I think most of us on the “outside” recognize that we have a system problem, here. Some even say that there’s a movement in the current legislature to have a constitutional convention next year to discuss starting from scratch. While I’d be an advocate for this, I’m not convinced it could ever be a reality.

Why? In the world of systems, change is difficult. Very difficult.

First, it is dreadfully hard for the individuals inside the system to even see what’s going on within it. It’s like teaching a fish about water. By the nature of what it takes to get into politics, many representatives have been swimming in the system since Day 1. It is a rare individual who can be indoctrinated into a system and still have the critical awareness to identify its weaknesses.

Second, even if an individual can see the root problems, the entire system is biased against letting it change. A system exists because it (originally, at least) simplified problems and streamlined things. But just like a person, a system can become greedy. Once a collective crosses this line, the system stops questioning its processes and begins to enter a type of “survival instinct” mode, where most of its actions exist solely to keep the system functioning in the same way it always has.

But organizationally this never works. Why? Because the world surrounding the organization is constantly CHANGING. A static organization cannot be profitable (in any sense: monetarily, socially, etc.) in a dynamic world.

This is the unending challenge of systems, and why leadership is imperative. True leaders may be the only thing that can break this cycle.

A good friend of mine told me that Newt Gingrich recently said he has his eye on California. The reason is simple: the majority of the country is following our path. If we can figure a way out of this mess, the larger country has hope.

C’mon Cali. We can do this.

UPDATE (10/5): Consulting firm Bain & Company’s L.A. office have released a very informative report on related issues. Check it out here (Exec Summary, bottom of page).

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