It's the time of year when the great and the good of American finance deliver graduation lectures to students leaving US colleges. Below are extracts from a lecture by Ben Bernanke, chairman of the Federal Reserve, to students at the Boston College of Law graduation ceremony. You can see the full version here. In a week's time, Jamie Dimon will be delivering a similar address to the graduating class at Harvard Business School.
In planning our own individual lives, we all have a strong psychological need to believe that we can control, or at least anticipate, much of what will happen to us. But the social and physical environments in which we live, and indeed, we ourselves, are complex systems, if you will, subject to diverse and unforeseen influences. Scientists and mathematicians have discussed the so-called butterfly effect, which holds that, in a sufficiently complex system, a small cause--the flapping of a butterfly's wings in Brazil--might conceivably have a disproportionately large effect--a typhoon in the Pacific. All this is to put a scientific gloss on what you probably know from everyday life or from reading good literature: Life is much less predictable than we would wish. As John Lennon once said, "Life is what happens to you while you are busy making other plans."
Our lack of control over what happens to us might be grounds for an attitude of resignation or fatalism, but I would urge you to take a very different lesson. You may have limited control over the challenges and opportunities you will face, or the good fortune and trials that you will experience. You have considerably more control, however, over how well prepared and open you are, personally and professionally, to make the most of the opportunities that life provides you. Any time that you challenge yourself to undertake something worthwhile but difficult, a little out of your comfort zone--or any time that you put yourself in a position that challenges your preconceived sense of your own limits--you increase your capacity to make the most of the unexpected opportunities with which you will inevitably be presented. Or, to borrow another aphorism, this one from Louis Pasteur: "Chance favors the prepared mind...."
....Although I never could have prepared in advance for the specific events of the past 21 months, I believe that my efforts throughout my life to expand my horizons and to keep a broad perspective--for example, to study and write about economic and financial history, as well as more conventional topics in macroeconomics and monetary economics--have helped me better meet the challenges that have come my way. At the same time, because I appreciate the role of chance and contingency in human events, I try to be appropriately realistic about my own capabilities. I know there is much that I don't know. I consequently try to be attentive to all points of view, to work collaboratively, and to involve as many smart people in policy decisions as possible.....
....When I graduated from college in 1975, and from graduate school in 1979, the economy was sputtering, gas prices and inflation were high, and pessimism--malaise, President Carter called it--was rampant. The U.S. economy subsequently entered more than two decades of growth and prosperity. The economy will recover--it has too many fundamental strengths to be kept down for too long--and the mood will brighten.