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Home Front Economy
Belmont Club: On complex systems
2009-02-25
Richard Fernandez

Two ideas are necessary to keep in mind when dealing with complex systems. The first is that it will tend to evolve towards a new state whose characteristics we may not be able to predict but which we know exists. This is what Fabius Maximus refers to as the successor the post World War 2 political/economic system. We are going there and are going to find it by trial and error. We know enough to realize we’ve left Kansas but not enough to set our new course with exactitude. We’re going to have to sniff our way along. Once we get near there, things will start to settle down because that’s the way complex systems often behave. “An attractor is a set to which a dynamical system evolves after a long enough time. That is, points that get close enough to the attractor remain close even if slightly disturbed.” The important thing is not to charge blindly past it and over the Edge of the World.

The role of the government isn’t to mandate the characteristics of that attractor by fiat — it can’t — but rather to take the necessary steps to midwife a new world being born by taking common sense steps without the burden of ideological finality. They have to do what works unimpeded by mental constructs which cannot comprehend what is happening to the complex system. In order to successfully do this, government must embrace the second idea inherent in dealing with complex systems. It must shorten its OODA loop. It cannot be in the business of setting Five Year plans in the middle of a dynamically changing situation. Rosenberg points out that much of the so-called fiscal stimulus package is “back-loaded to the out years; that we think it will be next to impossible to meet the employment goals (which could never be verified in any event – how can anyone prove that a job was “saved’?) since much of the spending is aimed at products that are imported into the USA.” But if government wants to treat the situation as one undifferentiated bolus and shit it out in one go we may create more problems than we solve.

What government needs to implement is a succession of quick but well thought out interventions with the least possible lag, so that some kind of closed loop policy fire control system can be implemented instead of the insane method of World War 1 style battleship prediction plotting extending over a period of years. Whether policy will evolve in that direction remains to be seen. The public debate so far has been about the Big Solution; the magic bullet because leaders like to pretend that they have one. What leader can admit that he hasnÂ’t? The day Barack Obama gets in front of national TV and says he doesnÂ’t have the answers is the day we start getting them....

A tax revolt is good to the the extent that it militates against the ponderous central planning approach to managing the crisis. But to the degree that it encourages another, albeit alternate version of the big fix it may lead to equally bad consequences. The alternative to a bad Five Year Plan is not another Five Year Plan. It is something else. In reality the system will have to find its own new equilibrium. Capitalism is the economyÂ’s reconnaissance in force into the uncharted economic future. The reason capitalism works is that it can try different things. Unlike government, it is not obliged to do one Awesome Thing. As we venture into the unknown some businesses wonÂ’t come back. Others will, with news of a new and boundless vistas. But we have to let them go out. We canÂ’t strike out in a central direction determined by bones cast upon a shamanÂ’s cape. It could lead us to the promised land, or out into the desert.

In conclusion: all interventions should be immediate, nonideological and subject to change given the arrival of new data and the speed at which we close our OODA loop should be improved. This is the way our mammalian ancestors overcame the dinosaurs. If we remember nothing else, we should remember that.
Posted by:Mike

#2  Yeah, but being a worker ant sucks. The life short, hours long, bennies suck and forget about getting laid.
Posted by: ed   2009-02-25 13:20  

#1  The masters of complex biological systems are ants. They use very little energy and almost no intelligence, yet they are most adaptive and succesful queens of the world. It's been estimated that up to 15% of the animal mass in jungles is the lowly ant.
Posted by: Richard of Oregon   2009-02-25 13:16  

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