Wednesday, February 25, 2009

Collapse of Complex Systems III: Incremental Change and Collapse
February 25, 2009

A host of beneath-the-surface causes cannot be eradicated by incremental reforms, policy tweaks and giveaways. Masking the problem does not make the cause go away.

This month I've attempted to describe deep cultural and economic causal trends which are unaffected by stimulus packages and policy tweaks. Here are several recent entries on this broad theme:
What Won't Change (February 2, 2009)
The Middle Class Is Crumbling (February 3, 2009)
Complacency and The Will To Radical Reform (February 12, 2009)
Complacency and Scalability Traps (February 14, 2009)

Structural causes identified in the above entries include:
1. demographics (retirement benefits unaffordable)
2. financial deleveraging
3. top-heavy, high-cost U.S. economy
4. rising interest rates
5. de-scaling of large enterprises/structural job losses
6. scalability trap/structural job losses
7. crippling regulation and overhead burdens on small business
8. cultural complacency
9. "head-fake" drop in energy removes incentives for alternative energy

Let's add a few more today.

In The Fall of the Roman Empire , author Michael Grant identified political disunity as one the one key causes of the fall of the Western Roman Empire (Rome).

One engine of such disunity and squabbling, of course, is a deep-denial complacency: if a large percentage of the ruling class/citizenry sees nothing wrong, or counts on feeble "reforms" to resolve mounting global challenges, then they will hobble those seeking systemic, sweeping changes required to survive the challenges.

Another key reason for this crippling disunity is the resistance of the plutocracy/welfare recipients to any change in the status quo. It may strike some as ironic that the two ends of the political spectrum are united in one goal: fiercely resisting any shifting of largesse/benefits. At the top, the "fortunate 400" in Roman society paid less and less tax as the crises mounted, while 300,000 fortunates at the bottom rung continued to draw free bread and 170 days of free public entertainment in Rome as the Empire collapsed inward on Rome.

We see plentiful evidence of both trends around us. The number of political appointees who felt paying taxes was for plebians is not just embarrassing, it's indicative of a broad cultural trend; and it seems many of the riots we read about in western Europe stem from proposed cuts in what are essentially "bread and circuses" welfare benefits which the Empire can no longer afford to shower on its residents.

As the plutocracy contributes less and less to the finances of a heavily burdened central government, wealth disparity rises. This trend has been firmly in place for years. Friday Quiz: The Fortunate 400 (January 30, 2009) For 'Fortunate 400,' a Tumbling Tax Rate (Wall Street Journal)

As in fast-declining Rome, the plutocracy is pleased to wield its wealth and influence to insure it pays 17% tax rate (much, much less when tax-free muni bonds are counted as income) while the productive elements of the economy are saddled with 40%-50% tax burdens.

Also as in headed-to-oblivion Rome, the plutocracy no longer contributes its sons and daughters to military service; that is left to the poor.

Lastly, rigid ideological camps are creating disunity as the middle (and the middle class) are eroded. Thus we have a Congress which united under pressure to give $700 billion in borrowed money to the banks under a Republican administration, and now under a Democratic administration the Republicans in Congress have belatedly discovered a deep desire for fiscal prudence--a desire which they mysteriously lacked for the 8 years of the borrow-and-spend Bush administration.

Though it is impossible to summarize the wealth of information in Jared Diamond's monumental Collapse: How Societies Choose to Fail or Succeed , it seems to me that the inability to see the underlying fragility of the environmental base of the economy was a key factor in the collapse of the cultures Diamond examines.

In an eerily similar way, the Powers That Be in the U.S. are essentially blind to the extreme fragility of the global energy complex, global fresh water supply, global soil reserves and the global public health system. As many authors have detailed, a global economy without abundant cheap fossil fuels will be unable to feed and maintain 6.5 billion humans.

Though neither Grant nor Diamond mention this specifically, I note that the Roman plutocracy/ central leadership obviously hoped that additional regulations and edicts would somehow turn the tide. I see the same over-reliance on legal mechanisms and edicts and policy tweaks in the U.S. today. A Congress of attorneys rather unsurprisingly is enamored of legalisms and laws and policy tweaks, and a plutocracy and welfare class wary of any reduction in benefits and tax breaks is pleased to hope tweaks and tucks will somehow maintain a crumbling status quo.

But as Donella Meadows outlined in her seminal paper, Leverage Points: Places to Intervene in a System (Sustainability Institute), adjusting the perameters of a system has limited effects. What this means is that fiddling around with "reforms" like increasing the fee paid by Medicare recipients by $10 will never make Medicare financially sustainable.

Ditto tweaking the gas mileage of the U.S. fleet by a mile or two, and 99.9% of all the other "reforms" proposed and fought over.

What we have in essence is an over-regulated, overly complex, cost-heavy structure which we attempt to "fix" by adding further layers of complexity and overhead costs. The idea that these incremental approaches can change the fundamental structural flaws is simply false; their net effect will be to hasten the collapse of the systems they seek to repair.

This is what I call The Seductive Illusion of Incremental Change (May 13, 2008).

As noted yesterday, Trainter's The Collapse of Complex Societies suggests that at some point the citizenry of failing societies more or less choose to let their unsustainable systems topple over rather than continue the draining attempt to support the burden.

Disunity, complacency, growing wealth disparity, rising military and taxation burdens, fragile environmental foundations--all these need only a sustained drought or energy shortage to tumble like dominoes.

While we're on the subject of "collapse," here are a few other relevant titles:

Fruitless Fall: The Collapse of the Honey Bee and the Coming Agricultural Crisis
The Coming Economic Collapse: How You Can Thrive When Oil Costs $200 a Barrel
Reinventing Collapse: The Soviet Example and American Prospects
Shameless pitch for my own book: Weblogs & New Media: Marketing in Crisis

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Operation SERF, Part 10
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