Complexity Is Fragile

The success of Justin Trudeau and his Liberal government last month has started me to thinking.  It is not safe to assume that no one else gets it, so I figured I was probably missing things.  Probably important things.

Fortunately, I came upon some thoughts that help.

Liberals tend to be people who think and talk, while conservatives tend to be people who do things.  If you are a liberal intellectual, you tend to see problems and opportunities that others do not.  If instead,  you do things, you tend to see limits, decisions and change.

The liberal mind cares and wants to fix things.  Because the cause is good, they pay little attention to limits.  The conservative mind wants to use old ways until they are easily replaced with new, better and ideally, cheaper ways.

Neither has a perfect way to prioritize what is necessary.

That problem becomes most visible in the implementation.  Liberals tend to use bureaucracy to solve problems and conservatives tend to use the market.

Markets are agile and bureaucracies are inert.  Either may work well in the beginning, but as time passes, that inertia becomes a serious problem.

What do you do with a bureaucracy that has served its purpose?  Most tend to hang on to the problem for which they are the solution and tend not to gracefully move on to the next opportunity.  They redefine their problem so it is more vague and harder to measure.

The theme is, never make anything simple if you can make it complicated and beautiful.  Solved problems endure as problems so far as the overhead goes.

New problems arise and resources are limited. Eventually society runs  out of usable resources and a different complexity arises.  The people then argue about allocations.  This reduces the effectiveness of the group.  Infighting is especially costly.  More pressure on resources.

The initial successes reallocating resources to social issues is impossible to sustain.  Complexity costs to build and it costs even more to maintain.  Complexity is fragile.

We got to this point rather easily.

Capitalism is good at creating wealth.  In the early times, it created far more than was required to sustain growth.  That surplus came to be used to deal with problems whose solution produced no direct economic value.  A secondary condition is there evolves a group, the elite, that sees their duty to be deciding on allocation of the surplus.  From their viewpoint the surplus always existed, will always exist, and will be as big as they need.  Unlikely.

Sometimes societies collapse.  Part of the collapse came because the elite did not see the real source of their money and the needs that the producing sector has to grow and change.

Rome for example.

Rome used their surplus resources in social ways.  Society became complex.  As the surplus was applied to complexity, society became more fragile.  Each diverted dinarius slightly reduced capital available to invest in growth or efficiency and added a structure that required even more money to maintain itself.  Bureaucracies do not intuitively reallocate resources, so demand for money grows.

It is a hard problem because neither the liberal nor conservative form of political thinking intuitively balances resources and social needs.

Diminishing marginal returns set in eventually.  Each new dinarius provided less benefit than the one before and eventually there becomes only cost.

A growing need for money allocated with diminishing marginal returns is a recipe for disaster especially when the money so taken limits productive activity.

Complex societies are antithetic to nature’s way.  Nature seeks simplicity.

“Collapse is simply the last remaining method of simplification.”  Clay Shirky

We might wisely seek ways to simplify society.  Others have failed to notice the inevitable.   You could visit Rome, Athens, Mayan Mexico and see the artifacts.

Don Shaughnessy is a retired partner in an international public accounting firm and is now with The Protectors Group, a large personal insurance, employee benefits and investment agency in Peterborough Ontario.

Contact: don@moneyfyi.com  

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