What About Fundamental Change?

Barrack Obama was big on fundamental change. If we listen to the news or social media, we hear a good deal about it. Certainly, politics in North America and Europe seems to be moving in that direction.

What should we do about that tendency?

If anything, we should try to estimate how the intermediate to long-term future will differ from what it has been. That requires a theme.

Are you optimistic or pessimistic about it? I am inherently an optimist, but I notice most of the people I recognize to be to the left of me tend to be pessimistic. They relate to and focus on “problems” – global warming, income inequality, systemic racism, equal vs equitable, a decline of religious belief, failure of traditional institutions, biased media, and more. They seek specific methods to “solve” each. All of those solutions require a stronger, wealthier, and more intrusive government.

Strong government or weaker is a decision we must address. We have forgotten that the government has nothing they did not first take from some citizen. To assess government as being better because they are stronger requires that we believe they can spend money and exercise control better than we can do so by ourselves. Could be true, but history supplies little evidence to support the thesis.

Do you believe in goals and programs or direction and systems? Systems seem to work best because once a path is chosen in a goal-oriented environment, there tends to be an unwillingness to change regardless of outcomes. Systems tend to be direction oriented and, therefore, more flexible. The best comparison comes from negotiator Chris Voss, “Never be so sure of what you want that you would not take something better.” Systems deliver the, as yet unseen, “something better.”

The opposing ideas

Markets are systems. Governments manage programs and define problems. Notice the difference in outcome as a result. Do we end up with solutions or with embedded bureaucracies?

Are governments the answer?

Governments and programs have a single perceived advantage. They offer fast solutions. That their solutions tend to fail seems unnoticed. The tendency towards failure destroys the advantage.

Are markets the answer?

Markets can take a long time to fix inequities, and they typically take longer when government programs come along. Nonetheless, they work, but the solutions are unnoticeable in the short run. Markets have an underlying ability to destroy the misallocation of money, or time, or people resources. In simple terms, things that don’t work don’t last. The Soviet Union took 70 years to disappear. Royalties ruling Europe are long gone.

Can you see fifty years of change?

Not easily, but using leftist ideas, I can’t see what the future will be. Will we be more free? More prosperous? More ethical? Healthier? Happier? Longer living? With wider or narrower choices? The leftist people I know see only an idea of the future. They don’t see what the idea means in terms of how we will live.

Can we see what markets achieve over 50 years? Not very well, but we can see how market-oriented things have worked in the past. I  listened to a podcast that draws on a Wall Street Journal’s article about the 50th anniversary of 1971. The idea is to understand the fundamental changes that occurred and how they present themselves today. The five chosen were these:

  1. Henry Kissinger’s secret trip to China to begin the normalization of relations.
  2. The MCI lawsuit that opened up competition in long-distance telephone rates
  3. DisneyWorld Opened
  4. Intel introduced the 4004 integrated circuit.
  5. The Bretton-Woods system for monetary management dissolved.

The idea is each permitted or even created a platform.

  1. The China move is obvious and still developing. You could argue either side of the good versus bad argument with reasonable information choices to support either side. Some market changes take more than 50 years to play out conclusion.
  2. MCI took away the AT&T monopoly and made long-distance nearly free. Did you know the fax machine was invented in 1926, but prohibitive long-distance prices made it impractical until the 80s? If you were spending $5.00 a minute of today’s money, how much traffic would there be on the internet? Would the internet even exist?
  3. Disney world is interesting in terms of scale investment. I suppose the idea of concentrated entertainment led to what Las Vegas has become.
  4. The integrated circuit permitted the computer age. Before that, computers were huge and expensive to both buy and run. A 4k memory board was bigger than a sheet of bristol board. Computers were slow because it took a long time for the electricity to pass through the wiring. ICs are very small. You should notice that the transistor, the idea underlying the IC, was invented 25 years before the 4004 chip. Markets work slowly, but useful things eventually come to the front.
  5. The Bretton Woods system was the basis for the gold-backed currency idea. Here again, you could argue either side of the good/bad question. Gold-backed currency limits government. Gold-backed currency exposes political errors faster. You cannot throw money at failed schemes indefinitely.

Can we identify the foundationally important platforms coming into view today? 

There are some already growing.

  • The long-form interview podcast
  • mRNA vaccines.
  • 5th generation and more advanced nuclear power.
  • Cold Fusion power
  • Warm superconductor technologies.
  • Quantum computing
  • Blockchain technologies, although I wonder if they survive quantum computing.
  • Artificial intelligence, especially machine learning. If successful, we will begin to see things we don’t know we don’t know now.

Finding the new “don’t knows” will be the biggest adventure.

Will today’s “liberalism”  survive?

I don’t see how. It is inherently illiberal. It is founded on competition instead of co-operation, envy, revenge and other negative emotions. Assigning government power to it is hardly a prescription for success. It didn’t work in the Soviet Union, and the government there was all-powerful.

Recall, “Things that don’t work don’t last.”

Perhaps we should look back 250 years and the idea of classic liberalism. The idea of freedom to choose and the freedom to fail was permitted. Those are the fundamentals of market solutions—especially the destructive side of it.

As the current system fails, look for:

  • The rise of religion as a community of thought rather than the institutional religion we have seen. I never expected to quote Justin Bieber but here goes, “”Church is not a place. We are the church. We don’t need a building to connect with God. God is with us wherever we are.”  Higher purpose.
  • Family and community will reappear as important ideas. Who can you trust?
  • People coming to understand the idea of incentives. Today media has been incentivized by clicks that drive their revenue stream. More clicks require more dramatic presentations. There are limits to how far that can go with that. Controversy doesn’t sell well forever. It relies on conflict, and conflict is self-defeating. Co-operative motivation.
  • More telecommuting. Zoom and similar programs will reduce the cost of getting to work for many. That will reduce the occupancy cost of many businesses. Hard on commercial landlords, probably. Paradigm shift

Every change is hard to see inside the bubble, but every year has brought fundamental change. None of the positive parts have appeared by command and control, though. Be observant of meaning and possibility, be thoughtful, be willing to change, be wise.

I help people have more income and larger, more liquid estates. 

Call or email don@moneyfyi.com or in Canada 705-927-4770

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: