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Musings Report 2022-18 4-30-22 The Global Revaluation of What's Truly Important
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The Global Revaluation of What's Truly Important
Two ideas will help us understand this decade: core-periphery and global revaluation of systemic adaptability, risk, capital, labor and resources--the revaluation of what's truly important.
I recently discussed the core-periphery model in a blog post, Crash Is King:
"Crashes reveal what's core and what's periphery because the core controls the destiny of the periphery. In systems terminology, the initial conditions set the parameters of potential options and the limits of the efficacy of various choices. The core's initial conditions are considerably more constructive than the initial conditions of the periphery.
In network terms, every connection between nodes runs through the core. This is not the case for the nodes. The dependency chains are asymmetric: each node looks stable and independent until push comes to shove. Everyone is dependent but some are less dependent than others."
Put another way, the core can live if the peripheral nodes collapse, but the peripheral node can't live without the core.
My point was that crises strip away what's actually essential from claims of what's essential, and reveal what assets are core and which are peripheral.
For example, vast tracts of fertile soil and fresh water river systems are key assets for growing food and providing fresh water. Long borders with potential enemies are a geopolitical liability.
These initial conditions set parameters which are difficult to overcome.
There are also parameters set by cultural, social, economic and political systems. Those which encourage adaptability and transparency are irreplaceable assets, those that impede adaptability and transparency are immense liabilities.
The other point about the core-periphery model is that dependencies abound in the global system but when push comes to shove, the core has the means to survive the breakdown of global supply chains while the periphery does not.
Global scarcities are reminding us that what's truly important is the means to grow and distribute food and fresh water to immense human populations.
Growing / raising food and distributing it on an industrial scale requires enormous inputs of energy. Even largely self-sufficient regions depend on fertilizers derived from hydrocarbon inputs.
Water is also energy-intensive as it generally requires massive investments in infrastructure to supply not just the daily needs of the human populace but agriculture and industry.
Civilizations that fail to provide sufficient food and fresh water to their populations collapse. The collapse may start with political turmoil but it soon unravels the entire socio-economic system.
I've been addressing the systemic costs of complexity recently in Musings #16, What Happens When Complexity Unravels?
As we revalue what's truly important, a significant percentage of complexity will be revealed as not only non-essential but a huge drag on a system struggling to deliver essentials.
A recent article illuminates the systemic weaknesses in complex, centralized, opaque hierarchies--weaknesses i have discussed in many of my books.
Why Complex Systems Collapse Faster
"When Ostrom examined the decision-making methods of successful social systems, she found that they operate as a network in which all the decision-makers in a certain sector are also stakeholders in that sector, and that decisions are always made by negotiated agreements.
In other words, you should avoid rigid, military-style management in which the decision-makers do not necessarily suffer personal consequences from their decisions because it is especially prone to collapse.
Perhaps Ostrom’s advice is not so different from what the ancient Chinese philosopher Lao Tzu had said in the Tao Te Ching: "rigidity leads to death, flexibility results in survival."
In sum, a lack transparency, skin in the game and accountability doom top-down complex systems to collapse.
Nassim Taleb of Black Swan and Anti-fragile fame recently noted the critical role of transparency in systemic resilience.
He observed that "a system seems all the more dysfunctional when it is transparent."
In other words, when we see all the petty squabbling, the clash of competing self-interests and the conflicts arising from advocacy, we reckon that system is dysfunctional and doomed.
But that is the healthy system, for what's at stake is visible to all, as is the process of all the stakeholders negotiating some agreement on how to proceed.
Corruption requires opacity: cartels, backroom deals, insider trading, bribery, etc. cannot occur in the bright light of transparency, i.e. all critical information is available to all stakeholders.
We can add to Lao Tzu's dictum on flexibility / adaptability: Opacity leads to death, transparency results in survival.
Closed, opaque hierarchical systems appear tranquil and well-managed because the in-fighting, self-interest and corruption is hidden. But opacity and centralized hierarchy are systemic weaknesses. These systems cannot compete with transparent, more decentralized, adaptable systems in eras of crisis.
What is core to a system's survival is two-fold: it must have the transparency, accountability (skin in the game) and flexibility described above, and the real-world resources to provide its own essentials.
This is scale-invariant: it describes households, villages, counties and countries.
How many times have we heard: "They broke up? But they were the perfect couple." Indeed. It's so much easier to hide problems and dysfunctions behind a happy-face facade of suppression.
The couple that is open about their negotiating an approach to difficult situations is the healthy relationship. The couple that hides their dysfunctional lack of communication and inability to find solutions that work for both people is the unhealthy relationship. Outward appearances have it backwards.
This is as true of nations as it is of couples. Systems that are transparent, accountable and adaptable have insurmountable selective advantages over opaque centralized hierarchies.
One important aspect of transparency is value, which is reflected in the cost / price. If supply, demand, inputs, friction, insider dealing and risk are all opaque--hidden, misrepresented, manipulated for show--then it's impossible to value anything properly.
Decisions made on inaccurate valuations cannot possibly be good decisions.
A global revaluation of systemic adaptability, risk, capital, labor and resources is underway. Those with the essentials of systemic adaptability (decentralized, accountable, anti-fragile, transparent) will survive and those without these essentials will collapse.
Those with the means to supply their own food, energy and water (what I call the FEW essentials) will survive, those who live or die on long dependency chains snaking through rivals will not.
The nation that downsizes its consumption to what's available will survive, those which attempt to live beyond their means will collapse.
When there's plenty of everything, it's easy to confuse what's essential with what's not essential but which is valued highly. When what's truly essential is scarce, then what's truly essential become clear and is repriced accordingly. What's non-essential is also repriced accordingly.
At the height of ancient Rome's abundance, the Imperial elite traded mountains of precious metals for incense. The Roman elite literally burned the empire's wealth for what the elite viewed as valuable.
Gold was plentiful in the early boom years of the California Gold Rush. What was scarce was eggs. How much gold will you trade for a few eggs? It depends on how hungry you are.
Highlights of the Blog
Not the 1970s or the 1920s: We're in Uncharted Territory 4/29/22
Doom Porn and Empty Optimism 4/27/22
Crash Is King 4/25/22
Best Thing That Happened To Me This Week
Recorded a new vocal track and C.C. kindly added percussion and remixed my latest tune, a simple little pop-rock love song:
From Left Field
NOTE TO NEW READERS: This list is not comprised of articles I agree with or that I judge to be correct or of the highest quality. It is representative of the content I find interesting as reflections of the current zeitgeist. The list is intended to be perused with an open, critical, occasionally amused mind.
What's one product––under $250––that's changed your life? -- I would ask this with a $25 price point....
The States Americans Are Leaving (And Where They Are Headed) -- voting with their feet...
Energy Strategy: The Road Not Taken? By Amory B. Lovins (October 1976) -- we could have done so much better...45 years squandered...
The Naked Sniper... And Other Lessons On Markets And Investing
WHY THE PAST 10 YEARS OF AMERICAN LIFE HAVE BEEN UNIQUELY STUPID "This, I believe, is what happened to many of America’s key institutions in the mid-to-late 2010s. They got stupider en masse because social media instilled in their members a chronic fear of getting darted."
Resource limits and our strange game of musical chairs
Simon Michaux discussing energy resources and bursting some comfy bubbles (59 min)
Easier said than done: National self-sufficiency in a changed world
A Clash of Two Systems
Facebook’s fibre optics in Nigerian state put Africa pivot in focus (via GFB)
The Coming Removal of the Mandate of Heaven, Part 1 (Food Crisis) -- this focuses on China but the issue is planetary in scale...
The Coming Removal of the Mandate of Heaven, Part 2 (Water Crisis) -- this focuses on China but the issue is planetary in scale...
"I have stretched ropes from steeple to steeple; Garlands from window to window; Golden chains from star to star ... And I dance." Arthur Rimbaud
Thanks for reading--
charles |
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