the Heart of it “from scratch”, from two systemic views

The heart of the problem “From Scratch”
from two systemic views.

1. Yaneer Bar-Yam is president of the New England Complex Systems Institute and Highlights the scientific research supporting the Occupy Wall Street movement.

2. Marc Calabria is a researcher at the CATO Institute who emphasizes as discussed on the PBS Newshour 11/24, the importance of addressing the stubborn structural causes (being widely ignored) of the growing inequity and instability, that are no one’s fault.

I quite agree with where each starts, and then draw the picture showing how our situation displays a direct conflict with nature, and a puzzle for how to apply the universal solution for ourselves.

Recognizing the natural mechanics of growth economies that would give us leverage and choice in the outcome.

Putting it together "From Scratch" from two different starting points.

A theoretical complex systems view

PH – I share Yaneer’s view that the problem the “Occupy” movement points to is real and critical to respond to. It’s not a social problem alone, however, but also seems to have a fairly clear systemic dimension, that one would need to understand in order to respond to.

The distortion in our society caused by one group of people earning by multipliers, while others earned incomes by constant units, isn’t caused by social values so it won’t be affected by social pressure. Only if the social pressure interferes with the mechanism causing the divergence in the two ways money is accumulated can it have an effect.

Of course, this is an age old problem, one that people have not thought through yet. For the last couple centuries the “bottom line” has been to alter the divergence by hoping that productivity growth would allow all incomes to multiply, so working people wouldn’t have so much to complain about. It’s the current failure of that solution we’re now dealing with.

We’ve actually been waited for the economy to “recover” it’s “lift all boats” behavior for 40 years. It was 1970 when the median wage in the US essentially stopped growing as spending and the earnings of finance continued to grow. The period since has been essentially built on promises of growing real earnings, that didn’t materialize and so turned into growing debt instead. That’s a simplified sketch of the situation, but accurate enough to begin trying to untangle where we really are.

The split seems to be between promises to have the future be like the past when earth seemed to have no limits, and related to our historical difficulty with understanding the difference between linear and exponential math, accumulating by units and by %’s. The ability of an economy to maintain ever growing accounts of its own wealth without similar wealth to back it up, is naturally temporary.

An structural procedures view.

PH – Marc,  Your view expressed so clearly showed you understand a lot.    Yes, study the systemic problems.

I’ve studied it extensively for many years, and used it to develop the new economic science needed to solve it.   As any “new way of thinking”, it takes people interested in looking at what familiar theories don’t explain.  What you find are roots in how the rules change for growth systems in nature.   The investment principles change as growth systems go from “small” to “big”.   There’s a universally proven response to that, which due to our ignorance we are, in effect, institutionally making every effort to avoid making.

I’m sure you know that systemic problems arise from previously having put trust in mistaken solutions.   It means the real solutions will sound a bit “anti-social”, or something.    I have lots you can explore related to the subject on “Reading Nature’s Signals”, my blog of that name, but do as questions.   Much of what I found requires a new approach to really understand it.

So in outline, the central problem is that “Wall Street” is doing exactly what society is asking it to.   The problem is what the people are asking for.     Institutionally what the markets are trying to provide are predictable compounding returns for investors, with the Fed going to every effort to help stabilize that.

The problem is that as the economy grew it changed the earth, and so natural responsiveness of both the economy and the earth also changed.   We didn’t notice it meant the natural laws of economics changed too.    We just spent a few decades trying to cover up the mismatch with growing debt.  That is what is now backfiring.

Even as we are coming to a second collapse as a result, we still have not changed plans or even questioned whether we should, really.   So providing compound returns has now become self-destabilizing, as it further strains an economy.  The economy is not responding to the demands of money as a stimulus.  It’s responding to them as a deeply undermining tax.

I’d be pleased to talk.

Yours,   Jessie Henshaw



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