House of Eratosthenes

We were not alone in skewering that silly David Brooks column. Gerard tortured it with a devastating fusillade, simply by linking to this piece over here. And the author there makes a brilliant point about the folks in charge right now, and their lack of ability and experience with the all-important hard-hat logic.

I think the complexifying financial and political environment of the last few decades has simply outstripped the capacity of our “educated classes”, our cognitive elite, to cope with it. The “wizards” in our financial system couldn’t reason effectively about derivatives risk and oversimplified their way into meltdown; regulators failed to foresee the consequences of requiring a quota of mortgage loans to insolvent minority customers; and politico-military strategists weaned on the relative simplicity of confronting nation-state adversaries thrashed pitifully when required to game against fuzzy coalitions of state and non-state actors.

Charles Murray and Richard Herrnstein argued tellingly in their 1994 book The Bell Curve that 20th-century American society had become a remarkably effective machine for spotting the cognitively gifted of all socioeconomic and racial backgrounds and tracking them into careers that would maximize their output. They pointed out, though, that the “educated class” produced by this machine was in danger of becoming self-separated from the mass of the population. I agree with both arguments, and I think David Brooks and Will Collier are pointing us at the results.

In retrospect, I think race- and class-blind meritocracy bought us about 60 years of tolerably good management by Western elites. The meritocracy developed as an adaptation to the escalating complexity of 20th-century life, but there was bound to be a point at which that adaptation would run out of steam. And I think we’ve reached it. The “educated classes” are adrift, lurching from blunder to blunder in a world that has out-complexified their ability to impose a unifying narrative on it, or even a small collection of rival but commensurable narratives. They’re in the exact position of old Soviet central planners, systemically locked into grinding out products nobody wants to buy.

The answer to the problem might surprise you. Keep reading…

Levels of environmental complexity that defeat planning are readily handled by complex adaptive systems. A CAS doesn’t try to plan against the future; instead, the agents in it try lots of adaptive strategies and the successful ones propagate. This is true whether the CAS we’re speaking of is a human immune system, a free market, or an ecology.

So as you go down the list of our confounding problems, you see each one has not just one, but two obvious solutions: A practical, reactive solution and a theoretical, proactive one. Our tendency has been to try out the theoretical, proactive solution first…when it doesn’t work, we try it again. We refuse to adapt. Ahmed the terrorist m-u-s-t not be “tortured” in any way, employers cannot ever be restored to the liberty to hire & fire as they see fit. Our fancy theories, many of which have been provided ample opportunities to bear fruit across the decades — and never once have — keep getting in the way.

Enter the complex adaptive system:

CAS hardening of the financial system is…[easy]. Almost trivial, actually. About all it requires is that we re-stigmatize the carrying of debt at more than a very small proportion of assets. By anybody. With that pressure, there would tend to be enough reserve at all levels of the financial system that it would avoid cascade failures in response to unpredictable shocks.

Cycling back to terrorism, the elite planner’s response to threats like underwear bombs is to build elaborate but increasingly brittle security systems in which airline passengers are involved only as victims. The CAS response would be to arm the passengers, concentrate on fielding bomb-sniffers so cheap that hundreds of thousands of civilians can carry one, and pay bounties on dead terrorists.

At this point I must veer off into two honorable mentions for the Best Sentence I’ve Heard Or Read Lately (BSIHORL) award. Pardon the topic drift, but there have been so many candidates for Best Sentence this week, they can’t all go walking away with one…those invisible gold trophies are expensive!

But these two have to be captured in the scroll before they drift on into oblivion. And the subjects are somewhat Similar. Similar enough.

“We’ve all experienced periods of economic hardship that far from ‘depressing’ us in perpetuity, have made us more wise as to how to succeed.”

And…

“The United States does not have a security system; it has a system for bothering people.”

Hat tip for that last one, to Proof Positive.

[…] for Obama FARK Will Cure Your Optimism Says More Than Any Panel of Any Cartoon, Ever The NeoCube Complex Adaptive Systems Best Sentence LXXX Peanut Vest “Hard Hat Logic” Best Sentence LXXIX Do Liberals Like […]
- House of Eratosthenes | 01/10/2010 @ 09:54

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Complex Adaptive SystemsSaturday, January 9th, 2010

Complex Adaptive Systems
Saturday, January 9th, 2010