Musings Report #7 2-16-13 The Wrong Unit Size
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The Wrong Unit Size
I came across an excerpt from management guru Peter Drucker's 1993 book, The Post-Capitalist Society, that hit me like a thunderbolt:
"The key autonomous actors are not just losing integrity and control, they are the wrong sort of unit to handle newer circumstances. For some, they are too large, for others, too small. There are pressures for the "relocation of authority" upward and downward, creating new structures that respond better to the forces of change."
This is a profound insight: the Central State and the global corporation are losing integrity and control not due to mismanagement but because they are the wrong unit size to address the emerging era's problems.
The State is too large to address most problems (actively making problems worse via sledgehammer Central Planning), and too small to address global challenges. The global corporation is too large to address the 90% of human life that isn't terribly profitable, and too small to resolve the implosion of the debt-dependent Status Quo.
The State has monopolized all authority, giving it essentially unlimited power to make things worse. Since the the Status Quo is at heart a crony-capitalist partnership of cartels and the State, the transnational corporation's authority ultimately flows not from the market but from the State that enables and protects its markets and margins.
The solution is to push authority down to decentralized units of local, opt-in, collective-intelligence organizations that are much better sized to respond to local conditions and local feedback.
In the larger scheme of things, what has happened is highly centralized concentrations of power, capital and authority have been expanding their control and reach for decades. Their unit size on the way up the centralization spectrum was once advantageous, but now they have become the wrong sort of unit size to address and solve the problems they have created or enabled.
Since central power does not relinquish authority easily, if ever, the Status Quo will have to decay and implode before authority can be pushed down to more responsive, appropriate levels.
NEW FEATURE: Email from the Musings Inner Circle
At the suggestion of my longtime friend and advisor G.F.B., I am adding a new section to the Musings Reports which highlights interesting email exchanges with people in the Inner Circle (subscribers and major contributors).
Mark G. suggested that the medieval-Renaissance trading confederation, the Hanseatic League, offers potential models for new global organizations that are not alliances between states or city-states. From Wikipedia: "The Hanseatic cities had their own legal system and furnished their own armies for mutual protection and aid. Despite this, the organization was not a city-state, nor can it be called a confederation of city-states; only a very small number of the cities within the league enjoyed autonomy and liberties comparable to those of a free imperial city,"
I do not know much about the league and am very interested in the decentralized organization model that offered a successful alternative to the Expansive State or Imperial model.
Lew G. sent me a link to the Handbook of Collective Intelligence, a project of MIT's Center for Collective Intelligence. Collective intelligence includes many models, including crowdsourcing and the global corporation.
Market Musings
Correspondent B.C. has proposed that the Status Quo has explicitly chosen GDP and the stock market as its chosen propaganda "markers" of recovery, and as such they will manipulate these by whatever means are necessary to keep them notching higher. That President Obama specifically identifies these two metrics as "proof" that his policies are working is strong evidence that these are indeed the chosen propaganda markers.
This further suggests that conventional tools of financial and market analysis--fundamental and technical--have lost their predictive value, as declines will only occur to serve some ulterior purpose, for example, to foster the illusion that the market is still "free," or to enable insiders to profit from "unexpected" declines and then scoop up cheap shares when the decline has scared non-insiders into selling. In trader-speak, this is known as "rinse and repeat."
The capitulation of bears appears to be complete: various historical data is being trotted out on numerous sites "proving" that years with January advances continue advancing and close much higher. Perhaps the market is truly disconnected from the real economy and the dollar. It's certainly something to monitor, but as I have often pointed out, the US dollar's rise crushes corporate profits, the supposed foundation of higher stock valuations. For the dollar to weaken, the euro will have to strengthen, as the yen is weakening as a direct result of Japanese Central State policy. It is mathematically impossible for the euro and USD to both rise, and the strong euro is crushing Eurozone exports. It's difficult to see what could drive the euro higher in a recessionary debt crisis.
What I am doing: watchful waiting.
What I would do if I were managing $1 billion: After seven up weeks in a row and weakening internals, assume nothing, await a tradeable trend.
From Left Field
Flummoxed by Failure—or Focused? It's not about being smart. The key to getting past unsuccessful moments is a flexible view of learning
Media bias is difficult to root out: after you've been body-slammed by biased MSM, all they need to do is do nothing: no retraction, no follow-up. Just let the slam remain on their servers, poisoning the credulous masses...this is an examination of data from a NYT test drive of a Tesla electric car.
"All disruptive technologies upset traditional power balances, and the Internet is no exception. The standard story is that it empowers the powerless, but that's only half the story. The Internet empowers everyone. Powerful institutions might be slow to make use of that new power, but since they are powerful, they can use it more effectively. Governments and corporations have woken up to the fact that not only can they use the Internet, they can control it for their interests. Unless we start deliberately debating the future we want to live in, and the role of information technology in enabling that world, we will end up with an Internet that benefits existing power structures and not society in general."
Thanks for reading--
charles
