|
|
Musings Report 2017-2 1-14-17 When Centralization Becomes the Problem Rather Than the Solution
You are receiving this email because you are one of the 500+ subscribers/major contributors to www.oftwominds.com.
For those who are new to the Musings reports: they are basically a glimpse into my notebook, the unfiltered swamp where I organize future themes, sort through the dozens of stories and links submitted by readers, refine my own research and start connecting dots which appear later in the blog or in my books. As always, I hope the Musings spark new appraisals and insights. Thank you for supporting the site and for inviting me into your circle of correspondents.
Thank You, New Subscribers and Patrons and Renewing Contributors!
A heartfelt Thank You to everyone who decided to renew their support of Oftwominds.com or become a subscriber/patron in the New Year. It promises to be an exciting year with ample opportunities for insights into the big changes underway globally.
When Centralization Becomes the Problem Rather Than the Solution
One of the core themes I'm working on this year is how centralization (of planning, power, wealth, governance and control)-- the primary solution governments, corporations and institutions turned to for the past 150 years (and especially for the 75 years since World War 2) --is not only no longer providing solutions for today's problems, it has become a systemic problem itself.
In trying to solve problems by concentrating even more power and control into the top of the wealth-power pyramid, authorities are not just failing to solve the problems: they are squandering resources that could have been devoted to real solutions (i.e. high opportunity costs) and erecting impenetrable barriers to small-scale, locally controlled solutions.
Centralized programs not only suck up all the funding and political capital; they also attract lobbying and corruption by wealthy players who have realized they can leverage their own private gains by influencing central planners to design and implement the programs is ways that enrich the few at the expense of the many the programs were intended to benefit.
Feedback, rigorous evaluation and accountability are key dynamics in successful solutions. All three are dissipated by centralized organizations, which are designed to dilute the three so that insiders are freed of the burdens of being accountable for the organization's failure to accomplish its mission.
Solutions arise from experimentation, innovation, trial and error, incremental advances and piecemeal improvements that are constantly exposed to feedback, evaluation and accountability from participants-- customers, users, residents, workers, supervisors, voters.
Centralized organizations are optimized for Grand Plans, thrilling visions of Big Problems Solved. But the grand quest distracts from actual solutions, and misdirects or ignores feedback, evaluation and accountability.
One infamous example of Centralized Solutions in war was the Vietnam War's body counts: the solution to winning the war, central planners in Washington decided, was to kill more of the enemy that the U.S. forces lost in combat casualties. A "kill ratio" of 1-to-10 (ten dead Vietnamese soldiers to every American GI killed in combat) would mathematically "win the war" through attrition.
Given this incentive structure and centralized evaluation of "success," American ground commanders naturally started counting civilian corpses as "enemy combatants" to boost the desired body counts in their sectors.
Actually winning the war required much more than counting bodies, of course, starting with the vast systemic corruption that characterized South Vietnamese governance. But body counts is a typical example of centralized planning and definitions of the problem and the solution imposed from the top down.
Another classic is the Grand Plan to issue every student a college degree, as if possession of the credential bestowed actual useful skills, values, etc. The substitution of a centrally controlled credential for an actually useful acquisition of marketable skills is typical centralized planning: every student can be processed through schools that all follow the same educational philosophy, curriculum and evaluation procedures: what I have called The Factory Model of education.
Variations are punished or banned as failures--especially if they work better than the centralized programs.
The author of an excellent book I'm reading on the abject failure of centralized foreign aid/anti-poverty programs, William Easterly (the book is "The White Man's Burden" 2006), describes the two kinds of aid philosophies and management: the Planners, who cook up Grand Visions and centralized command and control "scientific management" hierarchies to oversee the Big Solutions, and the Searchers, the people on the ground who seek piecemeal, localized fixes which often operate as markets with customers and suppliers getting the work done, as opposed to the Planners rigid management pyramid.
Easterly, who worked for 16 years in one of the most centralized aid organizations, The World Bank, musters undeniable evidence that Planners have effectively squandered $2.3 trillion in aid over the past few decades, with little to show for this monumental sum and effort.
Centralized command and control isn't cheap. As Joseph Tainter and others have shown, the complexity costs imposed by centralized hierarchies eventually exceed the carrying costs of the system they manage.
No centralized hierarchy can compete with self-organizing networks in terms of efficiency and cost.
Global corporations are often held up as examples of successful centralized hierarchies. But this overlooks two key characteristics of modern global corporations:
1. Thye have moved to flatten managerial layers, i.e. become more decentralized and more like networks
2. Corporations have a very simple-to-measure goal: to earn profits for shareholders in dynamic, rapidly changing markets. As a result, feedback, rigorous evaluation and accountability are key dynamics in corporate success stories, along with innovation, incremental improvements, etc.
Nokia is a recent example of a global corporation that failed to listen to feedback, rigorously evaluate programs and impose accountability in ways that encouraged honesty and transparency rather than masking the reality of failing programs.
Some costly centralization pays dividends, but only if the process and trade-offs are transparent. Otherwise, insiders steer the organization to benefit themselves. Democracy is a good example in the realm of politics.
Those benefiting from employment within inefficient, costly centralized institutions are naturally loathe to innovate themselves out of a job.
This dynamic strips incremental changes of most of their transformative power: only increments that don't threaten the status quo will be allowed. This limits internally supported change to the margins.
This leave near-collapse or systemic failure as the only pathway that's open to rapid transformation of costly, inefficient centralized institutions into more efficient, lower-cost self-organizing networks.
Many observers have noted that the energy returned on energy invested (EROEI) is diminishing, meaning less of each barrel of oil or equivalent is available to consume after extraction, processing, transport, etc.
Should the energy available to support the costly centralized structures that dominate modern industrial life decline below a certain level, these status quo dinosaurs will crumble because the energy costs of maintaining them will exceed the benefits they yield.
Summary of the Blog This Past Week
The Eight Forces That Are Pressuring Profits 1/13/17
What's Truly Progressive? 1/12/17
The Path to $10,000 Bitcoin 1/11/17
Dear Self-Proclaimed "Progressives": as Apologists for the Neocon-Neoliberal Empire, You Are as Evil as the Empire You've Enabled 1/10/17
Why Don't the U.S. Dollar and Bitcoin Drop to Their Tangible Value, i.e. Zero? 1/9/17
Best Thing That Happened To Me This Week
Completed some furniture and woodworking projects to my satisfaction.
Market Musings: Checking in on Gold
It's always worth checking in on gold when an inflection point nears.
As the US dollar surged, gold fell to nearly $1100, but it has recently risen sharply to just below $1200.
While this is clearly a positive trend for gold owners, what is the near-term outlook for further gains?
The indicators (MACD and stochastics) are turning up, a positive sign that more upside is likely, and the 50-week moving average beckons as an important support/resistance level above at $1262.
If gold can close definitively above the 50-week MA, history suggests further gains will follow.
From Left Field
The Secret Life of Trees: The Astonishing Science of What Trees Feel and How They Communicate
A Sober Utopia (via Lew G.) In a remote corner of Colorado, a radical experiment is underway to rehabilitate the state’s most downtrodden residents.
Establishment Narcissism – The Democrats’ Game of Thrones
Capital's Faithful Messenger: Barack Obama at Home
Plutocracy (and energy)
The Forgotten Interventions (in other nations' elections)
Civilization goes over the net energy cliff in 2022 — just 6 years away
Depletion: A determination for the world's petroleum reserve (PDF)
“Brexit, Oil and the World Economy” (54 min)
Aid in reverse: how poor countries develop rich countries
The Post-Productive Economy (via Lew G.)
How Should a Society Be? (via Lew G.) -- interesting ruminations on AI and journalism...
“Maybe the only significant difference between a really smart simulation and a human being was the noise they made when you punched them.” Terry Pratchett
Thanks for reading--
charles |
|
|
|
|
|
