The future isn't what it used to be

The future isn't what it used to be. Especially in the US, we are warned of impending recession on a daily basis. With a smaller world and easier travel of people and goods, real wages are evening out around the globe, meaning theirs go up and ours go down. The bills for the wild party have started arriving. None of this is new or surprising to anyone not transfixed by the pretty flashing lights of what TV focuses on this week.

So, there's bad news and good news. In some sense, awareness of the bad news is a ray of sunshine of good news in itself.

The value of the dollar continues falling, which the administration has been asking for, and kicking China in the shins for slowing down, repeatedly, and suddenly everyone seems shocked that this will result in an increase in the price of imported goods, including oil, and a gutting of the buying power of our life-savings and retirement funds. None of this is new.

There is hand-wringing and shock over how much the average person seems to be "cutting back" when, by the numbers, "the economy" is booming and healthy. But none of this is new either. The classic popular article that explains this in easy words is "If the GDP Is Up, Why Is America Down?" by Clifford Cobb, Ted Halstead, and Jonathan Rowe. Atlantic Monthly, October 1995, pp. 59-78. That was written 12 years ago. As I wrote here Oct 17, 2007

Certainly other guidelines to policy, such as the Gross Domestic Product, completely mask damaging actions and count spending our nations resources as "income" with no corresponding charge against "assets". (See Genuine Progress Indicator( Canada)
:

GDP-based measures were never meant to be used as a measure of progress, as they are today. In fact, activities that degrade our quality of life, like crime, pollution, and addictive gambling, all make the economy grow. The more fish we sell and the more trees we cut down, the more the economy grows. Working longer hours makes the economy grow. And the economy can grow even if inequality and poverty increase.

The more rapidly we deplete our natural resources and the more fossil fuels we burn, the faster the economy grows. Because we assign no value to our natural capital, we actually count its depreciation as gain, like a factory owner selling off his machinery and counting it as profit.

and the US "Redefining progress", Wikipedia on the Genuine Progress Indicator with a link to the one article that is a must read if you can only read one. (But you need a subscription or to go to the library to get it.)

On investigation, even the attacks on 9/11 against the World Trade Center were not new and not the first time the buildings had been attacked.

What's new is that some of this is starting to penetrate the astounding wall of denial and obliviousness that surrounds the shrinking island of unreality that we're standing on.

Maybe, we should consider standing somewhere else. Maybe, we should look for a safe-haven for what we have, before it too is swept away by the rising tide.

International investors are turning away from the dollar as a safe-haven, a currency of last-resort, and "diversifying". In short, the stock price of the USA is in slow-motion free-fall, and investors are slowly moving towards the door while advising everyone not to panic. They are seeking stability in turbulent times, and not seeing it here.

So, let's bring the lens of "systems thinking" to this question, and see what the crystal ball suggests. Let me appeal to common sense, which has some value to it.

First rule - if something is stable, it's probably stable.

Huh? What I'm suggesting is that things, as it were, have a sort of intrinsic inertia. There are things that change very easily, and things like the proverbial supertanker, that move only after great effort and very slowly. Supertankers, I've heard, start putting on the brakes while still 25 miles from shore.

So it is very unlikely that something that will be a stable safe-haven for the next decade has been fluttering wildly in the breeze in the last decade. In the sense of stability, the past is a good guide to the future, if we look at deep processes not surface events.

It's like trees, whose roots are generally mirror images of the tree, but below ground. If you want a tall tree, you'll need deep roots. The taller the building you plan to build, the deeper the pylons should be sunk into bedrock.

So, the place to look for stability is in processes that are true today, were true a decade ago, were true a century ago, and were true 2000 or 5000 years ago, or longer. It is a pretty safe bet that something that has been rock solid for 3000 years will still be solid next year.

This business of chasing the latest quick-silver sparkle of light, of "momentum" investing in something we know nothing about "because it's going up" is a poor strategy if you seek stability. Here's the news flash - if you want stability and safety, ignore the news, shut off the TV and your pager, and look instead at the "olds." Rediscover reading.

So, 3000 years ago, the American dollar wasn't here. Nor was the Euro. Nor was China launching satellites to the moon. That's all noise, a distraction. Those things change too fast to be "bedrock".

Get past "events" and look at what underlying processes haven't changed.

Physical laws, mathematics, and the billion-year flow of evolution of life on the earth were with us then and are still here, still going on. An alternation of good and bad times, in terms of hunting or harvests was common, as it still is. Moses led a campaign to stockpile 7 years worth of food, looking ahead to hold everyone over during the very hard times, and that was a good idea that worked out well for Egypt.

There was an emphasis on figuring out what wisdom was reliable and timeless, and getting it recorded somewhere and passed on from the older generation to youth, because sometimes youth wasn't interested in listening to old people talking about such things.

There were discussions, pretty much like this post, that people needed to stop chasing the latest fad and fancy, and focus on core competencies and responsible behavior based on the past being a good predictor of the future, giving us stories like Aesop's fables about the ant and the grasshopper and using the "good times" to prepare for the coming "bad times". Multiple prophets warned of bad things that were coming if people went off partying and ignoring virtuous behavior, and, they did, and they did. Denial of inconvenient truth has been with us a long time.

For example, here's a few of my favorite timeless quotes from the Old Testament Bible's book of Proverbs, part of the sacred books of Christians, Moslems, and I guess Jews and ancient Egyptians while we're at it.

Where there is no guidance, the people fall,
But in abundance of counselors, there is victory.
Proverbs 11:14

The deeds of a mans hands will return to him.
Proverbs 12:15

Wealth obtained by fraud dwindles,
But the one who gathers by labor increases it.
Proverbs 13:11

Righteousness guards the one whose way is blameless,
But wickedness subverts the sinner
Proverbs 13: 6


Poverty and shame will come to him who neglects discipline.
Proverbs 13:18

He who walks with wise men will be wise,
but the companion of fools will suffer harm.
Adversity pursues sinners,
But the righteous will be rewarded with prosperity.
Proverbs 13:20-21

He who watches his way preserves his life.
Pride goes before destruction.
Proverbs 16:18

Every man's way is right in his own eyes,
But the Lord weighs the hearts.
Proverbs 21:2

A man who hardens his neck after much reproof
Will suddenly be broken beyond remedy.
Proverbs 29:1

The king gives stability to the land by justice.
Proverbs 29:4

The spirit of a man can endure his sickness,
but a broken spirit who can bear?
Proverbs 18:14

A friend loves at all times,
And a brother is born for adversity.
Proverbs 17:17

He who shuts his ear tot he cry of the poor
Will also cry himself and now be answered.
Proverbs 21:13

I can't see that any of those processes have changed in the last few thousand years. People, left to themselves, tend to be easily deluded, captivated by the pretty lights, chasing wisps while discarding "burdens" like self-discipline and integrity and having respect for the wisdom their elders went to so much trouble to collect and preserve for them. People are very easily taken with their own brilliant ideas and righteousness and fail to consult before heading off on ill-advised actions that could have been avoided. Fools and their money are soon parted. Wealth can vanish overnight, but true friendship will endure.

Most of the wisdom seems clear, straight-forward, obvious, and generally ignored. It's not like this hasn't happened to the last 400 generations of humans.

We seem to have a rather slow collective learning process, however, while some preserve this timeless wisdom and most proceed to ignore it and call it irrelevant to the "modern" world, and then crash the latest scheme, economy, or nation on exactly the same shoals their ancestors did and marked out for them, then look astonished and say "No one told me!" Hmm.

We do seem to have a problem listening to the past when the pretty lights are right here and beckoning, and those people are partying and no harm is coming to them, and these people are good and they're just getting ripped off.

Well, here's a few more basic truths of "systems thinking" that need to be rediscovered every generation:

Sometimes, the inevitable consequences of actions are delayed.

What appears to be going on, based on short-term vision, is often at odds with what is really going on, based on longer-term understanding of the bigger picture.

In the long-run, the long-run matters.

Individuals don't have the memory, bandwidth, or stability to retain Truth for very long. You need collections of individual humans to be sufficient to hold onto Truth.

People who go off on their own and don't consult or even ask for advice are going to miss a lot of information that is obvious to others but invisible to them from where they are standing.

People are blind to their own blindness. It is really, really hard to grasp that very basic truth. We can't even see the hole where we can't see, and need to rely on others to tell us it's there, even though we can't see it.

Individuals are truly lousy at being unbiased observers of causality. They are very good at collecting anecdotes that support their pre-conception, and discarding evidence that conflicts with it.

That said, which most researcher would agree with, most ancient scriptures then go on with some deeper content related to the idea that the way we behave towards each other is really important to get right. Trust, honesty, and enduring friendship are valuable. Exploiting the weak, even if it appears we can get away with it, turns out to be a bad idea.

Here we're into lessons that are starting to be inconvenient. Secular society, having discarded the religious traditions that set the context in which true friendship is possible, then proceeds to tell us the replacement gospel that true friendship is "obviously" not possible and the best we can do is to exploit our neighbor before they exploit us. Oh, and it's easier to take candy from children and the weak than from adults or the strong, so start there.

But civilizations are more likely to grow from mutual support than from mutual exploitation.
And those who would steal from the weak have shown their true colors, and shouldn't count on their peers ever agreeing to some action that requires "Trust me" to fly. And, as the US has just demonstrated so well, pushing junk debt with a "AAA" label will come to light, and the backlash reverberates for a very long time, destroying opportunity and prosperity as it goes.

Trust, reputation, integrity, compassion, self-discipline, humility -- these things matter to individuals, to teams, to cultures, to nations. That's been true for thousands of years, and it's still true. Whether God is watching or not, everyone else surely is.

We are still waiting for Science to catch up to this and add a "fifth state of matter" to the list of solids, liquids, gases, and plasmas. (Older folk will go "Plasma? That wasn't on the list when Pluto was still a planet, in my day....)

We need to add "social fluid" to the list, which behaves with the same complexity as a plasma in a magnetic field. This fluid has memory, and a great deal of stored energy, so it can reverberate and amplify distortions. The fluid tends to be, over time, "self-correcting". Some responses take a long time to echo back, but then they arrive with interest. It's hard to tell what's really gone, and what's just in the back room gathering momentum.

Activities that are socially supportive, in the long run, will tend to be in turn supported by society, in the long run. That's a key belief, or hypothesis, that is pivotal to selection of an investment strategy with our money and our time and our lives.

A weaker version might be that activities that are destructive to society in the long run are going to be identified, attacked and destroyed by society, in the long run. The system as a whole has "an immune system" is that that way. This is a second belief, or hypothesis.

I think these are stronger hypotheses than arguing that the social fluid has no capacity to generate feedback that will do what it can to restore itself to health.

That said, then, don't invest in ideas that buck the system. I can't see all the pathways, but I have a hard time thinking that merchants of death, like tobacco companies, are good to be associated with or to stand very near, despite their bottom line. The social bottom line may differ from the GDP, because long-term accounting can give different answers than short-term accounting.

Fairness, trust, friendship, honesty, compassion, consultation -- these are industries with a long-term future. These build the fabric of stable economic prosperity and growth. Web 2.0 technologies that support sharing and collaboration, in this model, are very likely to keep on growing. Religions that build a basis for these virtues to grow in are likely to surge. Scientific research and social-technology companies that develop expertise in replacing internal combat models with internal mutual-support models are likely to develop and thrive.

It's hard to know if any particular country will have a monopoly on these virtues. These aren't commodities you find buried in some mountain, they are assets and resources a society has to value and grow slowly over time, seeking whatever it is that helps facilitate that process.

Long-term, very strong positive social feedback rewarding and supporting a very strong positive socially-constructive company is likely to be the star performer that is sustainable. Any other feedback loop has a minus sign in it, which means it will either be a damping-out loop, or an oscillating loop. So we are looking for something with slow but assuredly positive growth rate, not something with a very rapid and completely unsupportable surge and crash property.

Things that improve the overall functioning of our social "body", long term, will grow, for the same reason that railroads and highways were good "infrastructure" investments.

Products and services that help humans overcome their tendency to fragment, go off on their on own in a daze and do stupid things would seem a good place to invest social resources.

I think these virtues will make far more difference than what kind of reading or math scores our children get in school. We need "good people" with "good hearts" to build or rebuild a society that works. Technology is cheap, and everywhere. What we're short of is compassion, and the cultures that make compassion possible.

Then we can build strong teams, and tackle everything else.

These are very deep needs, they've been with us for thousands of years, and show no sign of going away on their own. This is a "market" that will be there, and we can take that to the bank.

The question is how to make a buck doing it. New religions? Social-networking tools? Web 2.0? Technology-mediated collaboration? Virtual reality? A lot of resources are moving over to this area and starting to nose around, smelling a market as big as railroads, utilities, or interstate highways. With cellphones that are interconnected mobile mainframe computers, whole new worlds of interaction are opening up every day.

Most advertisers seem to assume their maximum profit will be achieved if the "consumer" acts "good", which to them means dumb, pliant, compliant, impulsive, and punching the "buy" button as soon as the pretty lights start flashing. There's a market at the other end of that spectrum, where people who have thought about it and seen where the first strategy goes prefer to be wise, competent, long-term thinking, and interested in stability not flashiness.

The first one to actually figure out how to make a committee, meeting, or team actually work (in general, every time) is going to make a trillion dollars -- and have a society left to spend it in.

It is a very important distinction, that these would be technologies that would make a company more robust, which is not the same thing as "More competititive".

Long-term survival is not spelled "c-o-m-p-e-t-i-t-i-o-n". The trick is getting past and seeing past short-term survival to realize that. The only reason competition for survival was key to evolution of our bodies was that there wasn't much learning curve in individuals, so the learning had to occur by simply terminating the bad ones and making more good ones.

If learning is facilitated and can occur rapidly, and adaptation can occur without having to be "over my dead body", there is no utility to competition any more. Resources can redistribute themselves rationally without so much carnage.

"Mature" means more than being able to buy XXX rated pornography on your own credit card. As a nation, aside from our waistlines, we've bumped into the limits of a small world and run out of easy room to grow outwards.

That's not the end of the world -- it's just the signal that it's time to grow up instead.

We should throw out the GDP, and start measuring us the way the outside world sees us -- by how much value are we producing and contributing to interactions, not how much can we consume.

Since our spending spree is coming to a close, we need to measure ourselves by how much good we're doing, not by how many "goods" we have in the stock-room.

On a national level, it might be wise to have Madison Avenue and Hollywood focus their efforts to create consumer-culture abroad, where the money went, and focus within the US on going back to our roots of frugality, mutual-support, and compassion -- the stuff that we praise during disasters and seem to forget otherwise. Continued efforts to turn up the heat and get people who are broke to buy more is more likely to lead to urban riots and expanded prison populations or consumption of Prozac than it is to lead to a sales surge.

So, things come together and the agenda of capitalism and of altruism suggest the same pathway of taking a time-out and rebuilding the social capital of America. Nothing else seems to be working, and there's a lot of pain and instability due to that.