Saturday, December 31, 2011

…get off the insanity treadmill

By kay.e.strong


We are on the verge of sleepwalking through yet another year—vaguely cognizant that our mental map of the world is sorely misaligned with reality, yet barely conscious enough to form a coherent question about how.

Albert Einstein offers an insight worth reflecting on.  He posited that the thinking we use to solve our problems is in reality the source of our problems. The Greenspan 2008 epiphany is an apt illustration. Appearing before a congressional panel investigating the evolving financial crisis, he admitted "a flaw" in his view of world markets, despite “very considerable evidence that it was working exceptionally well” for forty years or more. To his credit, though, Alan Greenspan is, perhaps, the only leader on record to acknowledge that his mental model of the world had fallen out of sync with reality.  Despite this shocking admission by such a highly revered economic-seer, decision-makers and politicians alike have insisted on clinging to out-moded thinking about how the economy operates in reality.

Daily the news pours out evidence indicting the very thinking used to solve our problems.

…deleveraged of assets, homelessness on the rise

…rebound recession worries imported from abroad; yet, $1.6 T. safely tucked away by US banking system

…military spending on autopilot, while investment in people—the true pillars of growth—stagnate

…tax breaks—a runaway train speeding to “Utopia” (Greek for no place), despite proof that higher top income tax rates produce far more jobs

Einstein is also quoted as having defined insanity: doing the same thing over and over again and expecting different results.  

2012 is an excellent time to get off the insanity treadmill and reboot our mental models to better align with reality—a reality steeped in uncertainty, complexity and in need of new leadership attuned to this new reality.

Consider Joshua Ramo’s book The Age of the Unthinkable: Why the New World Disorder Constantly Surprises Us and What we Can Do About it (2009).  He passionately describes the melt-downs in the global order arising from mismatched mental images and plans for action. When we don’t see the world as a system, we miss the indirect linkages that hold the power to cascade change through a system in response to a direct challenge. He offers his book as a guide to how we can save ourselves—a “decoder ring for the perplexities of our current world, for the dangerous magic that seems to be unspooling everywhere. And it is also, once you’ve understood it clearly, a way for anyone, from eight to eighty, to begin to see what this world means for you — and to see what you can do about it.” (8)

Consider Rebecca Costa’s book The Watchman’s Rattle: Thinking Our Way Out of Extinction (2010). She succinctly identifies the key of our current woes: “The primary cause of all threatening trends is the complexity of civilization itself, which can’t be understood and managed by the cognitive tools we have thus far choose to use. (xi) She argues that our cultural tendency is to focus on the symptoms which we can wrap our head around rather than the underlying problem tangled in a web of complexity. We grab quick-fix solutions for what appear the obvious symptoms but make ourselves more vulnerable to their dangerous consequences.  From Costa’s perspective the key to survival is revving up the way a culture ‘thinks’ to match the complexity rate of the external environment—the part of the environment over which we have no direct control, often little knowledge but holds the power to decimate our lives.

Consider Margaret Wheatley’s book Leadership and the New Science: Discovering Order in a Chaotic World (2006).  My chance encounter with this one sent my head spinning! Wheatley offers hope when she asserts that "[a] system can descend into chaos and unpredictability, yet within that state of chaos the system is held within boundaries that are well-ordered and predictable." (13) Every living system changes to preserve itself. To do so, however, requires that system maintain a clear sense of identity and freedom of choices, while self-organizing to a higher level of complexity better matched to its environment.  Everywhere, life self-organizes as networks of relationships, thereby, making relationships the “basic building blocks” of life.  

May tomorrow be the day you step off the insanity treadmill and challenge your own thinking about reality as it is—not as it once was.


Kay Strong, Ph.D., Southern Illinois University, M.T., University of Houston, M.A., Ohio University; Associate Professor at Baldwin-Wallace College; Areas of expertise: international economics, contemporary social-economic issues, complexity and futures-based perspectives in economics. E-mail: kstrong@bw.edu

Saturday, December 24, 2011

…living on the edge

By kay.e.strong


On the heels of the Census Bureau revelation that nearly half of all Americans are living in poverty or low incomes, comes a new report, America’s Youngest Outcasts 2010. No, it’s not a made for TV reality show—it is reality for 1.6 million American children (1 in 45).  In the finger-pointing game of yesteryear, your typical social conservatives would link the plight of a child to the irresponsible behavior of the parent.  Yup, you’ve heard ‘em all…the unwed teenage mother syndrome, propagation for [welfare benefits] profit, drug addicted parents, and the like. But the National Center on Family Homelessness sets the record straight on this one.

“Financial speculation sparks collapse of the housing market and financial institutions, a stock market crash, and the Great Recession. The numbers of homeless children increased by more than 448,000 from 2007 to 2010; 1.6 million (one in 45 children) are homeless in 2010—that is a 38% spike from 2007.”  < http://www.familyhomelessness.org/ >

To satiate the greed of the few—1.6 million children—more than 30,000 children each week—more than 4,400 each day are being sacrificed. Homeless, hungry and malnourished, declining physical health, emotional trauma, a lost sense of security and unstable educational opportunities follow these children where ever they go.  As the National Center on Family Homelessness concludes “[p]lanning and policy activities to support the growth and development of these vulnerable children remain limited. Sixteen states have done no planning related to child homelessness, and only seven states have extensive plans.”  Let’s add hopelessness to that list. Living on the edge, the nation’s most vulnerable are cheated of life, liberty and the pursuit of happiness long before reaching voting age!

In 1996 the Personal Responsibility and Work Opportunity Act passed.  The Act was hailed as breakthrough legislation on welfare reform.  While signing the bill into law, Clinton declared that the act "gives us a chance we haven't had before to break the cycle of dependency … It gives structure, meaning and dignity to most of our lives."  It is time to enforce the same reform on the twenty-first century Welfare Queen, the nation’s financial sector. It’s time to demand that the Queen support the nation’s future, its children, in ways that “give structure, meaning and dignity” to their young lives.
 

Kay Strong, Ph.D., Southern Illinois University, M.T., University of Houston, M.A., Ohio University; Associate Professor at Baldwin-Wallace College; Areas of expertise: international economics, contemporary social-economic issues, complexity and futures-based perspectives in economics. E-mail: kstrong@bw.edu

Thursday, December 22, 2011

...scanning for tomorrow

By kay.e.strong


I’m an avid scanner, a skill honed while attending the futures program at the U of Houston.  Scanning is not a duplication task but rather an exploratory one. One designed to provide clues about the potential shape of the more distant tomorrow.  In the spirit of sharing, I offer a glance into how our tomorrow is shaping up.

Launched in 2009 as a nonprofit organization by Shai Reshef, University of the People (UoPeople) is the world’s first tuition-free online academic institution dedicated to the global advancement and democratization of higher education. The high-quality low-cost global educational model embraces the worldwide presence of the Internet and dropping technology costs to bring university-level studies within reach of millions of people across the world. With the support of respected academics, humanitarians and other visionaries, the UoPeople student body represents a new wave in global education. <http://www.uopeople.org/ >

Can you image the impact of engaging the creative potential of 7 billion minds!

***********

Lumus is showing off a pair of light, wearable HD video glasses that will allow you to interact with the world via augmented reality. It is forecast that wearable displays will replace hand-held screens like iPads or laptops.  < http://techcrunch.com/2011/12/13/heads-up-lumus-shows-off-720p-see-through-video-glasses/ >

With data chips embedded in products, animals and surfaces, imagine information overload on steroids bombarding your eyeballs!

And if you can't afford the video glasses, no problem!  The cell phone hologram is on IBM’s list of the Next Five in Five years. Merging 3D technology into the cell phones will enable projection of life size holograms of friends talking and moving in real time on any surface.  < http://www.computerworld.com/s/article/920140/Holograms_on_cell_phones_coming_in_five_years_IBM_predicts >

If I send my hologram, do you think students will know the difference in my 8 AM class?

***********

The U.S. Defense Advanced Projects Research Agency (DARPA) plans to put 1,000 3-D printers (rapid fabrication devices) into high schools across the United States as a way to encourage American young people to go into engineering and particularly manufacturing.
The project is one of many investments that the agency will make over the next five years to help high schoolers build STEM skills. These investments are critical to grow an educated twenty-first century workforce, says DARPA director Regina Dugan.http://www.wfs.org/content/futurist-update/futurist-update-2011-issues/november-2011-vol-12-no-11 >

The twenty-first century upgrade to shop class!  I hope they have a backup plan for containing projects gone wrong!

***********

Why not take a bad-news break as we wind down the year. Try some exploratory scanning of your own.  Follow up with the question “What if?” and consider the rich possibilities that tomorrow could bring. It's great calistetics for the mind and spirit.

Kay Strong, Ph.D., Southern Illinois University, M.T., University of Houston, M.A., Ohio University; Associate Professor at Baldwin-Wallace College; Areas of expertise: international economics, contemporary social-economic issues, complexity and futures-based perspectives in economics. E-mail: kstrong@bw.edu

Friday, December 16, 2011

…identity crisis in America

By kay.e.strong


One of the great atrocities unleashed on the American mind is the eradication of the lines distinguishing good economics from bad politics.

In introductory courses I distinguish between the end goals of economics and politics. For economics the goal is to maximize the well-being of the majority at the expense of the minority; the opposite is true for politics. Yet the bandwidth for a well-moneyed politician overwhelms that of even the most accomplished economist.

Politicians package the protection of corporate America’s interest as a common good, that is, beneficial to all members of the community. Prostituting themselves to the fortunes of millionaires, politicians propagate Kochism dribble: 

1. America must be governed (politics) by the free-market forces (economics).

2. Paying taxes (economics) is tantamount to government extortion (politics).

3. Individuals (politics) have no responsibility to society (economics).

Let's sift out the economic truths.

First, economist Jeffery Sachs in his book The Price of Civilization (2011) clarifies that all great promoters of free-market forces acknowledge a role for government.

“…Adam Smith, John Maynard Keynes, Paul Samuelson, Friedrich Hayek, and Milton Friedman, were fully aware of the reality of public goods, environmental spillovers, and asymmetric information and therefore of the need for government to be deeply engaged in public education, road building, scientific discovery, environmental protection, financial regulation, and many other activities.  None ever denied a major role for government in a market system.  That’s true not only for Keynes and Samuelson, who are famous for their championship of mixed economy, but also Hayek and Friedman, who are known for their advocacy of unfettered markets.” (34)

Second, free-market forces are stellar at promoting efficient use of resources and growing income.

Financially, the US is the wealthiest nation on the planet earning 14.5 trillion dollars in 2010—a  slow year by some standards.  Yet, our national debt stands at 15+ trillion dollars. By one estimate, the national debt has increased an average of $3.93 billion per day since September 28, 2007! < http://www.brillig.com/debt_clock/ > Why? We can afford to pay for civilization right now rather than foisting it off onto future generations. According to the American Society of Civil Engineers' 2009 report card, we are in need of a 2.2 trillion dollars investment infusion to replace or repair our aging infrastructure including roads and bridges ($930 b.), public transit ($265 b.), drinking and waste water treatment ($255 b.),and schools ($160 b.). <http://www.infrastructurereportcard.org/> Our disinvestment is showing up in our declining ability to compete in a globalized market. 

Third, free-market forces are notoriously unfair.  Those holding a minor advantage at the start of the game end with a major wealth and income advantage.

Today’s headline read: Census shows 1 in 2 people are poor or low- income (15 Dec). That works out to 156, 392,664 million Americans—half the U.S. population!  Census data, according to the news release, depicts “a middle class that's shrinking as unemployment stays high and the government's safety net frays. The new numbers follow years of stagnating wages for the middle class that have hurt millions of workers and families.”

Blurring economics as politics is the deadly elixir that got us where we are today! Columbia University economist Jeffery Sachs argues “[o]nly markets and government operating as complementary pillars of the economy can produce the prosperity and fairness that we seek.” (179)

And paying for civilization is a choice, a choice of responsible governance, a choice that recognizes the truth of WAIT-T!

 

Kay Strong, Ph.D., Southern Illinois University, M.T., University of Houston, M.A., Ohio University; Associate Professor at Baldwin-Wallace College; Areas of expertise: international economics, contemporary social-economic issues, complexity and futures-based perspectives in economics. E-mail: kstrong@bw.edu

Friday, December 9, 2011

Whom Are We Kidding?

By Lewis Sage


Writing in the current issue (v. 90 no. 6) of Foreign Affairs, George Packer indicts the alliance of conservatives and big money that came together, “beginning in 1978 to begin a massive generation-long transfer of wealth to the richest Americans.”  The US Senate’s refusal to surtax millionaires to finance the extension of workers’ payroll tax-cut is the latest evidence of the success of that alliance.
The oft-heard Republican claim that a tax on the rich would stall the job-creating engine of small business is disingenuous.  Commenting for House Speaker John Boehner, Michael Steele characterized surtax as “a job-killing tax on small businesses” (quoted in The New York Times, 11/29/12).  The premise of his argument is that many small business owners choose to report business profits as personal income – a perfectly legal tax strategy – and that a tax on their income, which amounts to a tax on business profits, discourages those folks from hiring.  I get it that small business owners, like most people, aren’t in a big hurry to pay more taxes for no reason whatsoever, but there’s are good reasons for this increase: the fairness inherent in an intact social contract and a degree of enlightened self-interest in economic recovery.  And surtax is not a job-killer.  Here’s why.
Time for a little algebra.  Suppose that hiring a new employee would increase your profit by $1000 a year after taxes.  Is it worth it to you to hire that employee?  No?  Then you’re not really all that into squeezing for profit.  Your marginal tax rate could increase by two or three percent, and you wouldn't even notice.  But if you would hire that new worker to increase profits by $1000, then you're the sort of person who pays attention to detail and you’ll do whatever it takes to increase your disposable income.  In particular, if that new worker increased your after-tax profits by $980 (98% of $1000), you would still hire them.  Okay. Here’s the algebra.  Whatever it takes to increase pre-tax profits by $1000 automatically increases after-tax profits by $980.  Whatever increases pre-tax profit by $X automatically increases after-tax profit by 98% of $X.  There; that wasn’t so painful.
So here it is in a nutshell.  Surtaxing millionaire business owners reduces their disposable incomes.  But it does absolutely nothing to their profit-maximizing business decisions… nothing!



Dr. Lewis C. Sage (AB Kenyon, PhD U. Maryland) likes intersections. Since 1991, he has taught Law and Economics, Mathematical Economics, and the Economics of Healthcare. A former Fulbright Fellow (Bulgaria 1995-6), he teaches an interdisciplinary Honors seminar, Enduring Questions, and is studying strategy in the NFL draft with faculty and students in Sport Management and Psychology. E-mail: lsage@bw.edu

Sunday, December 4, 2011

…T.rex and blame

By kay.e.strong

Ask a four-year old what happened to T.rex.  Without a moment’s hesitation the word extinction rolls smoothly off his tongue as he stands before you, eyes beaming in delight. Probe a bit about the reason for the extinction, and a likely response will hint at any number of changes in the environment to which T.rex was unable to adapt.  

Ask a politician what’s happened to the U.S, and like the four-year old, some accusation of blame rolls smoothly off his/her tongue as (s)he stands before you, eyes beaming in delight.  Probe a bit for an explanation and some well-rehearsed, but ludicrous one-liner will pop-out. 

Gingrich blames Child Labor Laws for Rising Income Inequality in U.S. (21 Nov 2011)

Romney Blames Obama for Expected Failure of Super Committee (20 Nov 2011)

Cain blames Perry for fueling sexual harassment allegations (3 Nov 2011)

GOP Candidates Blame 30 Years of Rising Income Inequality on Barack Obama and Single Moms (12 Oct 2011)

Bachman blames Obama for Arab Spring (30 Sep 2011)

Seriously, has blame-finding become the national pastime or is it an indicator of something much deeper?

Psychologists suggest that we invoke the tactic of blame to deflect attention from ourselves.  Politicians thrive on being in the limelight, so why would a politician ever want to deflect attention away?  Blame is a heuristic, a mental shortcut, that “shorten[s] decision-making time and allow people to function without constantly stopping to think …” In essence, blame functions as political-speakese for “I’m clueless.  Enough said. Can we move on?”  

Blame reveals the obsolete nature of the speaker’s knowledge.  It’s a reminder that the speaker belongs to the world of single cause. A world that began unraveling before the signatures dried on the Brent Woods Agreement (1944).  A world made even more extinct by the emergence and growth of the World Wide Web (1991). 

Authors David Hale and Lyric Hale of What’s Next (2011) remind us that “[a]n event always has more than one cause, all of which are intertwine in a web of complex interrelationships." (287) Multiple causes, interdependent relationships, overabundant information…what’s a politician to do? Blame!

Better yet, educate yourself. Be curious. Explore new ideas through reading. As a primer consider The Age of the Unthinkable by Joshua Ramo (2009).  Ramo cracks opens the door on the world in its complex context where stability is only a passing phase, a pause, if you will, in a system of unmapable dynamism.  He exposes the harm caused when decision-makers premise policy action on an image of the world that is grossly misaligned with reality.

Blame destroys the fragile threads of social trust which binds us together as a nation. We strengthen those threads every time we reject a blame-claim.  We strengthen our nation's ability to survive whenever we humbly acknowledge there is no one-way to solve complex problems, yet demand a serious public conversation in spite of it.  

Let mighty T.rex remind us of what happens if we don’t get beyond the futility of the blame game.

Kay Strong, Ph.D., Southern Illinois University, M.T., University of Houston, M.A., Ohio University; Associate Professor at Baldwin-Wallace College; Areas of expertise: international economics, contemporary social-economic issues, complexity and futures-based perspectives in economics. E-mail: kstrong@bw.edu

Baldwin Wallace University

My photo
This blog lives under the auspices of the Department of Economics whose mission has been to hold high the lantern beaming an "economic way of thinking" onto the world. Selfishness, rationality and equilibrium have been central to the teaching of an economic way of thinking rooted in the Renaissance. And, in this regard, the department has faithfully stayed the course. The intent of this blog, thinking out loud..., however, is to entertain exchanges which may challenge the centrality of economics as we teach it.