Slay Riding to Oblivion

Slate has an article – The Digital Slay-Ride – that discusses the ways modern technology is revolutionizing our lives. As Jack Shafer notes:

Folks giggled at Wired founder Louis Rossetto's bombastic formulation in 1993 that the "digital revolution is whipping through our lives like a Bengali typhoon" and upsetting the old order. But Rossetto is getting the last laugh. Wherever digital zeros and ones can dislodge analog processes, they either have or are. Call it a digital slay-ride.

I think he is spot-on about how digital processes are changing our lives. But when it comes to identifying problems in the newspaper business, his analysis ignores other major issues besides technology – like greedy owners who are detached from the whole point of their business.

Shafer also seems rather cavalier about the fate of newspapers in general:

Before we get too weepy about lost journalistic jobs and folded publications, let's ask how often reporters lamented the decline of other industries, products, and services swamped by Rossetto's digital typhoon.

The thing is, newspapers are not just another industry. Since the very beginning of the US of A, they have been an integral part of our democracy. As Thomas Jefferson once wrote “I would rather live in a country with newspapers and without a government, than in a country with a government but without newspapers.” There might not have even been a United States of America if it wasn’t for newspapers’ ability to spread news about developments throughout the 13 disparate colonies.

The need for newspapers to keep citizens informed continues today. As Chris Hedges notes:

A democracy survives when its citizens have access to trustworthy and impartial sources of information, when it can discern lies from truth. Take this away and a democracy dies. The fusion of news and entertainment, the rise of a class of celebrity journalists on television who define reporting by their access to the famous and the powerful, the retreat by many readers into the ideological ghettos of the Internet and the ruthless drive by corporations to destroy the traditional news business are leaving us deaf, dumb and blind.

For any organization to survive and thrive there must be a healthy balance between the interests of individuals and the interests of the group. Too much individualism, and things fall apart; too much group-think and things become static and unable to respond to changes within and outside the organization.

The key ingredient for ensuring that healthy balance in any organization is the free flow of information that can accurately reflect the way things are. For the United States of America, that information has historically been provided by newspapers. If the decline of newspapers leads to a decline in the dispersion of accurate information about the way things are, the result will be a grave threat to our democracy.

It's A Wonderful Life

Back in 1997 I wrote a piece about the movie It's A Wonderful Life for my website, offering a Quantum Age perspective on this holiday classic. As one of our holiday traditions in the USA is to catch a rerun of the movie, I figured I'd take this opportunity to offer a rerun of my essay.

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It’s one of the all-time favorite holiday movies in the United States. While much of it dwells in a world that is dark and harsh, it delivers a message of hope. And it’s so straightforward in its intention, the name of the movie is also its message: It’s A Wonderful Life.

The main character in the movie is George Bailey, a lifelong resident of Bedford Falls who becomes so despondent about his life he wishes he had never been born. Miraculously, an angel named Clarence appears and grants him his wish. As a result, George sees what life in Bedford Falls would be like if he hadn’t existed.

And what a different life it is! His younger brother is dead because George wasn’t there to save him, and a naval transport and all on board are lost in a WW II battle because his brother didn’t live to save them. George’s wife Mary is a spinster librarian, instead of the mother of their children. And the charming community of Bedford Falls, in which many have realized the American Dream of a home of their own and a happy family life, has been replaced by Pottersville, a tawdry honky tonk town in which evil Mr. Potter owns everything and people are hardened and bitter.

Realizing that, as Clarence says, he really did have a wonderful life, George begs to be able to live again. And thus, to his joy and amazement, he finds himself back in Bedford Falls, reawakened to a life that’s both demanding and rich.

This movie is clearly not a reflection of the traditional Newtonian world view. That perspective, with its paradigms of clockworks and machines, removes the human element entirely from the landscape. In embracing the detachment of objectivity, it makes people’s lives irrelevant. The overriding message people receive is “You’re not important, the world can manage quite fine without you.”

It’s A Wonderful Life offers a very different message: one person’s life can make a huge difference in the world.

Even though it was released in 1946, this movie seems to be very much in tune with the quantum age. For one thing, a basic premise of both this movie and quantum physics is that life revolves around relationships. Nothing happens in a vacuum; everything is intertwined with, and interacts with, everything else.

Indeed, everything we learn about George Bailey is revealed in the context of his relationships with others. Much of the movie consists of scenes of his life in which he deals with family, friends and customers. Through these images we learn who George is, and what qualities of character he possesses. We learn that he’s honest, conscientious and caring. We learn that he is not afraid to speak his mind when confronted with injustice. And we learn that he puts the highest value on his relationships with those around him.

But relationships do not work in only one direction, and It’s A Wonderful Life is not just about George’s relationships with others. It’s also about their relationships with him. While he may have helped others in very many ways, they helped George as well. On George and Mary’s wedding night, his friends Bert and Ernie help turn their leaky and run-down house into a honeymoon suite. And when George’s uncle loses the bank’s deposits and it looks like the world is crashing around him, his friends and relatives come together to save him and the bank.

Contrast that to the solitary and amoral Mr. Potter, who seems to be an incarnation of the objectivist world view. Eternally detached from the world around him, Potter measures everyone and everything he encounters solely on the basis of what they can do for him. There is no feeling in his world; everything is viewed through the cold lenses of objectivity and materialism.

Clearly, relationships are the spring that nourishes George Bailey’s life. But by themselves, relationships would not seem to explain the dramatic changes that take place when his life is, as it were, “erased from the books.” Is it possible that any one individual could have that profound effect on the world around him or her?

Having lived for many years in a rationalist-objectivist world, our inclination is to devalue the impact an average individual can have on the world around him or her. We generally live with an image of the world as an immense machine, grinding inexorably along without any concern for, or input from, mere mortals like ourselves. With such a mindset, we tend to view the story of George Bailey as a charming fairy tale, heartwarming but unrealistic.

But if we view it from the perspective of chaos theory, George’s story becomes much more believable.

That is because according to chaos theory minute variations in initial circumstances can have profound effects on outcomes. The classic example is known as the Butterfly Effect - the idea that the fluttering of a butterfly’s wings in Texas can eventually effect the formation of a hurricane off the coast of Africa. But an awareness of this dynamic can even be found in folklore:

For want of a nail, the shoe was lost;
For want of a shoe, the horse was lost;
For want of a horse, the rider was lost;
For want of a rider, the battle was lost;
For want of a battle, the kingdom was lost!

We experience examples of this everyday. We leave home for work a minute later than usual; we come to an intersection just as a slow driver passes by; we wind up behind this driver for two minutes; they turn down a side street and we soon after come to a traffic light just as it turns red; and things like this continue to happen so that we’re eventually twenty minutes late for work!

While we experience this all of the time, we usually don’t think about it, or consider such dynamics as important. But chaos science has found that this dynamic is present everywhere in the day-to-day world. From a curl of smoke to a massive hurricane, or from an electronic pulse in a computer processor to the world economy, minute variations in initial circumstances can create wildly different outcomes.

In such a world the existence, or lack thereof, of any individual becomes a critical factor in the unfolding of that world. Even further, any variation in the behavior of any individual can have vast and unforeseen repercussions. This is a common theme in modern entertainment. Michael J. Fox goes back in time in Back To The Future, and eventually his current family’s life is radically altered. Characters in Star Trek are frequently reminded of the importance of the Prime Directive, which is to avoid interference with any developing civilization, lest its developemental course be inadvertently altered. Such stories can sound fanciful, but we find them easy to understand intuitively because we experience the same dynamics in our daily lives.

The significance of their message, however, can be unsettling. It’s one thing to view ourselves as insignificant cogs in a vast machine; it’s something quite different to discover we are navigators on an unfamiliar road with no map to guide us. All of a sudden, every choice we make becomes tremendously important.

I believe much of the turmoil people feel in their lives today is a reflection of a dawning recognition of this truth. We are torn today between a well-worn sense of insignificance and futility, and a dawning intuition of great personal responsibility. Common reactions to this intuition are to attempt to resurrect institutions and values from the past in which we can once again lose ourselves, or to attempt to control every minute variable that might have a negative consequence for ourselves, our society, or our planet.

But perhaps we can learn to accept this new awareness, and live our lives like George Bailey: be true to ourselves, consider how we can make our world a better place, and find happiness in the small joys life offers. Perhaps, in living this way, we will come to the same realization that George Bailey came to on a fabled Christmas Eve: it really is a Wonderful Life.

© Dave Higgins, December 1997. All rights reserved.

What’s The Big Idea?

Watching the way politicians are struggling to deal with the current economic mess, it’s hard to avoid facing an unpleasant fact. While Republicans continue to base their arguments on discredited Big Ideas like “free market individualism,” Democrats still lack alternative Big Ideas that might guide them through policy minefields. Unfortunately, this isn’t new: the American Prospect had a cover story on the subject – “What’s The Big Idea?” – back in 2004.

Even though the Democrats “won” the national elections in 2006 and 2008, at times they still come across as feckless when addressing some major issues. An example of this was a recent News Hour interview with Democratic governors Granholm of Michigan and Ritter of Colorado, as well as Republican governor Sanford of South Carolina. Sanford based his opposition to a federal bailout of the Big 3 and of state governments on the usual free market arguments about people working hard, playing by the rules, and eventually being rewarded. (Somehow this apparently doesn’t apply to autoworkers.) Meanwhile, Granholm and Ritter’s argument seemed to be basically “we believe bad things will happen if a bailout of the Big 3 doesn’t happen.” Well, probably...but why?

As it happens, Robert Wright had an article in Slate back in November, 2001, titled “The Big Idea.” He contended that modern technology has brought us to a point at which we are all interlinked and interdependent. While making his case in the context of 9/11, this also can apply to our current economic crisis:

“The general principle is this. Technological evolution draws people into larger and larger non-zero-sum games that promise common benefit—win-win outcomes. But the ensuing integration can bring the threat of common peril, of lose-lose outcomes. Either way—win-win or lose-lose—the fortunes of people who live at great distances become more closely correlated. Increasingly, good foreign news (say, a Japanese economic rebound) is good domestic news, and bad foreign news (the spread of AIDS in Africa) is bad domestic news. And very often this correlation of fortunes—this non-zero-sumness—is an argument for more international cooperation.”

Albert-Laszlo Barabasi, in his book “Linked - How Everything Is Connected to Everything Else and What It Means For Business, Science and Everyday Life,” observes that today’s world is rife with networks. The auto industry would be just one example: the Big 3 depend on a common pool of parts suppliers, while those suppliers are dependent on the continuing business of the Big 3. A similar web of relationships exists between the Big 3 and their dealers around the country.

Barabasi notes that the most important parts of a network are those entities – or hubs – that have the most links to the rest of the network. However, such major hubs pose a significant risk: the collapse of just one or two can conceivably bring down a whole network. (Think of the Northeast blackout of 2003, for example.)

As we’ve seen in the debate about bailing out the Big 3, conservative free market types generally discount arguments of interdependence. As Wright said in his article, “Interdependence theory has a reputation on the right for being a namby-pamby doctrine for naive lefties.” That’s why conservatives were happy to see Lehman Brothers fail back in September: it was “the creative destruction of the market” at work.

Unfortunately, as economists and business experts like George Soros have observed, the demise of Lehman Brothers led to the meltdown of the entire financial system. Such an outcome might be inconceivable from a classic free market perspective, but it is easily understandable from an interdependent network perspective. Cascading failures are an inherent risk in networks, as anyone connected to a power grid knows.

The free market individualism espoused by conservatives and Republicans is a myth. (If they were really such individualists, why would they need a Club for Growth?) The alternative to this myth is not collectivism or socialism; the alternative is a recognition that we live in an interconnected, interdependent world. In this world, there is no contradiction between being an individual and being part of a group. Like a computer on a network, we are both simultaneously. And like a computer on a network, we are only as secure as the weakest link in that network. The failure of others can very easily lead to our own failure.

Perhaps, in fully recognizing the interdependent nature of our world, we will have found a Big Idea that can guide us in dealing with issues like the current economic crisis.

Got A Revolution

Look what's happening out in the streets
Got a revolution Got to revolution
Hey I’m dancing down the streets
Got a revolution Got to revolution
Ain’t it amazing all the people I meet
Got a revolution Got to revolution

- Jefferson Airplane – “Volunteers”

When the members of Jefferson Airplane recorded their song “Volunteers” back in 1969, they couldn’t have conceived of the scenes around the world the night Barack Obama won the 2008 presidential election.

With the optimism of youth, they might have imagined a time when a black American could become President of the United States. After all, in 1964 Irving Wallace published his popular novel “The Man,” about a senator who through a series of freak events becomes America’s first black president. Given the state of race relations in the late ‘60s it might have seemed a stretch to imagine an African American winning a presidential election – as opposed to landing in the office through the obscure laws of succession. But it was still within the realm of imagination.

The phenomena of people around the globe reacting to such an event at the same instant, on the other hand, was unimaginable for most people back in 1969. Telstar, the precursor for all of the communications satellites that make global television transmissions possible today, had been launched only 7 years earlier. There were not yet such things as the World Wide Web or cell phones, and only the extremely techy had email. And while some people were beginning to talk about a “Global Village,” nobody really had a good idea what that would look like.

And yet, thanks to breath-taking advances in technology over the past forty years, we find ourselves in that Global Village. Not only do people around the world now know – in the same instant – the results of an American presidential election. They now also know, in great detail, about many of the events leading up to that election. In addition, they are very aware of how an election in a distant land can have a profound affect on their personal lives. And occasionally they can become so invested in that election’s outcome that they will joyfully stream out into the streets to celebrate its results.

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There was a lot of talk about revolution back in the ‘60s. But it was generally viewed as something to be done to the establishment's institutions by brave idealists, or something to be resisted by defenders of the status quo. Revolution was a matter of personal intention. As Jefferson Airplane sang: “Tear down the walls – won’t you try?”

These days we find ourselves in a world overflowing with revolutionary change. But it’s not the change 60's radicals imagined or pursued, and it’s not the change defenders of the status quo feared and opposed. Instead, it crept up on us while we were transfixed by the so-called cultural wars. While everyone was fighting over political and cultural revolutions, the world was upended by a revolution in technology.

The primary casualty of this revolution is our understanding about how the world works. In countless areas, from big stuff like economics, politics and international relations, to more personal stuff like everyday life, people tend to have the disturbing sense that the rules have somehow changed. The common question has become: what are the rules now?

Actually, we are not the first to ask this question. One hundred years ago, as the field of physics was undergoing a similar revolution in its understanding of how the world worked, Werner Heisenberg observed:

The violent reaction on the recent development of modern physics can only be understood when one realizes that here the foundations of physics have started moving; and that this motion has caused the feeling that the ground would be cut from science.

And yet eventually scientists moved beyond this feeling of disorientation, became more familiar and comfortable with the new rules of modern physics, and began the work that released the tsunami of new technology that overwhelms us today. They not only adapted to a revolution in their world; they thrived in it, transforming our world in countless ways that not too long ago were unimaginable.

If it was possible for them, why shouldn’t it be possible for us? Is it impossible to believe that there are new and creative ways for us to confront the problems we face in the world around us?

The key to understanding our world today is to realize that we really must let go of our outdated preconceptions about how things work. The reason why many familiar institutions and beliefs are failing now is precisely because they are operating under a failing mindset.

Albert Einstein once said: “No problem can be solved by the same consciousness that created it. We must learn to see the world anew.”

Many of those people and organizations that are thriving today – and they are out there – are doing so because they have learned to “see the world anew.” Whether they are conscious of it or not, they are using ideas based in modern science to change the way they work and the way they approach problems.

It's a Small World After All

On election night 2008 I was at the Obama victory party in Albany, NY, to follow and celebrate the results. While it was a great evening, one moment in particular stood out. As we approached 11 PM, CNN showed a countdown clock for when the polls would close in California, Oregon, Washington and Hawaii. As the last seconds elapsed, we all started counting down with the clock, as if it was New Year’s Eve. We all cheered when the clock hit zero, and then cheered much louder as CNN announced that Barack Obama had indeed just been elected President. It was a wonderful moment.

Only later did I find out that crowds of people around the world were doing exactly the same thing at exactly the same moment. It was yet another example of how much we are all interconnected these days - in our awareness of what’s going on and in our awareness that events on the other side of the world can affect our lives.

While young people today may think nothing of this state of affairs, it’s something I still view with a degree of amazement. I was 11 years old and living in Panama when President Kennedy was assassinated. Communications-wise, it was a very different era. While people in the US watched on TV events like Oswald’s arrest and subsequent murder, the American (Canal Zone) TV station just provided a static graphic with Kennedy’s name and dates of birth and death - a sort of video gravestone. The audio consisted of radio transmissions and reports; I didn’t see Oswald get shot, I heard it reported - kind of like play-by-play coverage of a baseball game.

For better or worse, with today’s technology we are now much more tightly linked together. As Archbishop Desmond Tutu wrote, “...we are all caught up in a delicate network of interdependence, unable to celebrate fully our own heritage and place in the world, unable to realize our full potential as human beings, unless everyone else, everywhere else, can do the same.”

This is something we are still trying to understand and come to terms with. If the world is a network of links, how do we deal with it? The traditional way of dealing with things draws from a mechanical perspective of command and control that is pyramidal in form, with many down below and very few on top. In such a world, those with the most power control what happens. They are “the deciders.” But in a linked world, power is not pyramidal; it is networked, with everyone on basically the same plane. Clearly, this means the rules have changed. (An example of this change for military strategy is presented in the article “Command and (Out of) Control.”)

So what are the rules for a networked world? A useful resource for this is Albert-Laszlo Barabasi’s book “Linked - How Everything Is Connected to Everything Else and What It Means For Business, Science and Everyday Life.” One of his main points is that, while all nodes in a network may be equal in some respects, they are not equal in one key way. The difference between nodes is a question of how many links there are to a particular node. While there are many websites on the Internet, some receive a LOT more traffic and links than others. These popular nodes, which Barabasi calls hubs, are the power centers in any kind of network.

A key difference between traditional power centers and network hubs is defined by the source of their power. Traditional power comes from the hoarding of resources like money, weapons and control. Once one has the power, he or she can then dictate behavior to others. However, network power is more democratic: a hub gains or loses power based on the willingness of others to link to it. If something new and better comes along, a hub is likely to lose both links and influence. An example of this can be found with internet search engines: at one point AltaVista was one of the top search engines around; now Google rules the roost and AltaVista struggles to keep up.

In the traditional world, influence is something to be wielded: if you have enough power, you can influence the behavior of those you deal with. In a networked world, influence is something to be cultivated: the more connections you establish with others, the more influence you have. A great example of this from the music world is provided by songwriter Darrell Brown in “The Get-Out-the-Song Effort.”

Some may have wondered why so many people around the world were so excited by the election of Barrack Obama. Surely, there are many contributing factors. But one of those factors may relate to the perception of how Obama will use power compared to his predecessor.

The Bush-Cheney administration had a very traditional view of power: they felt America had the biggest military and economy in the world, so they could tell everyone else what to do. Judging by Obama’s campaign, it appears he has a better understanding of power from a network perspective. If he deals with the world and its problems from that perspective, America’s policies are likely to be very different.

At least, that’s the hope!

On Trees and Forests

I was kind of surprised when former Fed chair Alan Greenspan admitted to a Congressional committee that he was “in a state of shocked disbelief” over the current financial crisis. I know next to nothing about economics or the goings on around Wall Street, but I’ve felt for at least the past couple of years that something like this was coming.

Does that make me smarter than all the experts who claimed that everything was hunky dory over the past few years? Hardly. But it might mean that, unburdened by any expertise about lots of financial minutia, I was free to get a clearer sense of the big picture.

I didn’t know a lot of the fine points, but it seemed clear to me that much of what had been going on in the economy - all the spending, borrowing and general high living - was not sustainable. Possibly channeling Paul Krugman, I felt we’d been living lately in a “Wile E. Coyote economy”: we’d gone off a cliff and were suspended in mid-air, awaiting the moment of awareness that would send us plummeting down. From this perspective, it wasn’t a question of if things were going to crash, but when.

So why were the experts like Alan Greenspan so shocked by what happened?

At least a part of the problem might be that experts all to often fall into the habit of breaking complex systems down into smaller and smaller pieces, and then just focusing on some of those pieces. Some people may focus on the housing market, for example, while others may focus on how financial institutions evaluate their risk. But apparently few experts were looking at the financial system as a whole, including all the ways facets like the housing market and institutions’ risk management might relate. (This is an issue I touched on here.)

In cases like this, non-experts - not being focused on one particular facet or another - might be able to sense the big picture better than the experts. As the saying goes, the experts can’t see the forest for the trees. As with the wave/particle duality in physics, it sometimes requires a change in perspective for us to see two distinct but equally true facets of something - whether it is an electron or an economy.

A great example of experts being blinded by their expertise is offered in the movie “My Dinner With Andre,” when Andre Gregory talks about his experience in a hospital:

“You know, we'd gone to the hospital to see my mother, and I went in to see her. And I saw this woman who looked as bad as any survivor of Auschwitz or Dachau. And I was out in the hall, sort of comforting my father, when a doctor who is a specialist in a problem that she had with her arm, went into her room and came out just beaming. And he said: 'Boy! Don't we have a lot of reason to feel great! Isn't it wonderful how she's coming along!' Now, all he saw was the arm, that's all he saw.”

If experts want to avoid finding themselves “in a state of shocked disbelief” they are going to have to learn to view complex phenomena as a system, not as just an amalgam of a bunch of pieces. They will have to learn to see the forest as well as the trees.

Chaos On Wall Street

PBS' News Hour recently featured a Paul Solman interview of Benoit Mandelbrot, a mathemetician known for his work on Chaos Theory, and Nassim Nicholas Taleb, author of the book "The Black Swan: The Impact of the Highly Improbable." It offers unique insights into our current financial crisis, drawing from the perspectives of Chaos Theory and Complexity. Their joint message appears to be these are very disturbing and unsettling times - more than we even realize. (That's reassuring!) You can see it here.

Reality Isn’t What It Used To Be

Reality is that which, when you stop believing in it, doesn't go away. ~Philip K. Dick

The world would probably be a lot better off if people weren't so smug about their sense of reality. Regardless of nationality, religion or political affiliation, we have a tendency to believe we have a firm grip on The Way Things Are, and a confidence that our actions and beliefs are clearly the best way to deal with life's issues both large and small.

The fact that many things in life today, including many things other people do, appear nonsensical to us is just a minor detail. We know what's what, and we tend to feel it would be better for all concerned if everyone saw things the way we do.

We never seem to realize that big chunks of our understanding of reality reflect our own biases and perceptions, not the inherent nature of the world "out there." The perceptions we embrace with certitude are in fact usually best guesses about what is happening around us. And our certitude in these perceptions leaves us open to manipulation by others who present stories we find conveniently agreeable, even when those stories are lies. That certitude can also blind us to warning signs of coming disaster.

Ron Suskind once related a story about an anonymous aide who spoke about the Bush Administration creating its own reality:

The aide said that guys like me were ''in what we call the reality-based community,'' which he defined as people who ''believe that solutions emerge from your judicious study of discernible reality.'' I nodded and murmured something about enlightenment principles and empiricism. He cut me off. ''That's not the way the world really works anymore,'' he continued. ''We're an empire now, and when we act, we create our own reality. And while you're studying that reality -- judiciously, as you will -- we'll act again, creating other new realities, which you can study too, and that's how things will sort out. We're history's actors . . . and you, all of you, will be left to just study what we do.''

Many of us with a liberal point of view may tend to view this Bush/Cheney perspective from a lofty perch in the “reality-based community” and conclude that these people are either sinister or crazy. However we need to recognize there’s an element of truth in that aide’s statement. And then we need to decide how to deal with it.

On the most simple level, the aide was right. The Bush administration has created realities - in the Middle East, in New Orleans, on Wall Street and Main Street - that we’re now trying to figure out how to deal with. The key proviso that they either didn’t acknowledge or didn’t recognize was that those created realities often turned out to be quite different from what they themselves expected.

But beyond that is a much bigger question: what is reality today? In his book “Reality Isn’t What It Used To Be,” political scientist Walter Truett Anderson argues that in today’s postmodern world we are inevitably dealing with socially constructed realities. He notes the relevance of this in understanding modern politics:

“...the real fount of political power, the source of all loyalty and all independence, is the reality-creating process by which we decide who we are and what we think is happening.”

Although this book was published in 1990, it appears to define a problem Democrats have had lately in presidential elections: while Republicans provide stories to voters about who we are and what is happening, Democrats all too often respond with position papers and program promises. The egghead label that frequently stuck with Gore and Kerry - and has threatened at times to stick to Obama - is probably rooted in this distinction. (Note that Bill Clinton, who was also an exceptionally intelligent politician, managed to generally avoid the egghead label by - among other things - connecting with voters and “feeling their pain.”)

As we’ve seen over the past eight years, Republican hubris in reality-making has frequently doomed their plans to failure. Anderson notes: “...our deliberate reality-creating, future-making, civilization-building projects always turn out to have unexpected consequences...” This is especially true when you fail to recognize that you’re not operating in a vacuum; that others are creating realities at the same time you are.

Being a member of the “reality-based community” can only be useful when we recognize this truth: in today’s world we are each involved in creating realities, and such realities always exist within a larger context of other people’s realities.

As for the many problems confronting us today and in the upcoming election, Anderson provides a perspective from 18 years ago:

“This is the issue that mass democracies are going to have to come to terms with: whether we can construct our large-scale public realities in forms that enable us to grow and change and engage the difficulties of life in adult ways, or whether we will inevitably gravitate toward simple fables of good guys and bad guys.”

Complexity on Wall Street

I'll be the first to admit I don't know much about economics. Then again, based on the last few weeks, there are a lot of people on Wall Street that don't know much about economics either. (Why would an investment house acquire assets it doesn't know the value of?)

Anyway, it's clear that there's going to be a lot of Monday morning quarterbacking of the whole financial system when things finally calm down. The following two articles - one in the New York Times and one in the Washington Post - offer intriguing views on some of the flaws in the current system, drawing on ideas from modern science.

In his Times article This Economy Does Not Compute, theoretical physicist Mark Buchanan takes issue with traditional economics' methodology. He begins by discussing the shortcomings of equilibrium theory, which "views markets as reflecting a balance of forces."

He argues:

Really understanding what’s going on means going beyond equilibrium thinking and getting some insight into the underlying ecology of beliefs and expectations, perceptions and misperceptions, that drive market swings.

Buchanan says a number of people are now using computer models to get this insight. After discussing three different models and their initial findings, he notes:

Sadly, the academic economics profession remains reluctant to embrace this new computational approach (and stubbornly wedded to the traditional equilibrium picture). This seems decidedly peculiar given that every other branch of science from physics to molecular biology has embraced computational modeling as an invaluable tool for gaining insight into complex systems of many interacting parts, where the links between causes and effect can be tortuously convoluted.

He concludes:

If we’re really going to avoid crises, we’re going to need something more imaginative, starting with a more open-minded attitude to how science can help us understand how markets really work. Done properly, computer simulation represents a kind of “telescope for the mind,” multiplying human powers of analysis and insight just as a telescope does our powers of vision. With simulations, we can discover relationships that the unaided human mind, or even the human mind aided with the best mathematical analysis, would never grasp.

Better market models alone will not prevent crises, but they may give regulators better ways for assessing market dynamics, and more important, techniques for detecting early signs of trouble. Economic tradition, of all things, shouldn’t be allowed to inhibit economic progress.

In a similar vein, James G. Rickards takes issue with the prevailing wisdom on risk management in his Post article A Mountain, Overlooked; How Risk Models Failed Wall St. and Washington. He begins by describing the way risk has been evaluated by financial institutions up to now, using complex mathematical models:

Since the 1990s, risk management on Wall Street has been dominated by a model called "value at risk" (VaR). VaR attributes risk factors to every security and aggregates these factors across an entire portfolio, identifying those risks that cancel out. What's left is "net" risk that is then considered in light of historical patterns. The model predicts with 99 percent probability that institutions cannot lose more than a certain amount of money. Institutions compare this "worst case" with their actual capital and, if the amount of capital is greater, sleep soundly at night. Regulators, knowing that the institutions used these models, also slept soundly. As long as capital was greater than the value at risk, institutions were considered sound -- and there was no need for hands-on regulation.

However, he notes "Lurking behind the models...was a colossal conceptual error: the belief that risk is randomly distributed and that each event has no bearing on the next event in a sequence." This is basically the same idea as tossing a coin: no matter how many times heads comes up, the odds of it being heads or tails the next time is still 50-50. But are markets really like coin tosses? Rickards says:

Both natural and man-made systems are full of the kind of complexity in which minute changes at the start result in divergent and unpredictable outcomes. These systems are sometimes referred to as "chaotic," but that's a misnomer; chaos theory permits an understanding of dynamic processes. Chaotic systems can be steered toward more regular behavior by affecting a small number of variables. But beyond chaos lies complexity that truly is unpredictable and cannot be modeled with even the most powerful computers. Capital markets are an example of such complex dynamic systems.

Think of a mountainside full of snow. A snowflake falls, an avalanche begins and a village is buried. What caused the catastrophe? The value-at-risk crowd focuses on each snowflake and resulting cause and effect. The complexity theorist studies the mountain. The arrangement of snow is a good example of a highly complex set of interdependent relationships; so complex it is impossible to model. If one snowflake did not set off the avalanche, the next one could, or the one after that. But it's not about the snowflakes; it's about the instability of the system. This is why ski patrols throw dynamite down the slopes each day before skiers arrive. They are "regulating" the system so that it does not become unstable.

Rickards concludes:

Financial systems overall have emergent properties that are not conspicuous in their individual components and that traditional risk management does not account for. When it comes to the markets, the aggregate risk is far greater than the sum of the individual risks; this is something that Long-Term Capital Management did not understand in the 1990s and that Wall Street seems not to comprehend now. As long as Wall Street and regulators keep using the wrong paradigm, there's no hope they will appreciate just how bad things can become. And the new paradigm of risk must be understood if we are to avoid lurching from one bank failure to the next.

I, for one, vote a Big No on all this lurching. Hopefully, Buchanan and Rickards can get their messages through to the Powers That Be.

What's Going On?

It's hard to look at what's happening in the world today without wondering what the heck is going on.

To take just the latest example...America's financial system appears to be spinning out of control, and nobody can agree on what caused the current problems or how we should deal with them. Any solution proposed is broadly met with skepticism because no one believes the government or the business community has either the ability or the integrity to develop a proper and workable solution. Meanwhile, as we're attempting to deal with this problem, its effects ripple out through the rest of the world's financial systems.

As we're dealing with all this, we're confronted with similar problems in many other areas: the environment is stressed, personal integrity and ethics seem to be irrelevant in today's society, and people of different cultures, tribes or religions seem to be at each other's throats.

When people view such problems, they seem to react in one of three ways: they deny there's a problem, they try to force their solutions on everyone/everything else around them, or they throw up their hands and say it's hopeless and nothing can be done.

As if that isn't enough, there appears to be a general abandonment of common sense. If we had looked rationally at the housing bubble, we would have had to admit it couldn't last forever. If we had looked rationally at the cultural dynamics of the Middle East, we would have realized invading Iraq was not likely to be a "piece of cake." And if we looked rationally at all the junk being dumped into the environment around the world, we would have to acknowledge that we've been gradually making our world uninhabitable.

What's going on?

And what are we to do?

I believe we are going through a period of great change. This change is a product of the many new technologies that have been made possible by modern science. These technologies, in turn, are rooted in the ways science has come to redefine our understanding of our world.

I believe that if we draw on principles discovered by modern science, we will be able to develop a new form of common sense - a "quantum sense," if you will - that can give us new ways of seeing our world and new approaches to solving its problems.

Today many people are doing exactly that - drawing on lessons from modern science to propose new solutions. As I come across examples of this, I'll present them here. I'll also comment on issues from time to time, drawing on what I call "eight facets of the quantum world." You can get a rundown on those facets, as well as my general ideas on this subject, at my web site "Quantum Age."

Meanwhile, I welcome any leads on other cases where someone has used ideas from modern science to develop a new approach to a seemingly intractable problem. And I hope you'll join me as we strive to achieve "quantum sense."

Thanks for stopping by!