Thursday 20 September 2012

Box politics

Party politics always have been a mixture of national interests and ideological perception.

It matters however whether an ideology emerges under the banner of national interests or whether national interests become fashioned in accordance with ideology. Over the last few decades the latter has overtaken the former.

Under the perspective of society as a complex dynamic system the phenomenon stems from the clustering of affinity relationships within a nation leading to the formation of subsystems representing such clusters until they have become entities in their own right, and which from then on continue in a self-serving manner. The result is a party that places its ideology ahead of the overall national interest.

In the US former congressman Mickey Edwards discussed that development in his book “The Parties Versus the People: How to Turn Republicans and Democrats Into Americans”. In his interview on PBS Newshour he said, “the one thing that George Washington, John Adams, James Madison and Thomas Jefferson all agreed on was don't create political parties. And the parties they had in that day were things where a few people got together on three issues, four issues, five issues, but not like what we have today, permanent factions, Republicans, Democrats always on opposite sides, and the founders all warned against that”.

In Australia the situation is similar. So much so that addressing just about any issue in terms of some suggested solution will immediately categorise the speaker as being either left- or right-wing, depending on which party happened to claim ownership of the idea at some stage.

As a consequence the substance of one’s remarks becomes tainted with a whole host of connotations derived from the particular party. A conceptual transference takes place in which the speaker not only has to deal with the original concept but however unwittingly is seen as being representative of a much wider contingent and is responded to accordingly. This does not help the debate.

What follows are examples of themes, in no particular order, of which significant parts have been appropriated by political parties to varying degree and junked together under their banner instead of being allowed to form their own contexts.
  • Support for private enterprise is important, but a modern society requires public utilities so that anyone can have the opportunity to operate within that society regardless of financial means and personal standing.
  • Give due regard to individualism and personal rights, but there also is a place for collective measures because a complex society needs the means to facilitate interdependence among its various functionalities.
  • A handful of super athletes enjoy massive amounts of investment, yet physical dysfunction is spreading across the entire population sometimes in epidemic proportion because of insufficient resources for physical education.
  • As a consequence the pressure on the nation’s health system increases constantly, but anyone who suggests people should be less lazy and irresponsible is roundly condemned.
  • Spending hundreds of millions of dollars to save a few koalas is accepted without fuss, but at the same time the laws undermine the productivity of fruit growers (ie, humans) because they are not permitted to act against pests which destroy their crops.
  • Against the growing competitiveness of other nations we remove one challenge after another from children’s lives turning them into clumsy incompetents while even punishing parents if they don’t toe the official line.
  • The emphasis is on keeping up-to-date with the latest developments in any given field (sometimes even measured in monthly intervals), yet we are supposed to stand in awe before indigenous demographics whose culture had not changed over tens of thousands of years.
  • We give lip-service to common standards since every society needs a certain homogeneity in order to function, while at the same time celebrating multiculturalism for making life more colourful and not considering that life is more colourful precisely because homogeneity is mitigated. Besides, cultures in exile invariably stagnate and so become a caricature of their live counterparts in the home country; the result is a society of fossils.
  • Asylum seekers should be processed properly and not be palmed off to another jurisdiction, but consideration should also be given to the quality of potential newcomers because it needs a viable population to create the standards where assistance is affordable in the first place.
Follow the parliamentary debates and it becomes obvious that any one of the above will be voiced by one or the other political party but to the exclusion of so much of the rest. In the current political climate is has become practically impossible to pursue a set of policies which are comprehensive in terms of a reasoned approach; choose one party for one idea but forego the other.

No wonder the electorate is becoming more and more disillusioned with its representatives.

Friday 14 September 2012

The ESM as a function of Chaos

The European Stability Mechanism has been given the green light from a legal perspective and the markets are mostly relieved. Yet many see also danger. Since the ESM is part of the wider European economy and is therefore subject to the principles inherent in complex, dynamic systems, it is possible to examine its status in terms of Chaos, the technical term for this kind of environment, and so identify the challenge it faces.

A large-scale complex and dynamic system relies on the interdependency of its functional elements, which is another way of saying that those subsystems must be able to productively communicate with each other in order to maintain the feedback mechanism the system relies on. The larger the system, the greater the probability that the necessary synchronisation cannot be sustained because one or some of the elements enter a state not in congruence with the rest. 

There are essentially two ways in which the possibility for incongruence can be checked.
Either there exists a sufficiently strong authority which ensures that any subsystem adheres to its performance envelope and so prevents incongruent states from emerging, or the entire system is homogenous enough so that its parts autonomously adhere to the overall standard and/or theme.

The foregoing has been expressed generically on purpose to emphasise the universality of these principles.

As far as the EU is concerned, the ESM represents an entity that is designed to allow for and administer financial subsystems that failed.

In terms of complex systems we have Europe's financial framework (at that scale a subsystem in itself compared to the EU), containing further subsystems representing their particular euro-zone counterparts. Since the ESM is supposed to come into effect in case of failure (some economies have indeed already failed to live up to their intended designs), the mutual congruence is not given to begin with. Furthermore, the mechanism is meant to provide a functional envelope that is capable of overcoming discrepancies in its host system and correct them - and all this while still ensuring the internal integrity of each subsystem in question. That is the challenge.

Although there are many details - particularly in the current context - that have been omitted here, they are of a content-related nature. In other words, they are details relating to specific banks and their customers, their type of involvement in their own economies and the exposure to the outside, the types of businesses with their own performances and the exact components that make up a failure. Nevertheless, in terms of principle behaviour of and within complex dynamic systems the scenario runs along the lines described.

In the essay on Europe, written in 2006, the overall situation has been outlined with certain problems listed as potential developments inherent in such a system. As the ensuing years have shown, some of them did eventuate.

The present situation is once again a particular state of affairs, a phase state of the self-same system, which contains the potential for certain outcomes. In technical terms they can be seen as latent states, that is states for which the preconditions exist but which have not achieved a sufficient degree of import and/or bias for them to influence their surrounds.
Should that happen, that particular subsystem will have entered a new state and as such will change its host to some extent.

As far as governments are concerned, and its administrative derivatives such as the boards of banks, the idea still persists that an economy is essentially a form of some mechanical apparatus where an adjustment here and some input there have predictable consequences.

Unfortunately, quite the opposite is true. Economies are chaotic systems, they progress along their timelines via affinity relationships, the clustering and/or dispersal of functional modules, and pattern-seeking phase states subject to the occasional bifurcation or break point. 

Since such dynamics do not lend themselves to budget forecasts, political speeches, or investment newsletters, this part of reality gets shunted out of our consciousness. The result, failed policies, constant political arguments and confusing debates, social unrest even, remains an ongoing fare of nations.

No wonder economist Steve Keen calls his field the "naked emperor of the social sciences"*), and again not surprisingly, only few have the courage to agree with him.

*) Steve Keen, Debunking Economics, the naked emperor of the social sciences, Zed Books, London, 2004.