Sunday, August 26, 2012

Keep from All Thoughtful Men: How U.S. Economists Won World War II

commentary by Roger Erickson

Keep from All Thoughtful Men: How U.S. Economists Won World War II
    (Hat tip to Hoonose at Warren Mosler's blog)

"Jim Lacey has overturned nearly 60 years of sloppy work by historians."

This thread of actively suppressing information comes up repeatedly. From the colonial currencies of Ben Franklin's time, to Abe Lincoln's greenback advisors, to Marriner Eccle's time, to the current time of Warren Mosler, Bill Mitchell, Randy Wray, Wynne Godley, William Vickrey, and countless other, largely ignored authors pointing out obviously emerging operational realities (I've compiled a partial list, but there's still no telling how large it really is - an OpenSource repository of neglected works is sorely needed).

Is our 1-step forward, 2-step regression due to overt conspiracies, innocent frauds, or simply institutional momentum of outdated professional staff refusing to die off fast enough?

Whatever the cause, the time constant for re-acquainting existing theory with emerging operations formerly outside the "pure" theory area is obviously hampering us. And it may kill us.

Our first step should be to OpenSource this book, and many more like it, and invest to send a pdf copy to every citizen in the USA. The delay in distributing needed information is critically harmful. In any social species, the net value of key information is defined by how far and wide it spreads, not by how much static value a parasitic group member tries to extract in return for their participation. Best way to succeed is to keep your team alive and protecting you. We lose track of that.

It's not just that HP doesn't know what HP collectively knows. The "winners" occupying dominant institutional staff positions are actively resisting adequate sampling of already emerging operations that would cause faster turnover of theoretical frameworks. We're seeing a perfect storm of income fears, neglect of basic needs, fueling desperation to hold on to turf. That kind of distributed, institutional panic is exactly NOT what team members in a democratic republic want to see.

In short, the difference between policy-oriented theory and operations is diverging in many if not all arenas. That can only happen if a populace allows itself to be inadequately connected, inadequately practiced at managing change, and simply off the pace of contingency management. Scary stuff.

What are we going to do about it? We have more than adequate precedents for rising to such occasions, from Ben Franklin's famous table talk on to Marriner Eccles forgotten testimony to the US Senate. Our operational problem seems to be that most of the population is missing adequate exposure to these key lessons that would enable rapid development of adequate situational awareness. "We can do it," yet most of us don't seem to know that.

Sending inadequately trained staff into a democratic battlefield is a recipe for disaster.

We don't need cynics saying that any attempt to foster coordination is "paternalism."

We don't need arrogant "theoretical experts" in one field refusing to talk with operational experts in other fields - which they may not even know exist!

We do need trust and will to scramble through the current mess.
Then we need systematic planning to ensure another generation doesn't see themselves in the same situation yet again, this time with 600 million, not just 300 million people.

Seems to me that our problems are largely problems of scale. How do we maintain and actually increase group-intelligence when group size is rapidly scaling? That's a mobilization task, and we have plenty of people already familiar with such tasks.  Every system model known says that required inter-connectivity always scales far faster than population size. Lessons from all known examples of development - "ontogeny" - indicate that rapid re-mixing of connectivity patterns is the winning approach, allowing us to formally search for transiently successful "team patterns" while also knowing full well that we must soon disassemble them and re-assemble them in novel ways to meet accelerating change. We've been there & done that, but are acting like we don't have to do it again.  Get real!

Future shock already rolled past us. It looks like an intractable problem, yet every intractable task has a solution, and that solution will involve another level of indirection. Our #1 problem is that too many "experts" are actively resisting - not accelerating - indirection. Grandparent hubris & parent stubbornness is putting the kids at dire risk, just when all co-existing generations should be working together more fluidly, not less.

What was the literature major's take? "If we want everything to remain the same, everything must change." Why are we letting ourselves be afraid to stabilize our succession path by accelerating change?


Tom Hickey said...

Interesting that the Volkswagen operational VP that present the idea of re-issuing the beetle was turned down by top management, ostensibly because of their superior grasp of the auto business. He went did it anyway in secret, and the car became a repeat success story.

Reinvigorating previous good idea works. Policy makers should read Lacey, who, not by accident is ex-military and understands operations.

jeg3 said...

Change in America, citizens need to start looking out for their own interest and not self-sabotage (propaganda works only until it self-implodes and people wonder what happened to their cherished beliefs):

Who are the job creators?
"A TED Talk on Income Inequality by Nick Hanauer"

Change in America will take a lot of outreach with numerous organizations/ networks, and having a game-plan with rational macroeconomics (MMT).

See Figure 1 (PDF), MMT seems to be past Innovators stage and into the Early Adopters. Next up is Early Majority. You know MMT is in the Laggard Stage when Austrians say they knew it all along.
"Why, when, and how fast innovations are adopted"

Roger Erickson said...

enticing wording, but uselessly anthropomorphic content

How cultures thrive & fail depends on more things than what trinkets do & don't sell how fast. There are always multiple levels & waves of what is/isn't being adopted, from personal submarkets to agency-specific sub-markets to state & federal markets.

jeg3 said...

@ Roger,

I made a point about the graph & MMT as a metaphor, changing the point with words like anthropomorphic is not much of a point. The article was about the adoption of a new technology which does occur in a society (especially today's). And the research continues: "However,
we realize that the effect of distributing the agents on a
network could have some relevant effect in the dynamics
of technology adoption, and such is the subject of a work
already in progress."

Cultures also thrive depending on what macroeconomics they adopt, hence economic problems in Europe worse than the US.

Matt Franko said...


see your points about the future and agree, but earlier after what Tom posted below from "Ethics" I was thinking that for me a time machine back to Aristotle's time might be better than our current contemporary moron-rich environment... ;)

Some people value history too (it takes all types). So perhaps to your point forward looking people may be attracted to adopting a "new" and heterodox paradigm like MMT. While those who value our history may be attracted by how our classic Greek and Roman ancestors used "ancient MMT" as well.


Matt Franko said...

"Why are we letting ourselves be afraid to stabilize our succession path by accelerating change?"

Roger to me it looks like the mainstream are accelerating change. Or at least they are not preventing it...

We can see from the writings of Aristotle that the type of design, knowledge and operations of monetary systems that we here advocate for was already done 2,500 years ago by the human...

So the problem doesnt seem to be "conservatism" or a general aversion to change or progress...

What we are up against looks like a periodic function of REgression or DEvolution with a about a 2,500 year plus (and still counting) full cycle time. We still have a ways to go to get back to 'nomisma'.

Have you ever seen such a long period of constant regress in your evolutionary studies? This is interesting...


Roger Erickson said...

Matt Franko asks: "Have you ever seen such a long period of constant regress in your evolutionary studies?"

Constantly. They're everywhere, still surviving in protected niches, or in the paleontology record. Dodo birds? Neanderthal? Small, unexposed tribes? Austrian Economists? Libertarians? :)

How long Luddite species last is a function of statistics & adaptive challenges. The first sizable nation to seize the opportunities accessible through sustained, fully agile monetary operations may well overcome the USA.

see the book:

The question is why we didn't maintain that state of mobilization. It was lack of challenges, our own, or from outsiders.

Every period of systemic innovation requires an intervening or at least interleaved period of "sleep," where all the newly established cultural connectivity patterns are re-iterated, to smooth out subtle inconsistencies & unpredictable repercussions in far-flung & subtle processes.

Cultural evolution in social species is largely about making such system adjustments more virtual, and hence more fluid & adaptable. The outcome is that cultures, as opposed to physiologies, are moving towards "sleep" as a fully interleaved & continuous adjustment process, rather than the periods of overtly interleaved sleep that all known central nervous systems require.

We're not there yet. Why? Individual habits & institutional momenta are NOT as plastic as we require them to be.

Only known solution is more practice, so we can become a culture more fully expressing Outcomes Based Self Education.,mod=15&sourceid=chrome&ie=UTF-8&qscrl=1

Tom Hickey said...

The question is why we didn't maintain that state of mobilization. It was lack of challenges, our own, or from outsiders.

Actually we did to some degree when it was decided not to ramp down after WWII due to the perceived Soviet threat. It is called military Keynesianism, and it has shaped the US economy ever since.