Monday, September 30, 2013

Finding the Fewest Adjustments to National Culture That Trigger the Most Improvement in National Adaptive Rate

Commentary by Roger Erickson

Actually, make that the "Leanest/Fastest/Cheapest" adjustments.

The Strange Path From Joshua Chamberlain to WWI to Smedley Butler, Back to and Off the Gold Std, and on to FDR, Carroll Quigley, Shewhart, Deming, John Boyd ... and to sane currency and other operations.

Dear readers,

I admit never learning about any of these names back in public school in Oregon - except WWI and FDR of course. The other names I heard of ONLY long after earning a PhD, and only because of my own curiosity about the absolutely FUBAR, general welfare of the people, despite our nation's staggering rate of stockpiling insights that remain largely academic to the very citizens who could potentially wield them all!

Joshua Chamberlain, of course, enunciated the responsibility of preparing ourselves to meet unpredictable challenges (don't know if he ever knew about Darwin). Walter Shewhart conceptualized scalable network process control by 1926, just as much of the following history was starting to unfold. Shewhart named his "network adjustment" overview the "take-responsibility" PDSA cycle, which Deming endlessly promoted to a clueless electorate, and John Boyd later still renamed as the reactive OODA Loop, thereby allowing military officers everywhere to dig deep into the HOW of "network adjustment" without ever having to ask the essential question, "WHY" - which of course allows them to safely leave policy to the, very, sob!, bought-&-paid-for politicians which Smedley Butler had long ago lamented as the missing piece in a broken OODA LOOP. Boyd learned his own lesson, as he systematically left behind various strategy levels and developed increasing frustration with the process of policy development and formation of national intent. You have to wonder whether Boyd ended up agreeing with Smedley, that perfecting war is only perfecting a racket, for others.

Astoundingly, ALL these adventures in scalable, adaptive network operations occurred in near complete isolation from completely parallel national policy events literally screaming for sentient intervention! If war is too important to be left to the generals, isn't EVERY process too important to be left to the presumed local-process Central Planners?

While the legacy of Chamberlain/Smedley/Shewhart/Deming/Boyd were evolving, a parallel but isolated line of drivers was simultaneously beating the public mule with a different set of 2x4s. From FDR to Obama, a succession of "prominent lobbyists" were comprised of a remarkably small cast of characters involved in leading countries cyclically on/off the royalty/gold/fiat/TBTJ currency and ideology standards! And, they did it all in the name of anti-Central-Planning Central Planning!

You would NOT think a sentient electorate could even make up such a tale, as a way to divert it's members from forming group-intelligence from the mere sum of gang intellects! Nevertheless, here we are, and too few are listening to too many. As usual, that leaves far too many listening to too few.

Today, we as a people have again achieved contact with something we were seemingly absolutely dedicated to ignoring ... CONTEXT. A context which is inevitably slapping the entire electorate upside the head, with both a hard right and a stiff left jab to the mirror. Cuts have been opened, flowing blood is blurring views, and the public eye is nearly swollen shut from all the self-inflicted mayhem. How long can we go on pummeling ourselves, and stay on our feet? Who says shadows can't box back, and pin ourselves in a corner? And it's not even the 5th round! Does anyone still think the USA can last 12 rounds of cultural adjustment?

Now for the coup de graceless. A reminder that all these ignored events and processes were always linked, by a collective will to ignore - if nothing else -  thereby keeping the quality of our distributed decision-making from taking more responsibility for our own group outcomes.

In response to a recent post, reader John Hemington wrote the following, that puts the final, linking touches on issues that persisted in existing, in parallel, maddeningly un-linked.


"I had not seen this particular set of information, but this was an effort which had been waged since the mid-to-late 1800s by Cecil Rhodes and subsequently by Lord Milner and his “Kindergarten” which grew into the Round Table groups in England, the US, Canada, Australia, New Zealand and South Africa. It was this group which originally established the Council on Foreign Relations in New York to further this idea of unifying (at that time) all of the English speaking nations of the world in one big union. This effort ultimately failed, but the impetus behind it never really left the room.

A great source for this, by the way, is Carroll Quigley’s amazing 1,378-page history lecture, Tragedy and Hope: A History of the World in Our Time, published in 1966, as well as his earlier written but posthumously published The Anglo-American Establishment. As far as I am aware, Quigley is the only major historian to have focused his studies on the operations of the ruling elite, something he did more out of admiration and a sense that no one had adequately documented their efforts. Most elites would, of course, never sponsor and pay for such research into their operations. Quigley was the real deal. He taught at Harvard, Princeton and Georgetown; and was, in fact, Bill Clinton’s history professor at Georgetown. Here is a quote from Tragedy and Hope which explains what our rulers were planning for us in 1919, but hadn't been able to accomplish until recently:

Page 323-325: Modifications of productive and commercial organization and of financial practices made it almost impossible after 1919 to restore the financial system of 1914. Yet this is what was attempted. Instead of seeking to set up a new financial organization adapted to the modified economic organization, bankers and politicians insisted that the old prewar system should be restored. These efforts were concentrated in a determination to restore the gold standard as it had existed in 1914.

In addition to these pragmatic goals, the powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent private meetings and conferences. The apex of the system was to be the Bank of International Settlements (BIS) in Basle, Switzerland, a private bank owned and controlled by the world’s central banks which were themselves private corporations. Each central bank, in the hands of men like Montagu Norman of the Bank of England, Benjamin Strong of the New York Federal Reserve Bank, Charles Rist of the Bank of France, and Hjalmar Schacht of the Reichsbank sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world.

In each country the power of the central bank rested largely on its control of credit and money supply. In the world as a whole the power of the central bankers rested very largely on their control of loans and of gold flows. In the final days of the system, these central bankers were able to mobilize resources to assist each other through the BIS, where payments between central banks could be made by bookkeeping adjustments between the accounts which the central banks of the world kept there. The BIS as a private institution was owned by the seven chief central banks and was operated by the heads of these, who together formed its governing board. Each of these kept a substantial deposit at the BIS and periodically settled payments among themselves (and thus between major countries of the world) by bookkeeping in order to avoid shipments of gold. They made agreements on all the major financial problems, especially in reference to loans, payments, and the economic future of the chief areas of the globe.

The BIS is generally regarded as the apex of the structure of financial capitalism whose remote origins go back to the creation of the Bank of England in 1694 and the Bank of France in 1803. As a matter of fact its establishment in 1929 was rather an indication that the centralized world financial system of 1914 was in decline. It was set up rather to remedy the decline of London as the world’s financial center by providing a mechanism by which a world with three chief financial centers in London, New York, and Paris could all operate as one   . . .

And also this about fiat money:

Page 534-535 “All this served to create more highly organized and more self-conscious interest blocs in American life, especially among farmers and labor, but it did not represent any victory for unorthodox financing, the real key to either monopoly capitalism or to a managed pluralist economy. The reason for this was that the New Deal, because of President Roosevelt, was fundamentally orthodox in its ideas on the nature of money. Roosevelt was quite willing to unbalance the budget and to spend in a depression in an unorthodox fashion because he had grasped the idea that lack of purchasing power was the cause of the lack of demand which made unsold goods and unemployment, but he had no idea of the causes of the depression and had quite orthodox ideas on the nature of money. As a result, his administration treated the symptoms rather than the causes of the depression and, while spending unorthodoxly to treat these symptoms, did so with money borrowed from the banks in the accepted fashion. The New Deal allowed the bankers to create the money, borrowed it from the banks, and spent it. This meant that the New Deal ran up the national debt to the credit of the banks, and spent money in such limited fashion that no drastic reemployment of idle resources was possible.

One of the most significant facts about the New Deal was its orthodoxy on money. For the whole twelve years he was in the White House, Roosevelt had statutory power to issue fiat money in the form of greenbacks printed by the government without recourse to the banks. This authority was never used. As a result of such orthodoxy, the depression’s symptoms of idle resources were overcome only when the emergency of war in 1942 made it possible to justify a limitless increase in the national debt by limitless borrowing from private persons and the banks. But the whole episode showed a failure to grasp the nature of money and the function of the monetary system, of which considerable traces remained in the postwar period.

One reason for the New Deal’s readiness to continue with an orthodox theory of the nature of money, along with an unorthodox practice in its use, arose from the failure of the Roosevelt administration to recognize the nature of the economic crisis itself. This failure can be seen in Roosevelt’s theory of “pump priming.” He sincerely believed, as did his secretary of the Treasury, that there was nothing structurally wrong with the economy, that it was simply temporarily stalled, and would keep going of its own powers if it could be restarted. In order to restart it, all that was needed, in New Deal theory, was a relatively moderate amount of government spending on a temporary basis. This would create purchasing power (demand) for consumer goods which, in turn, would increase the confidence of investors who would begin to release large unused savings into investment. This would, again, create additional purchasing power and demand, and the economic system would take off of its own power. The curtailment of the powers of finance and heavy would then prevent any repetition of the collapse of 1929.”

The inadequacy of this theory of the depression was shown in 1937 when the New Deal, after four years of pump priming and a victorious election in 1936, stopped its spending. Instead of taking off, the economy collapsed in the steepest recession in history. The New Deal had to resume its treatment of symptoms but now without hope that the spending program could ever be ended, a hopeless prospect since the administration lacked the knowledge of how to reform the system or even how to escape from borrowing bank credit with its mounting public debt, and the administration lacked the courage to adopt the really large-scale spending necessary to give full employment of resources. The administration was saved from this impasse by the need for the rearmament program followed by the war. Since 1947 the Cold War and the space program have allowed the same situation to continue, so that even today prosperity is not the result of a properly organized economic system but of government spending, and any drastic reduction in such spending would give rise to an acute depression.

Sorry to make this so long, but it is very interesting given today’s stream of events." John Hemington


"Interesting given today’s stream of events?"

I'll say. I'd discovered Roosevelt's "currency orthodoxy" by other means, and had read many Quigley excerpts over the years. Yet I am increasingly astounded that Quigley wrote about aspects of it so clearly, so long ago ... AND THAT ALMOST NO ONE CARED!

How many times can a whole electorate walk back and forth past the very context awareness it's so desperately seeking ... before that context reaches out and smacks us, out of pure frustration and resentment? Maybe we don't deserve the truth? Even IF it could eventually be forced upon us?

There are many, other, failures to keep a national PDSA/OODA LOOP chasing evolving context with adequate form or tempo. All those examples, however, only foster the core feeling that WE can't survive these challenges with THIS outfit, as is! That nagging fear OUGHT to focus our minds on systematically finding insanely better ways to train our own citizens ... to master our own context, regardless of how it changes.  Yet it hasn't yet. 

Historically, of course, humans used to do nothing but adapt to new contexts. Today, though, we seem to be in our own way, everywhere. We need either new frontiers to expand to, or we need to make our own organizational state the newest frontier, and expand our operational dimensions inward rather than just geographically outward.

Minimally, we need a steady stream of national conferences dedicated to finding the fewest adjustments to national culture that trigger the most improvement in national adaptive rate. Until then, the quality of our distributed decision-making will continue to decline. We're being shockingly complacent about this. The only thing we can't be complacent about is complacency itself? Until we act with more collective tempo, our national PDSA/OODA loop is just something we talk about, without practicing. Nations that pursue that approach just fall off the bike when finally forced to ride!

Meanwhile, the issues constraining our national mood and group intelligence go far deeper than a misunderstanding of currency operations alone. We face even more fundamental limitations related to how we as a supposedly sentient species:

* address and perceive diverse, simultaneously degenerate contexts (individual-to-group),
* build and KEEP group alignment to changing, common cause,
* orient to group and personal options, and
* explore them one and all.

If nothing else, the increasingly linked discussions above repeatedly remind me of a dark joke. "The best evidence for intelligent life in the universe is that it HASN'T tried to contact us."

It's quite obvious that there is a far better, far easier way for citizens. How do we reconsider key steps, and then recruit people to FOCUS on that option? That is the only question that really matters anymore. We're literally starving even while our table is piling up with excess beyond our imagination, and we're even killing one another over scraps, and just for position at the very table where everything but the scraps are being ignored!

Options, options everywhere, and nary a group-brain to think.

1 comment:

Roger Erickson said...

maybe we should call this Parsi Money? :(