The 2012 presidential election is the most critical in the modern history of America, according to GOP candidate Newt Gingrich. And when Mitt Romney says America must change its direction, he is absolutely right. The information that follows will explain why.
The critical question is: Change how? As Romney contends, Leadership will literally save or doom the USA, and in the not so distant future. Based on the past three years’ trends, Barack Obama’s leadership and changes seems to have worsened, not helped America’s risk of an imminent collapse. (The fact that Obama’s initiatives seem to imitate the European direction is not comforting at all.)
Few things can doom a “system” faster than excessive complexity, which then collapses into chaos. This is true whether a natural system (e.g., ecosystem) or a man-made one, like a company or a government. I have been studying the influences of complexity for a decade, and warned of many problems in my 2008 award-winning book The Complexity Crisis and in previous posts here on Forbes.com.
When you study and publish on a topic, you connect with others who are also studying that topic. One such contact is Jacek Marczyk of Ontonix (www.ontonix.com). Jacek and his colleagues have developed a very powerful analytical tool for evaluating complexity and risk, and relating it to “devastating failures,” such as the total collapse of an entity.
We have all seen complexity damage various kinds of enterprises in recent times: the Costa Concordia proved that the systems for evacuating over 4000 cruise ship passengers failed due to the complexity of the task. The Boeing Dreamliner was delayed multiple times due to the complexity of new outsource vendors, using new processes, to produce new designs and from too far away. RIM Blackberry’s recent systems shutdown was at least partly induced by complex combination of its servers, hardware, software, etc. Failures of “big box retailers” like Circuit City, Linens n Things, Borders, et. al., were likely due to mismanagement of excessive complexity.
Few would argue that the enormous complexity of the gargantuan US Federal Government is a huge and dangerously expensive problem. The question is: Just how long can things go the way they have been going, before the US collapses into chaos? As you can tell by Jacek’s recent blog post (http://www.ontonix.com/Blog/When_Will_the_USA_Collapse%3F_Around_2018. ) his calculation says that if nothing is changed, even without any adverse upsets, the US collapse could occur as soon as 2017-2018. Scary? You bet!
America’s Collapse Due to Complexity (edited)
The European Union is in a state of demise, shown by the weakness of the Euro, which we recently forecasted to “dissolve” around Q3 of 2013. Once the common currency is gone, the union will probably transform into something easier to manage, less complex, less heterogeneous. The structural resilience of the EU as a system has been very low (1 on a scale from 1 to 5) since November 2010 and this is certainly not a good omen.
Recently we have turned our attention to the US. Employing data from the World Bank we have rated the country as a system, incorporating into the analysis over 800 parameters spanning:
• Economy, Industry, Agriculture, Energy, Society, Ecosystem, Transportation, Telecommunications, Military/Defence, Education, Health System, etc.
The result of this holistic rating process is a two-star resilience rating (i.e. low) corresponding to the classical “BBB” rating. The resilience rating is not a measure of the country’s ability to pay its debt. It is a reflection of the resilience (fragility) of the entire system and its ability to withstand shocks and extreme events, or the so-called Black Swans. Comparable to what was done for the Euro, we have analyzed the evolution of the complexity of the US as a system in the period 1985-2010. The result is illustrated in the figure below:
What is the conclusion? First of all, a healthy growing economy means increasing complexity (green curve). This means that the critical complexity (blue curve), which measures how much complexity a system can sustain without imploding, increases. Every time a system is in a state of crisis or transition both curves become bumpy (see the bump corresponding to the dot com crisis in 2000). The magnitude of the bumps indicates the severity of the crisis. What is apparent from the plot, however, is that the current crisis is the most severe in 25 years – it sets the clock back 10-12 years, when we registered similar values of complexity. However, what is more alarming is the slope of both curves – it is negative and with a value not registered before. Basically, a negative slope points to a shrinking economy.
The second alarming point is that when the complexity of a system reaches its corresponding critical threshold (critical complexity) the system in question becomes very fragile and therefore vulnerable. Its structure becomes weak and unable to absorb any increases in uncertainty, inefficiency, and especially, shocks. In the case of the US, this is precisely what is happening. If we take a closer look at the last few years, extrapolating trend, we see that the curves will meet around 2017-2018. This situation is illustrated below.
What does this mean? It means that over the next 5-6 years the complexity of the US will reach unmanageable levels and the entire system will essentially be out of control. Obviously, this statement is based on the assumption that no major adjustments and/or (extreme) events take place to change the trend line. However, it is also true that current crisis is exposing the inability of modern politics to react to disruptive events. Consequently, the assumption seems to be pretty realistic. Moreover, very large and complex economies are characterized by immense inertia, which means that changes of any nature require a very, very long time to effect.
But the most alarming point is this. In our analysis we are not looking only at the economy of the US. The analysis is holistic. It embraces also the society, environment, education, the health system, etc.—in other words, “everything.” This means we’re looking at the US as country, not just as an economy. In our previous blogs we have pointed to the fact that even though many parts of the global economy are in a state of crisis, this is not a crisis of the economy. It is a crisis of values, morals, of living beyond one’s means, and many other elements, which ultimately, are reflected in the state of the economy. In fact, the economy and the society are one and must be analyzed as such. Everything is interconnected. The economy is only one important part of a huge and dynamic network, which we understand very poorly.
Our result is most alarming due to very this fact. You can bailout a bank or a carmaker, but how can you “bail out an entire country”? And we’re not talking of fixing the books or printing money, we’re talking of fixing the entire system, including the economy, society, environment, education, health system, values, morals, ethics, culture, etc., etc., etc. How do you “bail that out”? Do we even have the necessary tools for such an undertaking?
The Western world finds itself in a state of decadence, leading a wasteful lifestyle, more or less like the Roman Empire in its last years. The only difference is that it took a century to collapse, while today changes happen at Internet speed.
It appears true that the only thing we learn from history is that we don’t learn from history. Are we doomed to repeat the mistakes of the past?
Photo credit: America in Danger