The income tax system is only one of many systems that will collapse in the coming years.
An enormous opportunity is presenting itself as a frightening problem—Complexity. How leaders react will determine the future of their businesses, and indeed the future and prosperity of America for decades to come.
About four years ago, my book The Complexity Crisis was published. I had been studying and observing complexity off and on for a decade. The first reaction of nearly everyone who reads my book—and these are mostly business people—is that “you wrote this about us.” To this I reply, “No, I didn’t, but I probably could have.” You see, complexity and its waste and turmoil, affects everyone, in every industry in the world. It is just worse in some places than in others.
As I point out in my book, complexity is largely created with the best of intentions, seeking growth or attempting to expand faster than is reasonably possible. Only those people and those companies who “figure it out” have begun to change, to recognize, measure and reduce complexity. A few manage complexity superbly and their results show it (Apple). Alternatively, others organize and manage complexity for competitive advantage (amazon.com) but even those who do so struggle with it, because complexity is insidious in the way it spreads. My book won a couple of awards, but still its sales and reach have not been great enough to do as much good as I hoped. Thus I continue to sound the warning, and flag the opportunities that exist.
Even when I point out the huge potential increases in profitability to be gained by reducing complexity, executives nod and say, “OK, we’ll take care of that.” And then they don’t—they go back to business as usual—and wonder why they get little or no benefit. I want to wrap up this too-long introduction. Virtually any company I have seen, with just a little coaching and prodding, can increase their bottom line by at least a full percentage point. Since most companies only make about 5% after tax, that one point is a 20% improvement.
And still they don’t react; they don’t change; and if they do, they do too little and only do it once. But complexity is like weeds in a garden. It keeps coming back again and again, and needs to be monitored, controlled and repeatedly removed.
Ironically, the systems that may fail first due to excessive complexity are not corporate systems. They are the incredibly complex systems that we call “government.” There is no company in existence that can rival the complexity of the US Federal Government. Of course the 90,000 municipal entities scattered across they US have plenty of their own complexity, but even the largest (California for example) are just now showing signs of total collapse, and they do not even come close to the Federal government in complexity.
I’ve tried offering help to various entities, but the NIH (Not Invented Here) factor is so large, that they think it’s under control. That is total nonsense. Yes, ridding the US Federal government of excessive complexity would eliminate tens of thousands of jobs—maybe even hundreds of thousands—and that would create new and different problems. But simplifying the US Federal government, starting at the top and working all the way down would also save TRILLIONS of dollars. There would no longer be a Federal deficit.
IF the savings and productivity improvements were made quickly enough, part of the displaced workers could be reassigned to new positions doing things and working on projects that are simply unaffordable now. Whether any group of elected officials and the hordes of lobbyists and special interests that attempt to influence them can ever come to grips with a change of this magnitude is doubtful.
If it could be done in a few controlled experiments to prove how powerful it would be, then there might be the will and the courage to spread it rapidly. The knowledge of what to do and how to do it exists in the private sector, which has been forced to do it to remain competitive and in business. Some call it “Six Sigma,” some call it “Lean,” and there are a host of other names for what needs to be done. I take a more simplistic approach. I call it “Simplification” on a massive scale to reduce Complexity and keep it down to manageable levels. (It will never go away completely for the same reason it exists—complexity is self-sustaining by people who don’t realize what they are creating until afterwards.
The paper that follows is just one of several (one by Jacek Marczyk regarding the imminent collapse of America) was part of this blog a few months ago. If you have not already discounted this warning, keep reading. Here is another one.
Complexity is a Very-Real, Very-Destructive Disease that Destroys Human-Based Systems
By Thomas Frey, Executive Director and Senior Futurist at the DaVinci Institute
Often time we hear about some new disease that sounds kind of phony and quickly discard it because it sounds like some made-up name for a common personality quirk. So, when I talk about the “complexity disease”, your first inclination will probably be to say “yeah right!”
But here’s the difference. Complexity is not a disease that affects humans. Complexity is a disease that affects systems. And even though it has never been labeled as such before now, it becomes a very useful frame of reference for people involved in building, operating, or managing a system. Complexity is a very-real, very-destructive disease.
Scientists and academics have been studying complexity for a couple of decades. There are numerous research centres and institutions around the world that study complexity and complex systems.
Systems come in many shapes and sizes. Large governmental systems range from air traffic control systems, to managing the power grid, to the income tax system. Local or community-based systems will include such things as water and sewer systems, parks and recreation systems, or local sales tax systems. Personal systems include everything from the sprinkler system used on the lawn, to electrical wiring in a house, to personal filing systems for books and records.
Systems are designed to solve problems. They are used to organize random efforts and channel the flow of information from beginning to end. They turn a chaotic effort into an organized, repeatable process.
As complexity increases, the cost of managing the complexity increases at an exponential rate until the system finally collapses.
Complexity itself is neither good nor bad. On one hand, complexity is necessary because complexity means functionality. However, complex systems are created by people for use by other people. And it is the interface with people that causes the problems.
Typically, the success of an individual is directly proportional to the number of systems they employ to manage their lives. Some people are just far more adept at using systems than others.
Much like the rest of life, systems are never static. So therefore system-related complexity is never static. Systems are always evolving, always changing. With people at the heart of any complex system, there is always a propensity for adding features, adding functionality, and adding coverage to the domain of the system. This desire to complicate the complicated is what I refer to as the exponential nature of complexity.
Dr. Jacek Marczyk, founder of the complexity management company, Ontonix, estimates that the yearly global growth of complexity is around 5-6%, based on OntoSpace analysis of data collected by the CIA (World Fact Book). At this pace, he anticipates that we will reach societal danger zones around 2040-2045.
Our biggest system-related problems come into play when we try to impose highly complex systems on people with relatively low complexity tolerance levels. A good example of this is the US income tax system.
The income tax system, based on an ever-expanding code now estimated to be over 64,000 pages long, is moving further and further out of the range of people with low complexity tolerance levels, and without a serious intervention to change things, is destined for a very near-term collapse.
In a similar fashion to the “Peter Principle”, complexity that remains unchecked will grow until it reaches a natural breaking point. Political leaders continue to mask the underlying problems by equipping armies of people to support the current system, and using technology to better organize the complexity involved. However, more people and more technology can only lead to more complexity, hastening the demise.
In the end, the income tax system will collapse because of the heavy non-monetary toll it extracts on people, slowing competitiveness, dramatically shifting the US standing in the global marketplace. The US income tax system is a giant millstone around the neck of the American people and unleashing this noose will be the quickest way to “put our freedom to work”.
Rest assured that when the income tax system goes away that it will not mean that taxes will go away. New systems will be put into place and the most likely replacement tax will be the one that best plans for the transition. Politicians are not interested in going through periods of total chaos, so the replacement system that does the best job at working us through the transitioning process will likely prevail.
A recent poll by the DaVinci Institute showed that 41% of the general population does not think income tax will ever go away….even in 100 years. Many people have resigned themselves to the inevitability of the income tax system. Most grumble and complain about it feeling that the sheer inertia of this giant bureaucracy is like an unstoppable force of nature.
However, change does not happen because everyone gets together first and decides a change is going to happen. Momentum will build quickly around a single event or thought leader. When the general public senses that the end is near, an overwhelming flood of support will rapidly hasten its demise.
The income tax system is only one of many systems that will collapse in the coming years. It doesn’t mean that life as we know it will suddenly come to a screeching halt. Rather, things will change. They will change, just as they have throughout history. Our goal has to be that they change for the better.
Photo credit: John Kent Kidwell