dw2

21 March 2013

The burning need for better supra-national governance

International organisations have a bad reputation these days. The United Nations is widely seen as ineffective. There’s a retreat towards “localism”: within Britain, the EU is unpopular; within Scotland, Britain is unpopular. And any talk of “giving up sovereignty” is deeply unpopular.

However, lack of effective international organisations and supra-national governance is arguably the root cause of many of the biggest crises facing humanity in the early 21st century.

That was the thesis which Ian Golding, Oxford University Professor of Globalisation and Development, very ably shared yesterday evening in the Hong Kong Theatre in the London School of Economics. He was quietly spoken, but his points hit home strongly. I was persuaded.

DividedNationsThe lecture was entitled Divided Nations: Why global governance is failing and what we can do about it. It coincided with the launch of a book with the same name. For more details of the book, see this blogpost on the website of the Oxford Martin School, where Ian Golding holds the role of Director.

It’s my perception that many technology enthusiasts, futurists, and singularitarians have a blind spot when it comes to the topic of the dysfunction of current international organisations. They tend to assume that technological improvements will automatically resolve the crises and risks facing society. Governments and regulators should ideally leave things well alone – so the plea goes.

My own view is that smarter coordination and regulation is definitely needed – even though it will be hard to set that up. Professor Goldin’s lecture amply reinforced that view.

On the train home from the lecture, I downloaded the book onto my Kindle. I recommend anyone who is serious about the future of humanity to read it. Drawing upon the assembled insights and wisdom of the remarkable set of scholars at the Oxford Martin School, in addition to his own extensive experience in the international scene, Professor Goldin has crystallised state-of-the-art knowledge regarding the pressing urgency, and options, for better supra-national governance.

In the remainder of this blogpost, I share some of the state-of-consciousness notes that I typed while listening to the lecture. Hopefully this will give a flavour of the hugely important topics covered. I apologise in advance for any errors introduced in transcription. Please see the book itself for an authoritative voice. See also the live tweet stream for the meeting, with the hash-tag #LSEGoldin.

What keeps Oxford Martin scholars awake at night

The fear that no one is listening. The international governance system is in total gridlock. There are failures on several levels:

  • Failure of governments to lift themselves to a higher level, instead of being pre-occupied by local, parochial interests
  • Failure of electorates to demand more from their governments
  • Failure of governments for not giving clearer direction to the international institutions.

Progress with international connectivity

80 countries became democratic in the 1990s. Only one country in the world today remains disconnected – North Korea.

Over the last few decades, the total global population has increased, but the numbers in absolute poverty have decreased. This has never happened before in history.

So there are many good aspects to the increase in the economy and inter-connectivity.

However, economists failed to think sufficiently far ahead.

What economists should have thought about: the global commons

What was rational for the individuals and for national governments was not rational for the whole world.

Similar problems exist in several other fields: antibiotic resistance, global warming, the markets. He’ll get to these shortly.

The tragedy of the commons is that, when everyone does what is rational for them, everyone nevertheless ends up suffering. The common resource is not managed.

The pursuit of profits is a good thing – it has worked much better than central planning. But the result is irrationality in aggregate.

The market alone cannot provide a response to resource allocation. Individual governments cannot provide a solution either. A globally coordinated approach is needed.

Example of several countries drawing water from the Aral Sea – which is now arid.

That’s what happens when nations do the right thing for themselves.

The special case of Finance

Finance is by far the most sophisticated of the resource management systems:

  • The best graduates go into the treasury, the federal reserve, etc
  • They are best endowed – the elite organisation
  • These people know each other – they play golf together.

If even the financial bodies can’t understand their own system, this has black implications for other systems.

The growth of the financial markets had two underbellies:

  1. Growing inequality
  2. Growing potential for systemic risk

The growing inequality has actually led to lobbying that exaggerates inequality even more.

The result was a “Race to the bottom”, with governments being persuaded to get out of the regulation of things that actually did need to be regulated.

Speaking after the crisis, Hank Paulson, US Treasury Secretary and former CEO of Goldman Sachs, in effect said “we just did not understand what was happening” – even with all the high-calibre people and advice available to him. That’s a shocking indictment.

The need for regulation

Globalisation requires regulation, not just at the individual national level, but at an international level.

Global organisations are weaker now than in the 1990s.

Nations are becoming more parochial – the examples of UK (thinking of leaving EU) and Scotland (thinking of leaving UK) are mirrored elsewhere too.

Yes, integration brings issues that are hard to control, but the response to withdraw from integration is terribly misguided.

We cannot put back the walls. Trying to withdraw into local politics is dreadfully misguided.

Five examples

His book has five examples as illustrations of his general theme (and that’s without talking in this book about poverty, or nuclear threats):

  1. Finance
  2. Pandemics
  3. Migration
  4. Climate change
  5. Cyber-security

Many of these problems arise from the success of globalisation – the extraordinary rise in incomes worldwide in the last 25 years.

Pandemics require supra-national attention, because of increased connectivity:

  • The rapid spread of swine flu was correlated tightly with aircraft travel.
  • It will just take 2 days for a new infectious disease to travel all the way round the world.

The idea that you can isolate yourself from the world is a myth. There’s little point having a quarantine regime in place in Oxford if a disease is allowed to flourish in London. The same applies between countries, too.

Technology developments exacerbate the problem. DNA analysis is a good thing, but the capacity to synthesise diseases has terrible consequences:

  • There’s a growing power for even a very small number of individuals to cause global chaos, e.g. via pathogens
  • Think of something like Waco Texas – people who are fanatical Armageddonists – but with greater technical skills.

Cyber-security issues arise from the incredible growth in network connectivity. Jonathan Zittrain talks about “The end of the Internet”:

  • The Internet is not governed by governments
  • Problems to prosecute people, even when we know who they are and where they are (but in a different jurisdiction)
  • Individuals and small groups could destabilise whole Internet.

Migration is another “orphan issue”. No international organisation has the authority to deal with it:

  • Control over immigration is, in effect, an anarchic, bullying system
  • We have very bad data on migration (even in the UK).

The existing global institutions

The global institutions that we have were a response to post-WW2 threats.

For a while, these institutions did well. The World Bank = Bank for reconstruction. It did lead a lot of reconstruction.

But over time, we became complacent. The institutions became out-dated and lost their vitality.

The recent financial crisis shows that the tables have been turned round: incredible scene of EU taking its begging bowl to China.

The tragedy is that the lessons well-known inside the existing institutions have not been learned. There are lessons about the required sequencing of reforms, etc. But with the loss of vitality of these institutions, the knowledge is being lost.

The EU has very little bandwidth for managing global affairs. Same as US. Same as Japan. They’re all preoccupied by local issues.

The influence of the old G7 is in decline. The new powers are not yet ready to take over the responsibility: China, Russia, India, Indonesia, Brazil, South Africa…

  • The new powers don’t actually want this responsibility(different reasons for different countries)
  • China, the most important of the new powers, has other priorities – managing their own poverty issues at home.

The result is that no radical reform happens, of the international institutions:

  • No organisations are killed off
  • No new ones created
  • No new operating principles are agreed.

Therefore the institutions remain ineffective. Look at the lack of meaningful progress towards solving the problems of climate change.

He has been on two Bretton Woods reform commissions, along with “lots of wonderfully smart, well-meaning people”. Four prime ministers were involved, including Gordon Brown. Kofi Annan received the report with good intentions. But no actual reform of UN took place. Governments actually want these institutions to remain weak. They don’t want to give up their power.

It’s similar to the way that the UK is unwilling to give up power to Brussels.

Sleep-walking

The financial crisis shows what happens when global systems aren’t managed:

  • Downwards spiral
  • Very hard to pull it out afterwards.

We are sleep-walking into global crises. The financial crisis is just a foretaste of what is to come. However, this need not be the case.

A positive note

He’ll finish the lecture by trying to be cheerful.

Action on global issues requires collective action by both citizens and leaders who are not afraid to relinquish power.

The good news:

  • Citizens are more connected than ever before
  • Ideologies that have divided people in the past are reducing in power
  • We can take advantage of the amplification of damage to reputation that can happen on the Internet
  • People can be rapidly mobilised to overturn bad legislation.

Encouraging example of SOPA debate in US about aspects of control of the Internet:

  • 80 million people went online to show their views, in just two days
  • Senate changed their intent within six hours.

Some good examples where international coordination works

  • International plane travel coordination (air traffic control) is example that works very well – it’s a robust system
  • Another good example: the international postal system.

What distinguishes the successes from the failures:

  • In the Air Traffic Control case, no one has a different interest
  • But in other cases, there are lots of vested interest – neutering the effectiveness of e.g. the international response to the Syrian crisis
  • Another troubling failure example is what happened in Iraq – it was a travesty of what the international system wanted and needed.

Government leaders are afraid that electorate aren’t ready to take a truly international perspective. To be internationalist in political circles is increasingly unfashionable. So we need to change public opinion first.

Like-minded citizens need to cooperate, building a growing circle of legitimacy. Don’t wait for the global system to play catch-up.

In the meantime, true political leaders should find some incremental steps, and should avoid excuse of global inaction.

Sadly, political leaders are often tied up addressing short-term crises, but these short-term crises are due to no-one satisfactorily addressing the longer-term issues. With inaction on the international issues, the short-term crises will actually get worse.

Avoiding the perfect storm

The scenario we face for the next 15-20 years is “perfect storm with no captain”.

He calls for a “Manhattan project” for supra-national governance. His book is a contribution to initiating such a project.

He supports the subsidiarity principle: decisions should be taken at the most local level possible. Due to hyper-globalisation, there are fewer and fewer things that it makes sense to control at the national level.

Loss of national sovereignty is inevitable. We can have better sovereignty at the global level – and we can influence how that works.

The calibre of leaders

Example of leader who consistently took a global perspective: Nelson Mandela. “Unfortunately we don’t have many Mandelas around.”

Do leaders owe their power bases with electorates because they are parochial? The prevailing wisdom is that national leaders have to shy away from taking a global perspective. But the electorate actually have more wisdom. They know the financial crisis wasn’t just due to bankers in Canary Wharf having overly large bonuses. They know the problems are globally systemic in nature, and need global approaches to fix them.

ian goldin

9 May 2010

Chapter completed: Crises and opportunities

Filed under: alienation, change, climate change, Economics, H+ Agenda, recession, risks, terrorism — David Wood @ 12:16 am

I’ve taken the plunge.  I’ve started writing another book, and I’ve finished the first complete draft of the first chapter.

The title I have in mind for the book is:

The Humanity+ Agenda: the vital priorities for the coming decade

The book is an extended version of the 10 minute opening presentation I gave a couple of weeks ago, at the Humanity+ UK 2010 event.  My reasons for writing this book are spelt out here.  The book will re-use and refine a lot of the material I’ve tried out from time to time in earlier posts on this blog, so you may find parts of it familiar.

I’ve had a few false starts, but I’m now happy with both the framework for the book (9 chapters in all) and a planned editing/review process.

Chapter 1 is called “Crises and opportunities”.  There’s a copy of the current draft below.

I’ll keep the latest drafts of all the chapters in the “Pages” section of this blog – accessible from the box on the right hand side.  From time to time – as in this posting – I’ll copy snapshots of the latest material into regular blogposts.

It’s my hope that the book will benefit from feedback and suggestions from readers.  Comments can be made, either to regular blogposts, or to the “pages”.  I’m also open to receiving emailed comments or contributions.  Unless someone tells me otherwise, I’ll assume that anything posted in response is intended as a potential contribution to the book.

(I’ll acknowledge, in the acknowledgements section of the book, all contributions that I use.)

========

1. Crises and opportunities

<Snapshot of material whose master copy is kept here>

The decade 2010-2019 will be a decade of crises for humanity:

  • As hundreds of millions of people worldwide significantly change their lifestyles, consuming ever more energy and generating ever more waste, the planet Earth faces increasingly great strains. “More of the same” is not an acceptable response.
  • Alongside the risk of environmental disaster, another risks looms: that of economic meltdown. The massive shocks to the global finance system at the end of the previous decade bear witness to powerful underlying tensions and problems with the operation of market economies.
  • The rapid rate of change causes widespread personal frustration and societal angst, driving a significant minority of people into the arms of beguiling ideologies such as fundamentalist Islam and the militant pursuit of terrorism. Relatively easy access to potential weapons of mass destruction – whether nuclear, biological, or chemical – transforms the threat of terrorism from an issue of national security into an issue of global survival.

In aggregation, these threats are truly fearsome.

To improve humanity’s chances of surviving, in good shape, to 2020 and beyond, we need new solutions.

I believe that these new solutions are emerging in part from improved technology, and in part from an important change in attitude towards technology. This book explains the basis for these beliefs.  This chapter summarises the crises, and the remaining chapters summarise the proposed solutions.

In the phrase “Humanity+”, the plus sign after the word “Humanity” emphasises that solutions to our present situation cannot be achieved by people continuing to do the same as before. Instead, a credible vision of wise application of new technologies can bring humans – both individually and collectively – to operate in dramatically enhanced ways:

  • Humans will be able, in stages, to break further free from the crippling constraints and debilitations of our evolutionary background and our historical experiences;
  • We will, individually and collectively, become smarter, wiser, stronger, kinder, healthier, calmer, brighter, more peaceful, and more fulfilled;
  • Instead of fruitless divisions and conflicts, we’ll find much better ways to cooperate, and build social systems for mutual benefit.

This is the vision of humanity fulfilling its true potential.

But there are many obstacles on the path to this fulfilment.  These obstacles could easily drive Humanity to “Humanity-” (humanity minus), or even worse (human annihilation), rather than Humanity+.  There’s nothing inevitable about the outcome.  As a reminder of the scale of the obstacles, let’s briefly review five interrelated pending crises.

1.1 The environmental crisis

Potential shortages of clean drinking water.  Rapid reductions in the available stocks of buried energy sources, such as coal, gas, and oil.  Crippling impacts on our environment from the waste products of our lifestyles.  These – and more – represent the oncoming environmental crisis.

With good reason, the aspect of the environmental crisis that is most widely discussed is the potential threat of runaway climate change.  Our accelerating usage of fossil fuels means that carbon dioxide (CO2) in the atmosphere has reached levels unprecedented in human history.  This magnifies the greenhouse effect of the atmosphere, tending to push the average global temperature higher.  This relationship is complex.  Forget simple ideas about increases in factor A invariably being the cause of increases in factor B.  Think instead about a dance of different factors that each influence the other, in different ways at different times.  (That’s a theme that you’ll notice throughout this book.)

In the case of climate change, the players in the dance include:

  • Variation in the amount of sunlight striking earth landmasses, due to changes over geological timescales in the axis of the earth, the eccentricity of the earth’s orbit, and the distribution of landmass over different latitudes;
  • Variation in the slow-paced transfer of heat between different parts of the ocean;
  • Variation in the speed of build-up or collapse of huge polar ice sheets;
  • Variation in numerous items in the atmosphere, including aerosols (which tend to lower average temperature) and greenhouse gases (which tend to raise it again);
  • Variation in the amounts of greenhouse gases, such as methane, being suddenly released into the atmosphere from buried frozen stores (for example, from tundra);
  • Variation in the sensitivity of the planet to the various “climate forcing agents” – sometimes a small change in one will lead to just small changes in the climate, but at other times the consequences are more severe.

What makes this dance potentially deadly is the twin risk of latent momentum and strong positive feedback:

  • More CO2 in the atmosphere raises the average temperature, which means there’s more H2O (water vapour) in the atmosphere too, raising the average temperature yet further;
  • Icesheets over the Antarctic and Greenland take a long time to start to disintegrate, but once the process gets under way, it can become essentially irreversible;
  • Less ice on the planet means less incoming sunlight is reflected to space; instead, larger areas of water absorb more of the sunlight, increasing ocean temperature further;
  • Rises in sea temperatures can trigger the sudden release of huge amounts of greenhouse gases from methane clathrate compounds buried in seabeds and permafrost – another example of rapid positive feedback.

Indeed, there is significant evidence that runaway methane clathrate breakdown may have caused drastic alteration of the ocean environment and the atmosphere of earth a number of times in the past, most notably in connection with the Permian extinction event, when 96% of all marine species became extinct about 250 million years ago.

Of course, predicting the future of the environment is hard.  There are three sorts of fogs of climate change uncertainty:

  1. Many of the technical interactions are still unknown, or are far from being fully understood.  We are continuing to learn more;
  2. Even where we believe we do understand the technical interactions, many of the detailed interactions are unpredictable.  Just as it’s hard to predict the weather itself, one month (say) into the future, it’s hard to predict the exact effect of ongoing climate forcing agents.  The effect that “a butterfly flapping its wings unpredictably causes a hurricane on the other side of the planet” applies for the chaos of climate as much as for the chaos of weather;
  3. There are huge numbers of vested interests, who (consciously or sub-consciously) twist and distort aspects of the argument over climate change.

The vested interests include:

  • Both anti-nuclear and pro-nuclear campaigners;
  • Both anti-oil and pro-oil campaigners, and anti-coal and pro-coal campaigners;
  • Both “small is beautiful” and “big is beautiful” campaigners;
  • Both “back to nature” and “pro-technology” campaigners;
  • Scientists and authors who have long supported particular theories, and who are loath to change their viewpoints;
  • Hardened political campaigners who look to extract maximum concessions, for the region or country they represent, before agreeing a point of negotiation.

Not only is it psychologically hard for individuals to objectively review data or theories that conflicts with their favoured opinions.  It is economically hard for companies (such as energy companies) to accept viewpoints that, if true, would cause major hurdles for their current lines of business, and significant loss of jobs.  On the other hand, just because researcher R has strong psychological reason P and/or strong economic incentive E in favour of advocating viewpoint V, it does not mean that viewpoint V is wrong.  The viewpoint could be correct, even though some of the support advanced in its favour is non-logical.  As I said, there’s lots of fog to navigate!

Despite all this uncertainty, I offer the following conclusions:

  • There is a wide range of possible outcomes, for the climate in the next few decades;
  • The probability of runaway global warming – with disastrous effects on sea levels, drought, agriculture, storms, species and ecosystem displacement, travel, business, and so on – is at least 20%, and likely higher;
  • Global warming won’t just make the temperature higher; it will make the weather more extreme – due to increased global temperature gradients, increased atmospheric water vapour, and higher sea temperatures that stir up more vicious storms.

A risk of at least 20% of a global environmental disaster deserves urgent attention and further analysis.  Who among us would enter an airplane with family and friends, if we believed there was a 20% probability of that airplane plummeting headlong out of the sky to the ground?

1.2 The economic crisis

The controversies and uncertainties over the potential threat of runaway climate change find parallels in discussions over a possible catastrophic implosion of the world economic system.  These discussions likewise abound with technical disagrements and vested interests.

Are governments, legislators, banks, and markets generally wise enough and capable to oversee the pressures of financial trading, and keep the systems afloat?  Was the recent series of domino-like collapses of famous banks around the world a “once in a lifetime” abnormality, that is most unlikely to repeat?  Or should we expect a recurrence of fundamental financial instability?  What is the risk of a larger financial crisis striking?  Indeed, what is the risk of adverse follow-on effects from the “tail end” of the 2008-2009 crisis, generating a so-called “double dip” in which the second dip is more drastic than the first?  On all these questions, opinions vary widely.

Despite the wide variation in opinions, some elements seem common.  All commentators are fearful of some potential causes of major disruption to global economics.  Depending on the commentator, these perceived potential causes include:

  • Clumsy regulation of financial markets;
  • Bankers who are able to take catastrophic risks in the pursuit of ever greater financial rewards;
  • The emergence of enormous monopoly powers that eliminate the benefits of marketplace competition;
  • Institutions that become “too big to fail” and therefore derail the appropriate workings of the market system;
  • Sky-high accumulation of debts, with individuals and countries living far beyond their means, for too long;
  • Austerity programmes that attempt to reduce debts quickly, but which could provoke spiraling industrial disputes and crippling strikes;
  • Bubbles that grow because “it’s temporarily rational for everyone to be irrational in their expectations” and then burst with tremendous damage.

We must avoid a feeling of overconfidence arising from the fact that previous financial crises were, in the end, survived, without the world of banking coming to an end.  First, these previous financial crises caused numerous local calamities – and the causes of major wars can be traced (in part) to these crises.  Second, there are reasons why future financial problems could have more drastic effects than previous ones:

  • There are numerous hidden interconnections between different parts of the global  economy, which accelerate negative feedback when individual parts fail;
  • The complexity of new financial products far outstrips the ability of senior managers and regulators to understand and appreciate the risks involved;
  • In an age of instant electronic connections, the speed of cascading events can catch us all flat-footed.

For these reasons, I tentatively suggest we assign a ballpark risk factor of about 20% to the probability of a major global financial meltdown during the 2010s.  (Yes, this is the same numeric figure as I picked for the environmental crisis too.)

Note some parallels between the two crises I’ve already discussed:

  • In each case, the devil is in the mix of weakly-understood powerful feedback systems;
  • Again in each case, our ability to discern what’s really happening is clouded by powerful non-rational factors and vested interests;
  • Again in each case, the probabilities of major disaster cannot be calculated in any precise way, but the risk appears large enough to warrant very serious investigation of solutions;
  • Again in each case, there is deep disagreement about the best solutions to deploy.

Worse, these two looming crises are themselves interconnected.  Shortage of resources such as clean energy could trigger large price hikes which throw national economies into tailspins.  Countries or regions which formerly cooperated could end up at devastating loggerheads, if an “abundance spirit” is replaced by a “scarcity spirit”.

1.3 The extreme terrorist crisis

What drives people to use bombs to inflict serious damage?  Depending on the cirumstance, it’s a combination of:

  • Positive belief, in support of some country, region, ideology, or religion;
  • Negative belief, in which a group of people (“the enemy”) are seen as despicable, inferior, or somehow deserving of destruction or punishment;
  • Peer pressure, where people feel constrained by those around them to follow through on a commitment (to become, for example, a suicide bomber);
  • Personal rage, such as a desire for revenge and humiliation;
  • Aspiration for personal glory and reward, in either the present life, or a presumed afterlife;
  • Failure of countervailing “pro-cooperation” and “pro-peace” instincts or systems.

Nothing here is new for the 2010s.  What is new is the increased ease of access, by would-be inflictors of damage, to so-called weapons of mass destruction.  There is a fair probability that the terrorists who piloted passenger jet airlines into the Twin Towers and the Pentagon would have willingly caused even larger amounts of turmoil and damage, if they could have put their hands on suitable weapons.

Technology itself is neutral.  A hammer which can be used to drive a nail into a piece of wood can equally be used to knock a fellow human unconscious.  Electricity can light up houses or fry someone in an electric chair.  Explosives can clear obstacles during construction projects or can obliterate critical infrastructure assets of so-called enemies.  Biochemical manipulation can yield wonderfully nutritious new food compounds or deadly new diseases.  Nuclear engineering can provide sufficient energy to free humanity from dependency on carbon-laden fossil fuels, or suitcase-sized portable weapons capable of tearing the heart out of major cities.

As technology becomes more widely accessible – via improved education worldwide, via cheaper raw materials, and via easy access to online information – the potential grows, both for good uses and for bad uses.  A saying attributed to Eliezer Yudkowsky gives us pause for thought:

The minimum IQ required to destroy the world drops by one point every 18 months.

(This saying is sometimes called “Moore’s Law of mad scientists“.)  The statement was probably not intended to be interpreted mathematically exactly, but we can agree that, over the course of a decade, the number of people capable of putting together a dreadful weapon of mass destruction will grow significantly.  The required brainpower will move from the rarified tails of the bell curve of intelligence distribution, in the direction of the more fully populated central region.

We can imagine similar “laws” of increasing likelihood of destructive capability:

The minimum IQ required to devise and deploy a weapon that wipes out the heart of a major city drops by one point every 18 months;

The minimum IQ required to poison the water table for a region drops by one point every 18 months;

The minimum IQ required to unleash a devastating plague drops by one point every 18 months…

Of course, the threat of nuclear annihilation has been with the world for half a century.  During my student days at Cambridge University, I participated in countless discussions about how best to avoid the risk of unintentional nuclear war.  Despite the forebodings of some of my contemporaries at the time, we reached the end of the 20th century unscathed.  Governments of nuclear-capable countries, regardless of their political hues and ideological positions, found good reason to avoid steps that could trigger any nuclear escalation.  What’s different with at least some fundamentalist terrorists is that they operate in a mental universe that is considerably more extreme:

  • They live for a life beyond the grave, rather than before it;
  • They believe that divine providence will take care of the outcome – any “innocents” caught up in the destruction will receive their own rewards in the afterlife, courtesy of an all-seeing, all-knowing deity;
  • They are nourished and inspired by apocalyptic writing that glorifies a vision of almighty destruction;
  • They operate with moral certainty: they seem to harbour no doubts or questions about the rightness of their course of action.

Mix this extreme mindset with sufficient raw brainpower and with weapons-grade materials that can be begged, bought, or stolen, and the stage is set for a terrorist outrage that will put 9/11 far into the shade.  In turn, the world’s reaction to that incident is likely to put the reaction to 9/11 far into its own shade.

It’s true, would-be terrorists are often incompetent.  Their explosives sometimes fail to detonate.  But that must give us no ground for complacency.  The same “incompetence” can sometimes result in unforeseen consequences that are even more destructive than those intended.

1.4 The sense of profound personal alienation

Environmental crisis.  Economic crisis.  Extreme terrorist crisis.  Added together, we might be facing a risk of around 50% that, sometime during the 2010s, we’ll collectively look back with enormous regret and say to ourselves:

That’s the worst thing that’s happened in our lifetime.  Why oh why didn’t we act to stop it happening?  But it’s too late to make amends now.  If only we could re-run history, and take wiser choices…

But there’s more.  Here’s a probability that I’ll estimate at 100%, rather than 50%.  It’s the probability that huge numbers of individuals will look at their lives with bitter regret, and say to themselves:

This outcome was very far from the best it could have been.  This human life has missed, by miles, the richness and quality of experience that was potentially available.  Why oh why did it turn out like this?  If only I could re-run my life, and take wiser choices, or benefit from improved circumstances…

The first three crises are global crises.  This fourth one is a personal crisis.  The first three are highly visible.  The fourth might just be an internal heartache.  It’s the realisation that:

  • Life provides, at least for some people, on at least some occasions, intense feelings of vitality, creativity, flow, rapport, ecstacy, and accomplishment;
  • These “peak experiences” are generally rare, or just glimpsed;
  • The majority of human experience is at a much lower level of quality than is conceivable.

The pervasive video broadcast communications of the modern age make it all the more obvious, to increasing numbers of people, that the quality of their lives fall short of what could be imagined and desired.  These same communications also strongly hint that technology is advancing to the point where it could soon free people from the limitations of their current existence, and enable levels of experience previously only imagined for deities.  Just around the corner lies the potential of lives that are much extended, expanded, and enhanced.  How frustrating to miss out on this potential!  It brings to mind the lamentations of a venerable French noblewoman from 1783, as noted in Lewis Lapham’s 2003 Commencement speech at St. John’s College Annapolis:

[A] French noblewoman, a duchess in her eighties, …, on seeing the first ascent of Montgolfier’s balloon from the palace of the Tuilleries in 1783, fell back upon the cushions of her carriage and wept. “Oh yes,” she said, “Now it’s certain. One day they’ll learn how to keep people alive forever, but I shall already be dead.”

Acts of gross destruction are often motivated by deep feelings of dissatisfaction or frustration: the world is perceived as containing significant wrongs, that need righting.  So there’s a connection between the crisis of profound personal alienation and the crisis of extreme terrorism.  Thankfully, people who experience dissatisfaction or frustration don’t all react in the same way.  But even if the reaction is only (as I suggested earlier) an internal heartache, the shortcoming between potential and reality is nonetheless profound.  Life could, and should, be so much better.

We can re-state the four crises as four huge opportunities:

  1. The opportunity to nurture an amazingly pleasant, refreshing, and intriguing environment;
  2. The opportunity to guide global economic development to sustainably create sufficient resources for everyone’s needs;
  3. The opportunity to utilise personal passions for constructive projects;
  4. The opportunity to enable individuals to persistently experience qualities of human life far, far higher than at present.

I see Humanity+ as addressing all four of these opportunities.  And it does so with an eye on one more crisis, which is the most uncertain one of the lot.

1.5 The existential crisis of accelerating change and deepening complexity

Time and again, changes have consequences that are unforeseen and unintended.  The more complex the system, the greater the likelihood of changes leading to unintended consequences.

However, human society is becoming more complex all the time:

  • Multiple different cultures and sub-cultures overlap, co-exist, and influence each other;
  • Worldwide travel is nowadays commonplace;
  • Increasing numbers of channels exist for communication and influence ;
  • Society is underpinned by a rich infrastructure of multi-layered technology.

Moreover, the rate of change is increasing:

  • New products sweep around the world in ever shorter amounts of time;
  • Larger numbers of people are being educated to levels never seen before, and are entering the worlds of research, development, manufacturing, and business;
  • Online collaboration mechanisms, including social networks, wikis, and open source software, mean it is easier for innovation in one part of the world to quickly influence and benefit subsequent innovation elsewhere;
  • The transformation of more industries from “matter-dominated” to “information-dominated” means that the rapid improvement cycle of semiconductors transforms the speed of progress.

These changes bring many benefits.  They also bring drawbacks, and – due to the law of unintended consequences – they bring lots of unknowns and surprises.  The risk is that we’ll waken up one morning and realise that we deeply regret one of the unforeseen side-effects.  For example, there are risks:

  • That some newly created microscopic-scale material will turn out to have deleterious effects on human life, akin (but faster acting) to the problems arising to exposure from asbestos;
  • That some newly engineered biochemical organism will escape into the wild and turn out to have an effect like that of a plague;
  • That well-intentioned attempts at climate “geo-engineering”, to counter the risk of global warming, will trigger unexpected fast-moving geological phenomenon;
  • That state-of-the-art high-energy physics experiments will somehow create unanticipated exotic new particles that destroy all nearby space and time;
  • That software defects will spread throughout part of the computing infrastructure of modern life, rendering it useless.

Here’s another example, from history.  On 1st March 1954, the US military performed their first test of a dry fuel hydrogen bomb, at the Bikini Atoll in the Marshall Islands.  The explosive yield was expected to be from 4 to 6 Megatons.  But when the device was exploded, the yield was 15 Megatons, two and a half times the expected maximum.  As the Wikipedia article on this test explosion explains:

The cause of the high yield was a laboratory error made by designers of the device at Los Alamos National Laboratory.  They considered only the lithium-6 isotope in the lithium deuteride secondary to be reactive; the lithium-7 isotope, accounting for 60% of the lithium content, was assumed to be inert…

Contrary to expectations, when the lithium-7 isotope is bombarded with high-energy neutrons, it absorbs a neutron then decomposes to form an alpha particle, another neutron, and a tritium nucleus.  This means that much more tritium was produced than expected, and the extra tritium in fusion with deuterium (as well as the extra neutron from lithium-7 decomposition) produced many more neutrons than expected, causing far more fissioning of the uranium tamper, thus increasing yield.

This resultant extra fuel (both lithium-6 and lithium-7) contributed greatly to the fusion reactions and neutron production and in this manner greatly increased the device’s explosive output.

Sadly, this calculation error resulted in much more radioactive fallout than anticipated.  Many of the crew in a nearby Japanese fishing boat, the Lucky Dragon No. 5, became ill in the wake of direct contact with the fallout.  One of the crew subsequently died from the illness – the first human casualty from thermonuclear weapons.

Suppose the error in calculation had been significantly worse – perhaps by an order of thousands rather than by a factor of 2.5.  This might seem unlikely, but when we deal with powerful unknowns, we cannot rule out powerful unforeseen consequences.  Imagine if extreme human activity somehow interfered with the incompletely understood mechanisms governing supervolcanoes – such as the one that exploded around 73,000 years ago at Lake Toba (Sumatra, Indonesia) and which is thought to have reduced the worldwide human population at the time to perhaps as few as one thousand breeding pairs.

It’s not just gargantuan explosions that we need fear.  As indicated above, the list of so-called “existential risks” includes highly contagious diseases, poisonous nano-particles, and catastrophic failures of the electronics infrastructure that underpins modern human society.  Add to these “known unknowns” the risk of “unknown unknowns” – the factors which we currently don’t even know that we should be considering.

The more quickly things change, the harder it is to foresee and monitor all the consequences.  There’s a great deal that deserves our attention.  How should we respond?

>> Next chapter >>

18 March 2010

Animal spirits – a richer understanding of economics

Filed under: books, Economics, irrationality, recession — David Wood @ 3:41 pm

It’s no secret that some of the fundamental assumptions of economic theory are faulty.

Specifically, the primary model in economics is that individuals invariably take actions which make good economic sense.  The mythical “Homo economicus” (“Economic Man”) is motivated at all times:

  • To purchase goods and services that have lower cost;
  • To create goods and services that they can sell at higher price;
  • To minimise the amount of effort that they have to expend to create these goods and services.

Real world people, of course, deviate from this model in numerous ways.  Lots of other things motivate us, beyond purely economic concerns.

Indeed, we can arrange human decisions on a two-by-two matrix:

  • On one dimension, decisions vary between economic motivations and non-economic movitations;
  • On the other dimension, decisions vary between rational and irrational.

Theories of classical economics take their lead from just one of the resulting four fields of life – the field of economic motivations that are pursued rationally.  But what impact do the other three fields have on overall economic questions, such as booms and busts, inflation, employment, savings, and inequality?

Many classicial economists give the strong impression that these other three fields have limited impact – somehow their effects average out, or can be discounted.  More recently, the rise of behavioural economics has challenged this conclusion, by increasingly providing evidence and analysis of factors such as:

  • Irrational biases in human decision making;
  • Herd mentality;
  • Limits of information;
  • The motivational importance of factors other than economic ones.

The best account I’ve encountered of this whole topic is the book “Animal Spirits: How Human Psychology Drives the Economy, and Why It Matters for Global Capitalism“.

This book was authored last year by two eminent economists, George A. Akerlof and Robert J. Shiller.  Their phrase “Animal Spirits” is taken from Keynes – from a part of the thinking of Keynes that, they believe, has been too often neglected (even by people who describe themselves as followers of Keynes):

The markets are moved by animal spirits, and not by reason

(paraphrased from Keynes’ 1935 book “The General Theory of Employment Interest and Money”)

Akerlof and Shiller provide five chapters that explain each of five important contributors to “animal spirits”:

  • Confidence and Its Multipliers
  • Fairness
  • Corruption and Bad Faith
  • Money Illusion
  • Stories.

These explanations interweave many accounts of economic episodes over the decades, adding to the plausibility of the fact that these factors matter a great deal.

Next, Akerlof and Shiller show how considerations of these “animal spirits” provide deeper insight into each of eight key questions of economic theory:

  • Why Do Economies Fall into Depression?
  • Why Do Central Bankers Have Power over the Economy (Insofar as They Do)?
  • Why Are There People Who Cannot Find a Job?
  • Why Is There a Trade-off between Inflation and Unemployment in the Long Run?
  • Why Is Saving for the Future So Arbitrary?
  • Why Are Financial Prices and Corporate Investments So Volatile?
  • Why Do Real Estate Markets Go through Cycles?
  • Why Is There Special Poverty among Minorities?

To my mind, the analysis is devastating: any serious discussion of eonomics needs to take account of these findings.

Footnote: Amazon.com contains a whole series of nasty and devious reviews of this book.  Don’t be misled by them!  The motivations of the people writing these reviews would be a worthy subject for an analysis in its own right.  There are other kinds of “animal spirits” afoot here.

24 October 2008

Smartphones and the recession

Filed under: recession — David Wood @ 1:17 am

“Symbian Smartphone Show – Recession? what recession?” That was the title of the characteristically perceptive summary of this week’s Smartphone Show prepared by analyst Richard Windsor of Nomura Securities.

In his summary, Richard made a series of positive comments about the show:

  • The vision of the Symbian foundation was put forward by all its members to an audience that has certainly grown in numbers compared to last year.
  • By putting Symbian and s60 together with the elimination of UIQ and MOAPs, it is hoped that licensees will have one system upon which to develop phones and applications.
  • At the same time the new structure means that the access to the software will be much more even, giving everyone a better chance at effectively competing.

However, he also noted:

  • The floor was abuzz with the prospect of the growing opportunity for smartphones but seemed oblivious to the possibility that an economic recession could materially dent growth.
  • While the talk is all about growth and the new opportunity, very little was said about the coming recession and the effect that ever increasing hardware specification will have on the ability for smartphones to continue getting cheaper and cheaper.
  • We see a negative impact from two sides:
  • First the fact that consumers have less disposable income to spend on high end devices.
  • Second, the pressure to compete with Apple, whose iPhone volumes has over taken RIM, is causing more technology to be crammed into phones earlier.
  • This has the effect of increasing the cost to build smartphones which means that price declines to consumers will slow or stop entirely.

So, is there any possible justification for paying so little attention to the likely onset of economic hard times?

Here’s one argument to consider. The Symbian Foundation is about, not the next ten months, but the next ten years. The general buzz at the show derives from expectation of a potentially huge long-term payback, rather than any evaluation of short-term rewards. Just as the original vision of Symbian, on its formation in 1998, contemplated up to ten years into the future, the creation of the Symbian Foundation likewise has an eye on market evolution up to 2018. Any recession between now and then is a lesser effect.

Well, I’m sympathetic to that view. However, it gives us no reason to breezily overlook the likely pain and disruption caused to the smartphone industry by an economic downturn.

After all, I vividly remember the distress inside Symbian during the crash of the dot com bubble. During that time, smartphone phone projects were being cancelled thick and fast – even when the projects looked to be full of real promise. These projects were cancelled on account of lack of finances to back more speculative developments. Development resources in our customers (and also in our customers’ customers) became focused instead on “safe bets” rather than on innovative high-risk high-reward projects. Symbian faced a real crisis. It took several long years to put that time behind us.

Could the same happen again? Perhaps. But I see several key differences:

  • This time, it will be the Symbian projects that are viewed as the safe bets: the Symbian software system is much more stable and proven than before
  • This time, many of the Symbian projects will be the lower costs ones – because of reduced needs to integrate large swathes of new functionality (beyond that already provided in the core offering), and also because of the lower hardware requirements of the high-performance Symbian software
  • This time, consumers are already familiar with smartphone technology, and are increasingly enamoured with it, rather than this technology only appealing to a narrow segment of the population.

I hope this doesn’t make me look complacent. Believe me, I’m not. I know it’s going to be hard, to turn the above prognosis into reality. But the enthusiasm and skills of the Symbian ecosystem (as manifest at the show) give me grounds for optimism.

In short, consumers may tend to prefer lower-cost smartphones, and this will benefit Symbian. Even though the Symbian phones will be comparatively inexpensive, they will deliver enough features (and a sufficiently good user experience) to win over end-users.

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