The Age of Brittle

[lpm]

Modern civilisation is strong. Capitalist cost minimisation has led to multiple different solutions for every question and an interconnection of processes, with highly sophisticated distribution and planning mechanisms. When one component fails, the system effortlessly switches to alternatives. It's hard to break.

But it's also brittle. If it does break, it shatters.

For the third time in a year, I've been to the supermarket to build up stocks of basics, as a free insurance policy against disruption. We are reaching this brittle state now because of:

- globalised trade, turning China into the world's factory
- financial crash of 2007-9, leaving government finances weak and economic imbalances
- the internet, disrupting traditional enterprises like high street shops and traditional jobs like taxi driver
- high personal consumption and personal debt, leaving people without savings and servicing credit cards
- Brexit (UK) and Trump (US), deliberately preventing global trade and creating disruption to existing practices
- climate change, leading to mass evacuation from flooding to mass evacuation from wildfires
- social media, driving bipartisanship, online hatred and discontent

And now we are adding pandemic, with illness and death, plus the threat of being in lock-down quarantine.

Individuals are over-stretched with debt, so if they aren't paid while self-isolating they'll default on credit cards, rent and mortgages - yet the govt can encourage self-isolation with cash because it too is over-stretched. The local small businesses on a knife-edge will fail - no customers at the hairdressing shop, building site suspended so no need for the local electrician firm, zero percent occupancy at the seaside hotel during the Easter holidays. Big businesses will go from struggling to failed, as seen with Thomas Cook and Debenhams

The final bit of stress might be the virus, but the real load taking us to breaking point is everything else - the maxed out economy and the maxed out people, against the backdrop of failing governments and mass hatred. If we get a pandemic, I'd be willing to bet the death toll from economics would exceed the death toll from the disease. It could be the biggest transformative event of our lifetimes.

If we don't get a pandemic, we don't avoid the underlying stresses. We stay brittle. The problem is in the fundamentals, not the event.

[El Pollo Diablo]

I know, it's great, isn't it? Soon, all my plans will be complete.

[Martin Y]

Send all the furriners home then wipe out a proportion of the domestic workforce, thereby increasing the labour value of the survivors.

Just like the Black Death, then. Not something to look forward to, yet, looking on the bright side, it's the dark before the dawn of a new golden age. Hooray.

[Boustrophedon]

So this is all down to capitalism?

[TopBadger]

And if the virus doesn't do it, the future asteroid impact will.

[rockdoctor]

After the huge success of HIV wiping out evil gayz, new bug was created to remove expensive geriatrics.
What will be the next group targeted?
Are there specific DNA-markers for socialism?

[dyqik]

After the huge success of HIV wiping out evil gayz, new bug was created to remove expensive geriatrics.
What will be the next group targeted?
Are there specific DNA-markers for socialism?

Living in cities is correlated with "socialism"*, which is why putting Mike Pence in charge of the US response after his success in spreading AIDS is such a good plan. You don't need to engineer the bug, just take advantage of how it spreads now among people crowded together.

I hope I'm joking here. But I'm not entirely sure that this isn't part of the thinking.

[Bird on a Fire]

Nassim Taleb's book Antifragile deals with this 'brittleness' (which he calls fragility).

He puts much of the blame on the development of systems that separate individuals from the consequences of their actions. Bankers gambling with other people's money knowing the taxpayer will bail them out, for instance. Climate change is another obvious example, where pollution is largely done by the richest few at the expense of the global poor, and in the present at the expense of the future. Obviously the internet, where I can call you all c.nts without anybody coming to my house and punching me in the face.

It's quite an interesting read (even if it's in dire need of a decent editor - a profession Taleb expresses considerable disdain for in one of his many ranty sidetracks), and he does come up with some suggestions for designing systems that are less brittle, or even that gain from disorder - the titular coinage antifragility.

[Sciolus]

Economically speaking, efficiency means brittleness and robustness means waste. Holding stock means you aren't sweating your assets, so we have JIT supply lines. Employing enough people to copy with busy periods means paying people to twiddle their thumbs during quiet periods. Building contingency into your prices means you lose business to companies with tighter margins. Cash reserves are better used increasing pay for senior management investing in the company.

So brittleness is baked into the economy, with robust practices forced out, right up to the moment a serious challenge comes and everyone needs bailing out or goes bust.

[jimbob]

Economically speaking, efficiency means brittleness and robustness means waste. Holding stock means you aren't sweating your assets, so we have JIT supply lines. Employing enough people to copy with busy periods means paying people to twiddle their thumbs during quiet periods. Building contingency into your prices means you lose business to companies with tighter margins. Cash reserves are better used increasing pay for senior management investing in the company.

So brittleness is baked into the economy, with robust practices forced out, right up to the moment a serious challenge comes and everyone needs bailing out or goes bust.

Yup. "Cutting the fat" is fine until there's a famine.

[jimbob]

Nassim Taleb's book Antifragile deals with this 'brittleness' (which he calls fragility).

He puts much of the blame on the development of systems that separate individuals from the consequences of their actions.
<snip>

I think that would be part of the problem, but it's more than that.

Certain businesses (yes I'm looking at you Goldman Sachs) have systems that go further and actively ensure that (in an echo of what Sciolus says) risky behaviour is the only rational option.

If the bottom-performing 10% of investors are fired every year, then you need to outperform them. Most years, there isn't a crash, so something safe is not going to perform well. The only rational way of keeping your highly-paid job each year is to gamble. And as your peers are also doing the same, you probably need pretty high-risk portfolios to get the returns in an average year.


Also such businesses are going to be attractive to those with psychopathic tendencies. Psychopaths tend to not worry about consequences - in such a way that it's debatable whether the threat of punishment is a deterrent to them at all. If they're in positions of influence then its a bit of a moot point whether they're insulated from the consequences of their actions except that would probably reduce their ability to repeatedly make damaging decisions.

[Pucksoppet]

Economically speaking, efficiency means brittleness and robustness means waste. Holding stock means you aren't sweating your assets, so we have JIT supply lines. Employing enough people to copy with busy periods means paying people to twiddle their thumbs during quiet periods. Building contingency into your prices means you lose business to companies with tighter margins. Cash reserves are better used increasing pay for senior management investing in the company.

So brittleness is baked into the economy, with robust practices forced out, right up to the moment a serious challenge comes and everyone needs bailing out or goes bust.

Yup. "Cutting the fat" is fine until there's a famine.

The question is, how can government policy ensure economies/businesses have sufficient fat to ride out challenges? Command economies don't have a good track record, and unfettered/minimally regulated capitalism/demand economies appear susceptible to the above ills. So what regulations are needed in regulated markets, and how do they differ to regulations and laws applicable now?

[dyqik]

The US approach to banking following 2008 was to require that consumer banks had sufficient reserves on hand, and to erect a firewall between speculative investment arms and consumer banking arms. That's in addition to Federally backed insurance of consumer bank deposits up to a limit.

Mandated government backed insurance can cover an awful lot of these issues, if done right, and with a few regulations similar to the reserves rule above.

That can potentially handle the cash flow mediated issues, but is probably the easier part, since cash is fungible.

[lpm]

The parallel would be to regulate supermarkets and require them to hold increased stocks, require surplus electricity capacity, keep an excess of nurses and hospital beds on hand.

Command economies are worse - they can routinely struggle to supply ordinary things like toilet rolls. In the USSR it was famously bath plugs for a while - stay in a hotel and reception would hand you a plug that would need to be returned on departure. People adapt well to these sorts of problems if it's the norm. But we westerners moan like hell at ordinary problems. For example, for a couple of days a sandstorm prevented holiday makers returning 2,000 miles from Tenerife via the miracle of air travel - and it was like their human rights were being abused.

[Woodchopper]

The parallel would be to regulate supermarkets and require them to hold increased stocks, require surplus electricity capacity, keep an excess of nurses and hospital beds on hand.

Command economies are worse - they can routinely struggle to supply ordinary things like toilet rolls. In the USSR it was famously bath plugs for a while - stay in a hotel and reception would hand you a plug that would need to be returned on departure. People adapt well to these sorts of problems if it's the norm. But we westerners moan like hell at ordinary problems. For example, for a couple of days a sandstorm prevented holiday makers returning 2,000 miles from Tenerife via the miracle of air travel - and it was like their human rights were being abused.

The basic problem with command economies is information. Every party involved in production has an incentive to game the numbers they report, and so the information provided to the central node is misleading. In addition to that the central node also has huge problems processing and analyzing the information it receives. It might be possible to address the latter with modern technology - computers were in short supply in the Soviet Union. But I doubt it would be successful as our current needs are far more complex.

As for brittleness, command economies are far worse. If the central node stops functioning then all the various units don't know what to do. As a decentralized system capitalism is much less brittle.

[Pucksoppet]

The parallel would be to regulate supermarkets and require them to hold increased stocks, require surplus electricity capacity, keep an excess of nurses and hospital beds on hand.

OK, so we appear to be in agreement that a command economy is unlikely to do better than the current situation. What would the general sweep of the (additional) regulation look like? Require all organisations to hold a minimum stock of 1/12 of annual turnover, and have liquid assets available at all times of 1/12 of turnover? Or...?

[lpm]

Decentralise everything - "A water tank in every attic" type approach.

Electricity generation at home/local level, with batteries in homes and back-up reserves in cars. No need for centralised gas or oil or petrol distribution. Make finance local, with new era of building societies and limited availability of credit.

Give citizens responsibility for their own lives - by reducing government provisions. Personalise healthcare with individual insurance plans, require private unemployment and disability insurance, cease funding state pensions and social care by 2060.

Which is in line with:

Nassim Taleb's book Antifragile... puts much of the blame on the development of systems that separate individuals from the consequences of their actions.

The current set-up allows people during failures to moan about others - like the govt - instead of looking to themselves. For example, blaming government for the problem of opioid addiction, instead of blaming users.

[Gentleman Jim]

Economically speaking, efficiency means brittleness and robustness means waste. Holding stock means you aren't sweating your assets, so we have JIT supply lines. Employing enough people to copy with busy periods means paying people to twiddle their thumbs during quiet periods. Building contingency into your prices means you lose business to companies with tighter margins. Cash reserves are better used increasing pay for senior management investing in the company.

So brittleness is baked into the economy, with robust practices forced out, right up to the moment a serious challenge comes and everyone needs bailing out or goes bust.

Yup. "Cutting the fat" is fine until there's a famine.

Actual Value Analysis; Lean Sigma
Words to strike fear into any work force

[Woodchopper]

Economically speaking, efficiency means brittleness and robustness means waste. Holding stock means you aren't sweating your assets, so we have JIT supply lines. Employing enough people to copy with busy periods means paying people to twiddle their thumbs during quiet periods. Building contingency into your prices means you lose business to companies with tighter margins. Cash reserves are better used increasing pay for senior management investing in the company.

So brittleness is baked into the economy, with robust practices forced out, right up to the moment a serious challenge comes and everyone needs bailing out or goes bust.

Yup. "Cutting the fat" is fine until there's a famine.

Actual Value Analysis; Lean Sigma
Words to strike fear into any work force

Alternatively, the US has the highest level of health security according to this index: https://www.ghsindex.org/

I can believe it, because the resources given to parts of the government like the CDC are enormous.

Perhaps the best way to be non-brittle is to be rich. ETA and the US is the richest economy out there (excluding a few small states, especially those sitting on massive natural resources).

[lpm]

No, it's the opposite.

When you're poor, severe blows don't break the system. Ebola in Congo kills people but does not collapse society. To break feudal England it took the massive sledge hammer of half the population dying of plague.

The concept of brittle is about rich countries with highly sophisticated systems. The US is an outlier in many ways - highly decentralised - yet has a political set up that is close to breaking. For example, imagine an epidemic in 1988 leading to talk about delaying the November election - the political system would have flexed and got back on track. In 2020 such a scenario would collapse the system. Voting methods using crosses on paper are inefficient but resilient, the US variants of machines are efficient but now highly risky.

A lot of the US level of health security is due to wasteful duplication of resources - the US spends vastly more on healthcare than any other country, with little upside in terms of better health outcomes. If you are rich and insured you have a choice of hospitals with superb facilities. I know someone rich who had a baby in the US: there was valet parking when she arrived and her room was full of machines that go ping that were never used. We don't have that in the UK - the NHS is so efficient. It's the high efficiency that leads to strong structures that are also brittle.

[plodder]

Decentralise everything - "A water tank in every attic" type approach.

Legionella.

[El Pollo Diablo]

I suppose one of the interesting outcomes here politically is that the mood music for the last 40 years has been individualism, through Thatch and Reagan and so on, but politically in both the US and UK, FPTP somehow manages to be both very non-individualistic (it deters people from voting in most areas) but also sound less socialist than other options (PR has a 'feel' of progressiveness, liberalism, complexity which conservatism tends to shun). So, you're relying on individuals to contribute to a society where the incentives for contribution are being hampered by things like FPTP.

[Bird on a Fire]

I suppose one of the interesting outcomes here politically is that the mood music for the last 40 years has been individualism, through Thatch and Reagan and so on, but politically in both the US and UK, FPTP somehow manages to be both very non-individualistic (it deters people from voting in most areas) but also sound less socialist than other options (PR has a 'feel' of progressiveness, liberalism, complexity which conservatism tends to shun). So, you're relying on individuals to contribute to a society where the incentives for contribution are being hampered by things like FPTP.

Decentralisation is a double-edged sword.

On the one hand, individual voices can be amplified in a smaller chamber.

On the other, a small group will have a restricted range of possibilities, and if you don't like what's on offer locally you're stuffed.

I think part of the answer is to try to address problems at an appropriate scale, rather than searching for a one-size-fits-all solution.

[dyqik]

Alternatively, the US has the highest level of health security according to this index: https://www.ghsindex.org/

I can believe it, because the resources given to parts of the government like the CDC are enormous.

Perhaps the best way to be non-brittle is to be rich. ETA and the US is the richest economy out there (excluding a few small states, especially those sitting on massive natural resources).

We're seeing right now how that is completely false. One President guts the CDC's pandemic response in one year's budget, and replaces experts with loyal stooges and "poof!" it's gone.

Meanwhile, American healthcare in a pandemic is as good as that given to its poorest people. Because viruses spread to all members of society when someone is too poor to skip work and lose income while symptomatic, too poor to get medical treatment, and too poor to spend money on over preparedness.

US healthcare is also stretched to breaking point. There are whole counties with one doctor, and even up around here in the rich and crowded North East, there are shortages of staff.

[Bird on a Fire]

Alternatively, the US has the highest level of health security according to this index: https://www.ghsindex.org/

I can believe it, because the resources given to parts of the government like the CDC are enormous.

Perhaps the best way to be non-brittle is to be rich. ETA and the US is the richest economy out there (excluding a few small states, especially those sitting on massive natural resources).

We're seeing right now how that is completely false. One President guts the CDC's pandemic response in one year's budget, and replaces experts with loyal stooges and "poof!" it's gone.

Meanwhile, American healthcare in a pandemic is as good as that given to its poorest people. Because viruses spread to all members of society when someone is too poor to skip work and lose income while symptomatic, too poor to get medical treatment, and too poor to spend money on over preparedness.

It seems to me that a weakness of the US system is that it depends on good-faith participation at the highest levels, and that that can apparently no longer be taken for granted. There are the famous "checks and balances" at various points in the system, but the key node of the network is the presidency, and a malfunction there can cripple the whole system. Is that reasonably accurate? The POTUS does seem to have more power as an individual compared to heads of states in other democracies, elected or otherwise.