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From Cascading Complexity To Systemic Collapse: A Walk Thru "Society's Equivalent Of A Heart Attack"
Over a year ago, FEASTA's David Korowicz stunned the world with his fascinating analysis titled "Trade-Off: Financial System Supply-Chain Cross-Contagion: a study in global systemic collapse," in which he shone a much needed light on the "weakest link" choke points of modern hyper-complex society: a forensic investigation into a "Minsky Moment" thought experiment gone wrong, one crossing the systemic instability threshold, and culminating with society, economics and the modern world as we know it grinding to a halt and worse.
Since Korowicz' analysis is precisely the terminal outcome that awaits the world caught in a state of relentless denial that even refuses to contemplate "Plan B", what we said then is that "everyone who wishes to know what will happen unless everyone is aware of what may happen" should read said study in global systemic collapse. Before proceeding further, we urge all readers who are fascinated by the topic of crossing thresholds of social, systemic instability to read the original analysis if they have not done so already.
The original paper led to an eruption in opinions and responses both on the pages of Zero Hedge and elsewhere, to an issue that has chronically received virtually no media attention (for obvious confidence preserving reasons in a world in which centrally-planned ignorance confidence is bliss), we are delighted to present Korowicz's follow up, "Catastrophic Shocks through Complex Socio-Economic Systems—A Pandemic Perspective" which "provides an overview of the effect of a major pandemic on the operation of complex socio-economic systems using some simple models. It discusses the links between initial pandemic absenteeism and supply-chain contagion, and the evolution and rate of shock propagation. It discusses systemic collapse and the difficulties of re-booting socio-economic systems."
In a way that only Korowicz can, the author summarizes the increasingly more precarious state of systemic social equilibria, and how a more determined push away from a trendline (or back toward mean reversion as those who can see right through the central banks increasing desperation to preserve the world's legacy status quo "just one more day") could result in the end of modern society.
To wit: "The commonalities of global integration mean that diverse hazards may lead to common shock consequences. The systems that transmit shocks are also the systems we depend upon for our welfare and the operation of businesses, institutions and society, so to borrow Marshal McLuhan’s phrase, the medium is the message. One of the primary consequences of a generic shock is an interruption in the flow of goods and services in the economy. This has diverse and profound implications - including food security crises’, business shut-downs, critical infrastructure risks and social crises. This can in turn quickly destroy forward-looking confidence in an economy with major consequences for financial and monetary stability which depend ultimately on the collateral of real economic production. More generally it can entail multi-network and delocalised cascading failure leading to a collapse in societal complexity."
What follows is a "thought experimental" methodology which is used to look at the socio-economic implications of a major pandemic. In other words, a step by step walk through of how society transitions from its unstable current equilibrium state, one represented by the highest level of socio/economic/monetary entropy, to society's equivalent of a heart attack: a straight line collapse in social entropy once parametric thresholds are breached, leading to failure and halt of any and every process reliant on incremental, evolutionary complexity. It is here that epistemological assumptions about society's future can simply and subjectively be reduced to simple heuristics: "optimism" and "pessimism." The former holds that even in a complete systemic collapse, the system can eventually regroup and eventually return to its most recent, highest level of complexity. The latter.... does not.
This is how Korowicz frames it:
We imagine that after a pandemic wave people are again available for work. But people cannot however become productive immediately because other inputs are also needed. But those inputs are stalled because they rely upon other inputs and so on. More broadly we may define Recursion failure as: “the inability of a complex economy to easily resume production and trade after a significant collapse because in a complex and interdependent economy, production and trade must resume in order for production and trade to resume”.
Further even if a government wanted to rebuild, it may be too complex to orchestrate resumption from the top down. This is firstly because the economy has evolved by self-organization, nobody has ever had, nor could they have put its elements together in the first place. Secondly, even if it could be done, the systems of command, control and supply that might do it would be the very systems that had been undermined.
Over time entropy would become an issue as engines rust, reagents become contaminated, and expected maintenance and repairs are left undone. This would all add to the cost and inputs needed for resumption. In a more complex society the degradation rate may be higher for thermodynamic reasons.
Overall, we are saying the longer a socio-economic system spends in the critical regime, the more likely it is to undergo a complete systemic collapse and loss of basic function. In addition, the longer it spends in this state, the more difficult it may be to ever return to its pre-pandemic state.
This is a complex society’s equivalent of a heart attack. When a person has a heart attack, there is a brief period during which CPR can revive the person. But beyond a certain point when there has been cascading failure in co-dependent life support systems, the person cannot be revived. This means that the socio-economic system could be changed irretrievably and the job of society and government would be to both manage the crisis and plot a fundamentally different path.
The extent of our contemporary complex global system dependencies, and our habituation to a long period of broadly stable economic and complexity growth means a systemic collapse would present profound and existential challenges.
It is precisely this inevitable final denouement, and the fact that its mere contemplation simply acknowledges there is nothing society can do to prepare for a terminal outcome, which is why modern society is replete with pre-ordained distractions that seek to prevent the vast majority to contemplate a narrative in any way resembling the one above, and why nobody is willing to admit the contemplation of a "Plan B" as even merely the fact that "very serious people" - those whose actions have resulted in the current precarious systemic environment- are thinking about the "what if" potentiality, sets off events in motion that culminate with the entire system ultimately crashing under its own complexity.
Which, of course, is precisely why we present the full piece as everyone should be aware of what the absolutely worst case outcome may and will look like in a world in which sticking one's head in the sand has become a religion.
Catastrophic Shocks Through Complex Socio-Economic Systems: A Pandemic Perspective (pdf), source FEASTA
David Korowicz
Summary
The globalised economy has become more complex (connectivity, interdependence, and speed), de-localized, with increasing concentration within critical systems. This has made us all more vulnerable to systemic shocks. This paper provides an overview of the effect of a major pandemic on the operation of complex socio-economic systems using some simple models. It discusses the links between initial pandemic absenteeism and supply-chain contagion, and the evolution and rate of shock propagation. It discusses systemic collapse and the difficulties of re-booting socio-economic systems.
1. A New Age of Risk
Consider the following scenarios:
- A highly contagious pandemic outbreak in South-East Asia (of comparable or greater human impact than the 1918 influenza outbreak).
- A disorderly break-up of the Eurozone and global financial system implosion.
- A ‘perfect storm’- during a time of major global financial instability - there are terrorist attacks on North African oil installations (partially driven by social unrest arising from record food prices) & a category 5 hurricane hits a major population/ industrial/ oil producing regions of the US east coast.
These are all examples of potential global shocks, that is hazards that could drive fast and severe cascading impacts mediated through global systems. Global systems include telecommunications networks; financial and banking networks; trade networks; and critical infrastructure networks. These systems are themselves highly interdependent and together form part of the globalised economy. The interest in global shocks and how they manifest themselves has grown in recent years (WEF 2012, 2013; Helbing 2013,; Buldyrev et. al. 2010).
First it useful to acknowledge that the hazards referred to in the opening scenarios are increasingly likely. Potentially new pandemic strains are being encouraged by increasing human pressure on the biosphere, while mass global air transport could aid rapid global transmission. Ecological constraints, presently pre-eminent amongst them are food and oil flows and increasingly the effects of climate change are growing. Stresses in the credit backing of our financial and monetary systems are arguably increasing, with the additional vulnerability that such systems are the primary vector through which major ecological constraints in energy and food would be expressed (Korowicz 2011).
One of the primary issues for this paper are, given any significant hazard, how does the impact spread through the globalised economy and in what way are we vulnerable to the failure of interconnected systems. To answer this we need to understand how complex societies are connected and how they have changed over time.
The globalised economy is an example of a complex adaptive system that dynamically links people, goods, factories, services, institutions and commodities across the globe. Such systems can be represented by a‘state’ that is not in equilibrium, but defines a set of ordered characteristics that exist within a range of deviations from a mean and persist for a period of time. For example, the state is characterized by exponential growth in Gross World Product of about 3.5% per annum over nearly 200 years within a range of several percentage points. This had correlated with emergent and self-organizing growth in socio-economic complexity which is reflected in the growth of the:
- Number of interacting parts (nodes): This includes exponential population growth; the 50,000+ different items available in Wal-Mart; the 6 billion+ digitally connected devices; the number of cars, factories, power plants, mines an so on.
- Number of linkages (edges): This includes the 3 billion passengers traveling between 4000 airports on over 50 million flights each year; the 60,000 cargo ships moving between 5000 ports with about a million ship movements a year; the average number of media channels (internet sites, TV channels, twitter feeds) per person times the population; and the billions of daily financial transactions.
- Levels of interdependence between nodes: The growing number of inputs necessary to make a good, service, livelihood, infrastructural output or the function of society as a whole.
- The speed of processes (or time compression):This includes the increasing speed of financial transactions; transportation; digital signaling; and Just-In-Time logistics. If we consider the globalised economy as a form of singular organism, we can understand this process as an increasing metabolic rate.
- Efficiency: increasing competition and global trade arbitrage driving down inventories; and globalised economies of scale.
- Concentration: The emergence of ‘hubs’ within the globalised economy- a small number of very highly connected nodes whose function (or loss of function) have a disproportionate role in the operation of the globalised economy . For example, banks are not connected at random to other banks, rather a very small number of large banks are highly connected with lots of other banks, who have few connections to each other. These arrangements are sometimes known as scale-free networks. We can also see concentration in critical infrastructure, and trade networks.
- De-localization: The conditions of personal welfare; business or service output; or country’s economic output is smeared over the whole globalised economy. The corollary is that if there is a major failure of the systems integration in the globalised economy, a localised community may have extreme difficulties meeting its basic needs.
Economic and complexity growth have in many ways reduced risk. Localized agricultural failure once risked famine in isolated subsistence communities, but now such risk is spread globally. It has made critical infrastructure such as sewage treatment and clean water available and affordable. Global financial markets enable an array of risks, from home insurance and pensions to default risk and export credit insurance, to be dispersed and potential volatility reduced. Indeed, what is remarkable is just how reliable our complex society is given the number of time sensitive inter-connections.
Another way of saying all this is that our society is very resilient, within certain bounds, to a huge range interruptions in the flow of goods and services. Within those bounds our society is self-stabilizing. For example supply-chain shocks from the Japanese tsunami in 2011, the eruption of the Icelandic Eyjafjallajokull volcano in 2010 or the UK fuel blockades in 2000 all had severe localised effects in addition to shutting down some factories across the world as supply-chains were interrupted. However the impacts did not spread and amplify, and normal functioning of the local economy quickly resumed.
But we know from many complex systems in nature and society that a system can rapidly shift from onestate to another as a threshold is crossed (Scheffer 2009). One way a state shift can occur is when a shock drives the system out of its stability bounds. The form of those stability bounds can increase or decrease resilience to shocks depending upon whether the system is already stressed prior to the shock.
The commonalities of global integration mean that diverse hazards may lead to common shock consequences. The systems that transmit shocks are also the systems we depend upon for our welfare and the operation of businesses, institutions and society, so to borrow Marshal McLuhan’s phrase, the medium is the message. One of the primary consequences of a generic shock is an interruption in the flow of goods and services in the economy. This has diverse and profound implications - including food security crises’, business shut-downs, critical infrastructure risks and social crises. This can in turn quickly destroy forward-looking confidence in an economy with major consequences for financial and monetary stability which depend ultimately on the collateral of real economic production. More generally it can entail multi-network and de-localised cascading failure leading to a collapse in societal complexity.
Previously the dynamics of such a scenario was studied when the initial shock was caused by a systemic banking collapse and monetary shock. This coupled the exchange of goods and services causing financial system supply-chain cross contagion and a re-enforcing cascade of de-localizing multi-system risk (Korowicz 2012).
In this paper a similar methodology is used to look at the socio-economic implications of a major pandemic. After a very brief review of other researchers work (section 2), some real life examples of partial systems failure are reviewed (section 3). This allows us to make make some estimates of shock spreading rates. In section 4 the links between pandemic absenteeism and supply-chain contagion is discussed and related to societal complexity. In section 5 we look at how contagion spreads, the rate, and the relationship to complexity.
In section 6 we look at some of the multi-system interactions. In 7, we look at why after a major collapse, the pre-shock socio-economic state may not be recoverable. Finally there is a short conclusion. This paper aims to broadly outline how very simple models can shed light on catastrophic shocks in complex socio-economic systems. A significantly more detailed discussion on several issues may be found here,(Korowicz 2012).
2. Socio-economic Impact of a Major Pandemic
We are interested in the socio-economic implications of a major influenza pandemic whose initial impact would be direct absenteeism from illness and death, and absenteeism for family and prophylactic reasons.
The pandemic wave (we will only consider one) lasts 10-15 weeks. We assume this causes an absenteeism rate of 20% or 40% over the peak period of 2-4 weeks, and a rate above 20% for 4-8 weeks when the peak is 40%. This represents our initial impact. Our question is then what happens next.
There are two general perspectives to studying such impacts. The first focuses on the impact on a specific industry or service, often with a view to Business Continuity Planning (BCP). Unsurprisingly, the question of how a health service would manage a pandemic when its own operation is compromised is of recurrent interest (Bartlett and Hayden 2005; Itzwerth et al. 2006). Or for example the effect of worker absenteeism on the movement of freight in a coupled US port-rail system (Jones et al. 2008). This analysis is important for local preparations however it suffers from having to isolate the system under consideration from the environment to avoid the analysis becoming too open and complex.
The alternative track is to use macroeconomic modeling to look at the impact on an economy as a whole. This type of modeling might be useful for low impact pandemics where the economy remains in its historical range of conditions, for example the impact of the 2003 SARS outbreak ( Knapp et al. 2004; Keogh-Brown and Smith 2008).
However when considering major pandemics (McKibbin and Sidorenko 2006; Keogh-Brown et al. 2010) it is highly questionable if such conventional macroeconomic modeling works, or would be very mis-leading. This is firstly because such models are built out of, and parameterized within the context of long run macroeconomic stability. A major pandemic could be highly de-stabilising, causing, as we shall see, cascading systemic disruption and failure.
Secondly, such models are blind to the issue of rising complexity and the speed of processes, which we argue here are essential for understanding major shocks. Finally, they have little to say about the dynamics of the impact, how it spreads through time and cascading failure. This is of most interest to actual risk manageent.
3. Vulnerability Revealed
One way to understand and even parameterize the structure and behavior of complex socio-economic systems is to empirically study occasions when there has been some systemic failure.
In September 2000 truckers in the United Kingdom, angry at rising diesel duties, blockaded refineries anad fuel distribution outlets (Public Safety and Emergency Preparedness Canada 2005; McKinnon 2006; Peck 2006). The petrol stations reliance on Just-In-Time re-supply meant the impact was rapid. Within 2 days of the blockade starting approximately half of the UK’s petrol stations had run out of fuel and supplies to industry and utilities had begun to be severely affected. The initial impact was on transport - people couldn’t get to work and businesses could not be re-supplied. This then began to have a systemic impact.
The protest finished after 5 days at which point: supermarkets had begun to empty of stock, large parts of the manufacturing sector were about to shut down, hospitals had begun to offer ‘emergency only’ care; automatic cash machines could not be re-supplied and the postal service was severely affected. There was panic buying at supermarkets and petrol stations. It was estimated that after the first day an average 10% of national output was lost. Surprisingly, at the height of the disruption, commercial truck traffic on the UK road network was only 10-12% below average values.
There were clear indications that had the fuel blockades gone on just a few days longer large parts of UK manufacturing including the automotive, defense and steel industries would have had to shut down. In the end this was a point hazard with systemic impacts, so once government became aware of the systemic risks they forced the truckers’ hands and they desisted. Still the event concentrated minds. The UK was within days of a severe food security crisis and widespread socio-economic breakdown.
Lest one think this is an issue for only the most complex societies -a week-long truckers strike in September 2012 in South Africa again saw emptying petrol station and ATM machines within a week of the disruption. And hospitals reliant on burning coal for power had to fall back on reserve stocks (Boesler 2012).
While the UK fuel blockade was probably the most dramatic and well-documented example of supply-chain failure, we also got glimpses of what can happen the following Icelandic volcano eruption in 2010, and the tragic events surrounding the Japanese tsunami and Thai flooding in 2011. From these examples we see that failure of production or supply from one area can shut down factories on the other side of the world within days of the initial interruption. A report from the think-tank Chatham House on the impacts of the Icelandic volcano and subsequent interviews with businesses about its impact and their preparedness came to the general conclusion (Lee et. al. 2012) :
“One week seems to be the maximum tolerance of a Just-In-Time economy”…..before major shut-downs in business and industries would occur.
Further, after such a disruption, things would not just return to normal. Again, from the Chatham House study:
“... many [of the businesses surveyed] said that had the disruption continued just a few days longer, it would have taken at least a month for companies to recover”
And a quote from a desk study on the impact of a one week long absence of (just) trucks in the UK economy, things would not just return to normal (McKinnon 2006):
“... After a week, the country would be plunged into a deep social and economic crisis. It would take several weeks for most production and distribution systems to recover”
So the indications for the UK are that over the first week of the disruption, contagion across supply-chains and businesses rises relatively slowly. But very soon after that socio-economic disruption rapidly become very severe. And then even if the primary cause can return to normal, the economy takes weeks to recover. The studies do not consider what would happen if the primary disruption were to continue for many weeks.
4. Interdependence, Liebig’s law, and Cascading
One of the defining features of rising complexity is growing interdependence. That is, the output of a person, a service provider, a factory, a piece of critical infrastructure, or a complex society as a whole depends upon ever more inputs, be they tools, intermediate products, consumables, specialist skills and knowledge or collective societal infrastructures. And those outputs in turn become further inputs through the dispersed networks of the globalised economy.
Some of these inputs may not be necessary to the output of a factory, a service or economy. However, there will also be more critical inputs that the output cannot proceed without. Some of these are easily substitutable through other replacements, suppliers, people or stores that are easily accessed. What we are left with are critical inputs with low substitutability. This is shown in figure:1. We can also see that some of the least substitutable critical inputs are labeled hubs. Hubs are things like electricity, fuel, water, and financial system functionality - things generally referred to as critical infrastructure. They are societal services and functions upon which all society depends. This is represented by the dotted line.
A simple but important principle, Liebig’s Law of the Minimum, says that the production is constrained by the scarcest critical input. So even if you have ample supplies of all but one critical input, your production fails. That is, production fails on the weakest link.
This explains why the most exposed businesses to supply-chain failure are the most complex businesses. Firstly; they have some of the most inputs (making a car can mean assembling up to 15,000 components). Secondly, they have more inputs are very complex and specialized, and so cannot be easily substituted. Alternative production lines might not be available or take months to re-engineer or specialist skills may be in limited supply. Thus, auto and electronic manufacturers were some of the most affected by the Icelandic volcano, the Japanese tsunami and the Thai flooding in 2011.
What Liebig’s law shows is that you do not need to lose everything to stop a business, service or function or society - just the right bit. This helps to explain why a loss of only 10-12% of commercial vehicles had such a big impact during the fuel blockades.
As our economies have become more complex we have been, on average, adding more inputs into our lives, into goods and services, into the functioning of our societies. Secondly more of those are critical with low substitutability.
Let us now apply Liebig’s law to pandemic absenteeism. The people affected by a pandemic are part of the supply of inputs to any system’s function. There may be many people contributing to one output of a business, service or function. We assume that most employees are either unnecessary for the period of the pandemic, can telecommute, or are easily substituted. But there is a smaller number of sub-functional roles occupied most likely by those with specialist skills who are critical with low substitutability. If any one of them is unavailable, the sub-functional role fails and with that, the output of the whole organization/ function. We can then say that the complexity of the output is the number of specialist, low substitutability sub-functions, this we can take as a measure of complexity C.
In figure:2 we see a simple model of absenteeism as might happen in a pandemic situation. It is shown for absenteeism rates of 20% and 40%. It also shows where there is no staff redundancy, and where every specialist has a ‘spare’.
Clearly, higher absenteeism rates and no staff redundancy increase the chance of a system failure. We can imagine a factory or service with hundreds of employees including 6 independent but critical specialist roles, with 100% redundancy, upon which the whole factory depends. But even with a 20% absenteeism rate, there is still a 20% probability that the factory or service goes down because one critical specialist and their spare is absent. Once this happens, all the other hundreds of employees might as well go home. These become the indirect absentees.
Firstly, with the loss of this output good or service (especially if it is critical with low substitutability) other businesses and services may be affected potentially causing cascading affects through complex socio-economic networks as a whole. The dual absenteeism-output cascade is shown in figure:3.
Secondly we can see the effective absenteeism in society is the initial absenteeism due to the pandemic plus the sum of indirect cascading absenteeism. Further the lack of inputs stopping production would add further indirect absenteeism. This positive feedback means the number of economically inactive people in the society is potentially far greater than the absenteeism rate. This tends not to be reflected in macroeconomic modeling which is blind to complexity risk and cascading affects.
5. Time and Cascading Failure
In society there is always a level of absenteeism and a percentage of goods and services that can’t be delivered for whatever reason. You do not get the spread of supply-chain contagion as complex societies are efficient at finding alternative suppliers, and some inventories are carried to help when there is a hiatus. Further most factories don’t produce very critical things or there is lots of substitutability. One wont miss a brand of toothpaste in the supermarket when there are 20 brands available.
To initiate a cascading failure one first needs appropriate scale, from a major hub failure or large enough absenteeism. Secondly, one requires that what is affected has what is sometimes known as centrality, meaning how critically connected it is to other parts of a socio-economic network. Thus the effects of a pandemic or hub failure in a weakly connected country, Mali say, would be unlikely to spread supply-chain failure widely.
Thus we can conclude that there might be point above which supply-chain contagion takes off, and below which the society is still operational and recovery can occur. This point depends upon the initial pandemic absenteeism rate and the society’s complexity at the epicenter of the pandemic. This point, in the languageof complex systems is a critical transition, Ic ,measured as the initial number of ‘infected’ supply-chain nodes, which when crossed, causes a positive feedback of supply-chain contagion.
A simple model of supply-chain failure can be based upon the idea that the more supply-chains are disrupted or infected, the greater the chance that further supply-chains will be infected (Korowicz, 2012). This is limited ultimately by the number of connected parties, L. This has the form of the logistic equation where we can associate the time constant with the average time a society can operate using its stock inventories, Ti. The number of infected nodes is:
Where Io>Ic and is a constant
the dividing line between the sub-critical and critical acceleration. We can see that the longer time inventories are held within a society, the longer the time the operation of society can function before the critical acceleration. Clearly then the rising speed of societal processes, in this case, supply-chain re-charging, reduces temporal resilience to shocks.
Even this very simple model reproduces the main features of real events and studies seen in section 3 - the impact on society does not rise linearly with time but starts to accelerate as more inventories are drawn down. From what we have seen, the sub-critical time is about a week for the UK. In section 2 the scenario for a major pandemic would have had greater than 20% initial absenteeism for 4-8 weeks, clearly this would be very deep into the critical acceleration regime. Of course this assumes the initial absenteeism brought the supply-chain failure above the critical transition. There are good grounds for thinking this would be so by considering that a loss of 12% of trucks was already bringing the UK along the sub-critical acceleration curve.
For pandemics in less complex societies we would expect a higher critical transition point, and a longer period before critical acceleration occurs.
6. External Cross-Network Contagion
We imagine a pandemic outbreak occurs in South-East Asia, say. The main vectors through which a shock could propagate outside the region are pandemic contagion, financial system contagion, and supply-chain contagion. How they transmit that contagion depends upon the network structure and centrality of the effected region with respect to the external world. We might also assume that the spread would require an initial external impact greater than some critical value for external contagion to occur, this is in correspondence with the critical transition level Ic in section 5. Further we would expect the shock to spread at different rates (banking shock could travel faster than supply-chain contagion because the operational speed of the financial system is greater than the inventory turn-over time). We would also expect different periods for each networkbefore critical acceleration occurs, with the fastest system dominating.
The local spread of the infection would in broad terms spread out in geographical space at the speed of human transport. There would also be the spread through airport linkages. Here the global spread of the pan-demic is across a different topological space related to the density of linkages between airports and the shortest paths between any airports (Woolley-Meza et. al. 2011).
Some countries’ role in trade is far more important to the globalised economy than others. The more important the initially impacted region is, the greater is the likelihood of spreading supply-chain contagion globally. Kali & Reyes (2007) measured countries' influence on global trade, not only by trade volumes, but the influence a country has on the global trading system. They used an Importance Index to rank their influence. For example, they find that Thailand, which was at the centre of the 1997-1998 Asian financial crisis ranked 22nd in terms of global trade share, but 11th on their level of importance. In another study, Garas et. al. (2010) used an epidemic model to look at the potential any country had to spread a crisis. One of their data sets is based upon international trade in 2007. It uses a measure of centrality to identify countries with the power to spread a crisis via their level of trade integration. Like the previous paper, the centrality in the network does not necessarily correspond to those countries with the highest trade volumes. There are 12 inner core countries,which are listed in no particular order are: China, Russia, Japan, Spain, UK, Netherlands, Italy, Germany, Belgium-Luxembourg, USA, and France. The data sets used by both groups combine Belgium and Luxembourg data, both sets of authors have classified them together and separately respectively.
Hidalgo & Hausmann (2009) used international trade data to look at two things - the diversity of products a country produces, and the exclusivity of what they produce. An exclusive product is something made by few other countries. Most countries in the world are non- diversified and make standard products. The most complex countries are diversified and make more exclusive products. More exclusive products have less substitutability.
It can also be assumed that even a standard product, bread say, requires many more critical inputs in a complex country than in a less complex one.
Financial system contagion outside the initially impacted region could be through banking networks, the bond market, the shadow banking system, currency volatility and confidence. Again the structure of financial networks and the centrality of the region with respect to financial assets and liabilities would determine the extent of any shock. A additional issue is how vulnerable or resilient the external financial system is at the time of the shock.
If a multi-network failure were to spread globally the ability of the external world to help the initially impacted region would be undermined. In this case there would be global systemic collapse.
7. Recovery & Recursion Failure
We saw indications in the empirical studies of failure in section 3 that once supply-chain failure starts to go critical, the removal of the primary cause does not allow the immediate resumption of socio-economic activity. Why?
The disruption could have pushed companies into bankruptcy, and purchasing power in the economy would be lost as trade collapsed. Failures in critical infrastructure including payment might also occur. More generally there would be an intertwined supply and demand collapse.
More broadly, if an economy was shattered, and its forward looking viability looked both precarious and uncertain one would expect a collapse in the value of a country’s currency. Rather than helping exports (which would be very little because the economy’s productive capacity had collapsed), it would hinder imports of emergency supplies and make debt in external currencies much more difficult to service. The economic damage and reduced economic prospects may then cause tightened credit conditions, spiraling bond yields and systemic bank failure.
There are also issues that are most pertinent for more complex societies. We imagine that after a pandemic wave people are again available for work. But people cannot however become productive immediately because other inputs are also needed. But those inputs are stalled because they rely upon other inputs and so on. More broadly we may define Recursion failure as: “the inability of a complex economy to easily resume production and trade after a significant collapse because in a complex and interdependent economy, production and trade must resume in order for production and trade to resume”.
Further even if a government wanted to rebuild, it may be too complex to orchestrate resumption from the top down. This is firstly because the economy has evolved by self-organization, nobody has ever had, nor could they have put its elements together in the first place. Secondly, even if it could be done, the systems of command, control and supply that might do it would be the very systems that had been undermined.
Over time entropy would become an issue as engines rust, reagents become contaminated, and expected maintenance and repairs are left undone. This would all add to the cost and inputs needed for resumption. In a more complex society the degradation rate may be higher for thermodynamic reasons.
Overall, we are saying the longer a socio-economic system spends in the critical regime, the more likely it is to undergo a complete systemic collapse and loss of basic function. In addition, the longer it spends in this state, the more difficult it may be to ever return to its pre-pandemic state.
This is a complex society’s equivalent of a heart attack. When a person has a heart attack, there is a brief period during which CPR can revive the person. But beyond a certain point when there has been cascading failure in co-dependent life support systems, the person cannot be revived. This means that the socio-economic system could be changed irretrievably and the job of society and government would be to both manage the crisis and plot a fundamentally different path.
The extent of our contemporary complex global system dependencies, and our habituation to a long period of broadly stable economic and complexity growth means a systemic collapse would present profound and existential challenges.
8. Conclusion
To make the systems we depend upon more resilient ideally we would want more redundancy within critical systems and weaker coupling between them. Localization and de-complexification of basic needs (food, water, waste etc) would provide some societal resilience if systems resilience was lost. We would have more buffering at all levels, that is, larger inventories throughout society.
All this is the very opposite of the direction of economic forces. The reason we have such tight inventories, tight coupling, and concentration in critical infrastructure is they bring efficiency and competitive advantage. Further, in a time of global economic stress there is a drive towards further economic efficiency. For example, during super-storm Sandy, fuel shortages were exacerbated by low inventories that were the direct result of cost cutting arising from the financial crisis (Schneyer & Gebrekidan 2012). In general we are locked into socioeconomic processes that are increasing complexity-derived vulnerability.
Increasing vulnerability coupled with increasing hazard mean that the risk of a major socio-economic collapse is rising. The commonalities of catastrophic shock outcomes across a range of hazards suggest common risk and resilience planning is urgently required. Further, because of the possibility that a permanent state shift could occur, planning needs to consider how to deal with non-reversion to pre-shock conditions.
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On this argument I always go back to the great depression.
Where did play boys go during those times?
They went to Paris, while the US was hell 1929-1942, Paris was 24/7/365 sex and drinking, in the USA it 100% austerity.
Today? Probably Melbourne where POT is legal and just get stoned, and like the depression years, stay far away from the USA.
It all depends how old you are,... but these days, good tropical weather, liberal dope laws, ... easy women,... that's what life is all about,
The USA is about prisons, and killing, ... that my friends is not what life is about.
Exactly take out the FBI and the CIA fills the void, take out DHS and DEA takes over
Get rid of ARMY and NAVY is the arse-hole
It never ends there are always MORE assholes that good guys,... best to find a nice place to live far from the assholes,...
Remember life is short, ... your only regret will be not getting stoned or drunk enough, or not getting enough pussy.
I am most optimistic for the future of humanity but realistic balanced so as to comprehend that there are many horrors and evils that lurk in the shadows and all too ready ready to suck the blood of the innocents and the ethical.
***
You must be a young guy,...maybe have ties to the HELL you call USA?
Nations fail all the time, ... the only thing 'exceptional' about the USA is how dumb and kept in the dark and fed shit are their people, ... I mean in all of history, I don't think there has been a worse case of 'exceptional-ism' by the Hair-Lip.
Today's COP-SHOP, you know the 400,000 that OBAMA just extended pay whether they go to work or not,... they and they alone represent all that is left of 'american exceptionalism', ... all else are headed toward economic ruin and desperation.
No to "young guy" (older than God, actually)
No, to ties to the USA
Just find the whole scenario interesting and don't expect a rosy future; au contraire.
let it burn and from the ashes the Phoenix will rise. Now that would be nice to see.
Ho hum
Me too ... burn baby burn ...
I like RP, or Marc Faber, ... I have been predicting the demise of the USA since the 1970's, so I have to be right eventually, but I did bail some 10+ years ago, and have never been happier since ...
I can shit face drunk and ride my bike anywhere I wish, and if I meet a cop on the trail, 99% of the time, the conversation always turns to "You want a drink",.. :) I mean the USA ain't fun anymore,...
When I was kid, and the cops pulled us over they would say, "Now put your pot&beer in the trunk, and take your girlfriends home",... and that was that ! :)
Now the cop is the enemy, and beer in the car means your fucked for life as a kid, and it means a year of boredom, jail and a $30k fine if your an adult.
Fuck the USA, ... TPTB specially 'boiled the frog' to turn the average USA citizen into a god-damn fucking idiot.
Fuck the USA,.... or did I already say that?
That's true about the cop sending you home in the past when drunk. that happened to my nephew like 25 years ago. Ha, ha.
they skanked the private pensions years ago, there's still several trillion in public pensions just swaying in the wind though.
The private pension money was looted and sub'd with IOU's
The public pension money will NEVER be paid, as its back'd by debt,
The private pension was REAL CASH, but it got stolen in 1980's read barlette&steel, 'america what went wrong', 1988
I'm not kidding guys the only thing left to steal now is to sell YOSEMITE to the Japs or chinese, e.g. PUBLIC lands, are the only asset left worth stealing.
Everything that can be carried off, is already gone,
The cops are stealing private gold and drugs as quick as they can, but its diminishing returns as most of us that had anything left the USA years ago...
***
Well then there is the "PRIVATE RETIREMENT" Cash, but I think most 'experts' agree that the 401K loot will be stolen by the next FED bitch, I mean IRA's and 401k's, I mean my CPA told me back in the 1980's that they were all a trap to rob people.
They live and breath off of human capital, and ours tiring quickly.
collapse has occured, just they can't bring themselves to say it. some profit from it, some look around and say this world is not the one I grew up in, but never seek why. remember free trade is good tariff bad, but look at the result of free trade america, look at the result of wide open immigration, look look or keep your eyes wide shut. all the data in the world all the statistics all the bs YOU are fed, cannot change what eyes wide open see around you.
We are lied to sure, but not one of us must go along with the lies of modern finance and international scams, the nation is corrupted by those who want all the above.
Tis the dawning of the age of Aquarius. Well said.
Jeebus, talk about academic bullshit.
What we got here in Amerika is controlled chaos.
The lunatics are running the asylum right on schedule.
Terror is just around the corner.
True, but every asylum is armed to the teeth you got treasury,and fed, and dhs, and fbi, ... and they all are armed to the teeth and will kill one another for power.
Then you have the 'little people' fed shit on TV and told to stay in their homes.
It's going to get interesting as these the USD implodes cuz these armed teams will then all fight each other for the spoils of war, aka taxpayer assets,
For those that still have anything that the IRS considers valuable and you still live in the USA, I pity you dumb ass.
Is the government shutdown like a mini pandemic and a push towards the unstable region?
This is worse than one of Spock's mini-dissertations.
Bla, bla, bla... Buzzwords, bla, bla, bla.
Look, boys & girls... It matters naught by which exact path we slide downhill. The ONLY 'tree-plucking' thing that matters, is the timeline (Developmental Altitude) we slide down to.
Given that timeline/altitude, we then need the appropriate resources, skills, etc. to stabilize and rebuild. But hopefully rebuild better, smarter and WISER than before.
K out.
"Timeline, Developmental Altitude"!? WTF?
Clearly it was past my bedtime.
Should've just said "Era". To what era would we slide back to or crash down to? 1970's, 1930's, 1870's, 1830's, 1770's or 1730's?
Its a pretty straight forward and simple analysis, nothing new in here but its well laid out and backed by some basic modeling.
Most people understand that the increasing complexity in our society is also causing an increase in systemic risks, and thats why people are starting to either grow food, or store it and going off the grid. Whether people understand it in detail or not, the actions of preppers and stackers show they understand the ultimate consequences.
It should also be noted that the probability of a system collapse is an exponential function - while many might be familiar with the exponential debt function baked into fracitonal reserve banking, it is also worth understanding that the supply chain systemic risk function is also exponential. This is because the probability of a critical sub function failure is not an independent variable, but rather it is a fucntion of all the other critical sub functions in its supply path. So if there is an ongoing linear increase in risk at multiple points, these are not accumulative, but rather they create an exponential function - due to the mathmatical method to calculate probability.
So as we make linear increases to the risk profile, by reducing inventories, adding an interconnection, adding a new critical input and so on - the result is an exponential increase in probability of collapse. In other words, unless we REVERSE our direction collapse is not just increasingly probable, it is in fact inevitable.
Good point, Amagnonx, that "the probability of a system collapse is an exponential function."
Exponential functions are something which one can intellectually understand, as mathematics. However, they are extremely difficult to get a gut feeling for. As with atomic energy being billions of times BIGGER than chemical energy, as something which we ordinarily have no feel for, the intellectualized ideas about almost EVERYTHING BEING EXPONENTIAL, still tend to be almost impossible to intuitively comprehend!
Article reminds me of a Slayer concert in '88, Los Angeles. It was kind of like dominoes falling. It was all just elbows and assholes. Couldn't move. South of Heaven was playing, but right when the song goes high gear, an asshole lights a pack of Black Cats and throws it in the crowd. Bodies start moving. You start moving, against your will. You're being pushed. First, left. Then, right. Forward. Backward. Everyone together, falling. Then, fighting to stand upright again. The weaker people underneath you fall underneath the weight of the crowd. You look down and see their heads getting trampled on by a sea of feet. There is no way they can get up. They are fighting for air. They are fucked. You are trying to not get crushed yourself, but the weight all around you from the crowd is like a body cast, a splint. You're immobile, rigid, paralyzed. The cattle got spooked and now they can't stop and you can't stop because they can't stop and so nobody can stop anymore, even if they tried. There's too much perpetual motion that keeps the crowd in this state of universally unwanted motion, but the crowd can't stop itself from moving just as a wave can't stop itself from splashing. Once it starts it cannot unstart. And oh shit, here comes the pushing again, this time from behind you and so you have to push the guy in front of you who has to push the guy in front of him and so on. And the stoned girl who falls down, you can't help her. She's already under the hooves.
All it takes is for someone to light a fuse.
A great write Wyatt, I could almost feel I was there, actually, hopefully, I will never be there, I have a fear of large crowds, the thought of being immobilized in the midst of the milling herd is something I could have nightmares about.
Great thought-provoking piece. In a sense it contradicts everything from David Ricardo to Japanese JIT manufacturing, kind of makes the WTO superflous or at least reduces its importance, and pretty much says that absent some immediate, costly, and all encompassing planning, we haven't a chance.
He gives big picture arguments (pandemics, major disasters, etc.), but one can even see relatively small events having substantial impact. Here's an example: he writes that Thailand is 22nd in trade but on some scale is 11th in importance. One can guess this relates to auto/truck parts and electronic components (that are there not because of any particular talent or skill, but merely because of cost, proximity to markets, and maybe even the wide availability of bargirls). Now the most important figure in Thailand is the 84? year old King, who has sat on the throne for seventy-something years. Because he is the only monarch 99% of Thais have ever known, and is widely revered (naturally and by lese majeste laws), when he goes on to his next Earthly iteration the country might well experience a period of substantial civil unrest. Thailand already has major political divisions, who go at each other from time to time in very violent ways. One of the few things keeping them from going at each other full time has been the presence of the King. Take him away, and Thailand will be a country to avoid. Should wide social unrest develop, factory production, or domestic transport of that production, is likely to be impacted, with knock off effects on any process that requires Thai-based inputs. So how large of an impact is Important Export Source #11?
That's just one example, and one we are likely to see within a year or two. A more obvious possible trouble area would be some disruption in Saudi oil production, perhaps due to a Shi'a uprising in the oil provinces. There are not simple on-off switches to GOSPs, and even if these are not destroyed, a temporary shut-down would require substantial maintainance.
One thing I considered while reading the article, however, was Europe post-WWII. Yes, everything was less complicated and interconnected then, but Europe emerged from its devastation relatively quickly, and within about twenty years had matched or exceeded its previous level of development. Japan recovered even faster. Maybe that owed a lot to the fact the US was relatively unscathed and not especially dependent on anyone else at the time, but it suggests that repair is more possible than the article implies. Large societies self-organized once, so absent untoward government interference, perhaps they can do it again.
Can't that unrest be quelled? Seems like a lot of unrest nowadays is less and less quelled.
Thais are pretty good at unrest. When the Red Shirts-Yellow Shirts were having at it a year or two or three ago (time flies), there was an ex-Army Colonel, who was a leader of one of the factions, being interviewed on live TV. From at least 800 yards away a sniper put a round in his forehead, ending the interview among other things. That wasn't a lucky shot of an amateur, but rather an Army trained sniper (in one faction) taking out an Army Colonel in another faction. Thus, even within the Army there are sides, both of which are obviously very well armed.
USA Snipers were seen coming and going that day from the Hilton Hotel ( Where the Shots came from ). It was reported in SE Asia that the CIA had been brought in to take out the trouble makers.
No. You are operating with false information. The US had minimal interest in the Red-Yellow thing, except that one of the primary battlegrounds was Lumpini Park, not too far from the Embassy on Wireless. US interest in Thailand doesn't stray far from liaison operations looking for the aQ types who used to use the Grace Hotel as their BKK HQ, or when a few aQ types hid out in Ayutthaya (Hambali).
Bangkok is aptly named, thai buddists make good mercinary armies,when they go against all budda teaches then breaking bad- balls to the wall is only seconds away. love the thai's they don't need LSD.
Thaksin Shinawatra is a globalist, he was sponsored by the usual suspects and given a CIA education and given an inside track into government telecom contracts. He was made a billionaire by the Rothschild clan and intended that he should take over in Thailand.
The problem was the Thai's already have their own entrenched oligarchy which is connected to military power, so Thaksin just wasnt able to break in directly, but the campaign continues with his sister ultimately gaining political power.
This conflict was created by the CIA and so forth, and was on the globalist agenda to usurp the entrenched Thai oligarchy - the takeover isnt complete, but it seems to be moving forward. When land ownership and corporate laws become more relaxed (which is obviously the plan) then we can see the effects of the globalist takeover. Some aspects of corporate ownership laws have already been relaxed.
Who makes this stuff up for you? So many one note wonders populate the internet, where EVERYTHING since Eden is CIA-Rothschild Axis. In fact, I think I heard on Rense or Icke that the serpent was really Mayer Amschel's great grandfather, and his great great great grandfather set the shaped charges for the Big Bang.
Aren't there plenty of other sites where you can indulge in that sort of thing without bringing ZH down?
If you knew anything about it you would have at least tried to present some information to back your argument, you probably live in the US or something and know nothing about this place.
To back up what? Your opinion is as patently absurd and uniformed as it would be if someone claimed Martians were backing Taksin.
No, I don't live in the US, and yes, I am intimately familiar with Thailand, Thai politics, US interests in Thailand, etc. Wrong league, fella.
LOL, well done Chindit13.
LOL, and I agree with you, NP. chindit13 has always seemed to be a dose of reality re SE Asia, a part of the world I have never visited.
If Thaksin were backed by the CIA / USA, then he would still be Prime Minister and not rubbing elbows with Sheikhs in Dubai. Just sayin'.
Try using simple words rather than the polysyllabic and technobabble. You may find that once you take away the jargon you are not actually saying anything different than you can hear in the average pub on Friday night.
I got something more coherent from the "Random CS paper generator" - A Methodology for the Synthesis of Expert Systems by Dr Smirnoff
Funny guy. I hear he has a theater in Branson Mo.
The curve is a simple logistic function. Nothing complicated here--it's basically exponential growth up to the point of inflection which is then damped by carrying capacity.
The real question isn't IF and TO WHAT EXTENT. The real question is WHEN. And to say the risks are increasing isn't an answer to WHEN. An article about that would have real value to us since we all know the collapse is coming since it always comes and we all know the system will rebuild itself, short of global nuclear war or an ice age or something of that nature, since it always rebuilds itself in some form or another (humans are too intelligent to not be able to rebuild in some form). Why doesn't one of these math guys or anyone tell us when it is going to happen say to within 3 months of the event. That would be new information that we could all take a chance on or not. Of course, I know that is virtually impossible to do but why not take a theoretical stab at it. We keep talking about the same thing over and over because no one knows a formula or means of figuring out WHEN. Surely, some of these geniuses can take a stab at it. What about a probability analysis based on past data or something like that?
You're looking for someone to read some chicken guts for you.
Shit happens...until it don't. That is all.
We're seeing perhaps the maturity of "For Profit Efficiency (Capitalism, a good thing) widely spread since the 70's throughout the world which is largely responsible for the current wealth generated by those who were capable of investing and those involved in placing and controlling those global investments. There are several large Countries, initial generators of that Capitalistic application that are "Rich" from past actions. Several, however, have become internationally non-competitive in manufacturing and and creation of product because of Government misdirection. The cycle continues, they become poor until their costs come down sufficiently and their government changes philosophy (Like China) and becomes efficient and directed to business manufacting once again in lieu of silly rules and laws defining restrictions on production. At that point they may once again become productive.
To blame all this on "because of Government misdirection" is to take the bait hook, line and sinker.
I never liked Armaggedon type suffs.
However, there was an event that started the end of the status quo and it's irreversible.That event is not finantial collapse, some pandemia... The author has mentioned it en passant:
It's Fukushima. The Pacific Ocean being continuously poisened with heavy contaminated radioactive waters, the air with a non stop emission of radioactive isotopes...
THIS is the issue. Quoting the author:
Fukushima has already started the path (that's my opinion) to "a food security crisis" (...) "and an initially exponential spread of production failures across the world". "This will reinforce and spread financial system contagion".
Finally, neither wealth nor geography is a protection.
I have this feeling that at some point survivors are gonna end up living under glass domes.
Minusing me? You can either prepare or living in denial.
But isn't gonna go away. As far as I've researched, until now they have not figure out what to do, they don't even know what's happening inside some of the reactors, where some cores are, they can't stop the radiactive emissions on water and air... All that shit, pal, doesn't evaporate but spreads. It's spreading right now in the northern hemisphere, then is gonna go south too. Worlwide.
Do you actually need some links about the whole issue?
Do you have any information about any solution to THAT REAL UNDENIABLE UNAVOIDABLE HUGE PROBLEM?
TNT, ever hear of dilution? not to laugh at japan or it's nuke problem but you need to get a better understanding of the size of the problem, for japan and area around yes, but the world not so much.
Dilution?
“Even a single hot particle consumed or inhaled into the body can cause a cancer.” (H. Caldicott).
And this thing it's going on and on: I mean, radioactive isotopes are being released continuously on air and water since march 2011.
The California coastline is becoming like a dead zone.
http://planet.infowars.com/outdoors/california-coastline-becoming-like-dead-zone-fukushima-to-blame
“Post-Fukushima Horror”: Severe impacts on oceanic environment — An unpredictable amount of damage to Pacific — Fundamental to reproduction of humans — Japan’s simply dumping nuclear waste into sea"
http://enenews.com/post-fukushima-horror-severe-impacts-on-oceanic-environment-unpredictable-amount-of-damage-to-pacific-fundamental-to-reproduction-of-humans-japan-simply-dumping-nuclear-waste-into-se
Professor: Fukushima disaster is the worst case of nuclear contamination in history — It’s a crisis for all humanity — Building up to something much worse? (VIDEO)
http://enenews.com/professor-fukushima-the-worst-case-of-nuclear-contamination-in-history-a-crisis-for-all-humanity-building-up-to-something-much-worse-video
And so on. News won't get any better, I'm afraid.
Deluded fool
I'm not saying you are wrong about Fukashima, but the end of the world claims are coming in thick and heavy. It has gotten to the point where you can make any claim about it, such as the claim that it is equivalent to 85 Chernobyls, and still be believed.
I would like to hear some reputable counterarguments (ie, not by TEPCO).
There have been more than 1000 nuclear tests since 1945 and the earth is still here. Studies have shown that nuclear test clouds that originated in Nevada, then spread across the atmosphere across western states and a direct correlation of malignant cancers and deaths related to the fallout from those radioactive clouds.
Gamma rays can be harmful and may cause oncogenesis.
Fukushima may have to be nuclear bombed to bring an end to the malaise, the maelstrom of chaos. All of that nonchalant jazz. Bombing it might work. Just remove everybody within a 250 kilometer radius and hit the button. Finally find a good use for the bomb.
Wouldn't have to worry about it anymore.
A 250K radius in Japan covers a lot of people! You would probably need to evacuate Tokyo to be on the safe side.....where are you going to put 20 million ++ people for x period of time??
Yeah use radiation bomb to solve a radiation leak....
Kinda ike using debt to solve too much debt....
Oh, wait...
Assuming a nuclear explosive device is used and would be effective (if used I'd assume something will be delivered underground)...
Japan is not allowed to have nukes and officially have none in their arsenal.
The question is who gets to do this and what is the geopolitical "fallout".
a) USA does it... how would people take that if the US nuked japan... again?
b) Japan does it (they swore off nukes post WW2, but they say Japan has potential capability for quickly building a nuke)... this would effectively nullify their nuke ban and bring the region up in arms for allowing then to get nukes.
c) Russia/China offers... ya, no way Japan would allow two territorial competitors (senkaku and kuril islands) to nuke fukushima for them.
I think you are right TNTARG, The two things which will have the most effect on our human future are, WW111 and Fukushima, WW111 has already started, we are having a short Hiatus in hostilities for the moment, but don't be fooled; The dice has been cast, the lines are drawn, and in the end every combatant will sacrifice their own lives rather than grovel before their opponent, (I may have to die, but I'm taking you with me!), We have the weapons to `Kill Everybody` yet `Everybody` includes ourselves, the lesson? War isn't the way to preserve your existence!
Fukushima, with THREE reactors melting down, not China syndrome, but west coast north America syndrome, for now, must poison the whole World eventually and probably sooner than we think, the fact that the Japanese are left to deal with this Global Disaster alone, speaks volumes about our Rulers true nhilistic mental state, The rulers are becoming tired, it is obvious, knowing how to gain control does not necessarily mean knowing what to do when you have it, the outright poisoning of the World, of which Fukushima is perhaps the most glaring single example all the way to the Fracking (And poisoning the drinking water) speaks of some unconscious death wish, someone wants to die and they want to take us all with them!
http://www.youtube.com/watch?v=x1HQR0sVlpQ#t=273
Sounds like typical conspiracist bullshit to me. Someone noticed that market collapses often occur in October and figured now was as good a time as any to predict one. If he happens to be right, great, what a prophet. If it doesn't, nest month he will be talking about something else and his fans will forget all about it. If someone calls him on it he will have a story about how the Illuminati stymied the plot for their own nefarious purpose, or some such bullshit.
While it is sobering to study possible cascades to failure, they tend to omit the fact that when business management is free to adapt, innovate and overcome, they do. We had similar talk of cascades to complete failure prior to January 1, 2000, when I was told by otherwise sober and thinking adults that at midnight, airplanes would fall out of the sky.
When I asked such people if, on January 1 of 2000 that the point of sale system in a store didn't work how many managers would not revert to tallying up customer purchases on note paper using #2 yellow pencils. And as any power or computer failure spread, who wouldn't revert to more simple replacement systems instead of telling customers that the store was closed? A growing number would.
Free people are free to work around problems. Where society fails is where government rules forbid adaption and innovation. That could happen. For example, a major component of the previous financial collapse was due to a FASB rule that required portfolio managers to 'mark to market' even when the markets were disorderly and prices were obviously suppressed down. It took FASB over a year to change the rule. It was MtoM that was responsible for Merrill Lynch being forced to sell itself to BofA at a great loss to shareholders.
Similarly, some future clause in some Dodd-Frank regulation could cause an important part of the repo or overnight system to seize up and a cascade to failure could propagate well before any Washington bureaucrat had his first sip of Starbucks in the morning.
I make an analogy of a centralized US government control of commerce, banking and economy to the use of genetically modified organisms (GMO).
Over the short term, this centralized government design may get some short term increase in yield (actually through borrowing and thus depleting the soundness of the currency) but in the end, these GMOs have Achilles heels, be it resistance of weeds to glycosphate (the active ingredient in Round Up), or the susceptibility of wheat to the U-99 fungus, or the failures of GMO rice prodution due to drought in India.
The bottom line is that government control injects so many distortions and destabilizes the natural robustness of the economy that it has to increasingly micromanage the ever increasing numbers of unintended consequences until it can't , and then whole thing crashes. Better to have small recessions from which we can recover due to a hardened, resiliant economy that has faced them under a regular basis, than "protecting " an economy by artifical government subsidies and wealth redistribution which makes it more suscepitble to a catastrophic collapse.
Very good Hubbs, if the goal is long term sustainability we must work with Nature, the attempts to `Improve` nature will have unimagined consequences, eventually a consequence will arise which is directly against our survival and we will be powerless to do anything to reverse it.
Short term thinking is all we have now, there is another, `Song of Praise` for the Fracking industry on Yahoo this morning, could there be a better example of what we are willing to do to `Keep the Dream alive` than destroying the acquifers, (For Ever), for short term profit?
" It was MtoM that was responsible for Merrill Lynch being forced to sell itself to BofA at a great loss to shareholders."
Nonsense. MToM is a tenant of real Accounting and therefore valueation. Removing it allowed more WS Criminals to hide from the valueation of the marketplace.
You cannot say that the market is good until it disagrees with me. That is downright stupid.
Reserves are for market risk, and that risk is not normally distrubuted. Banksters don't want to keep the correct reserves cause with Fractional lending and guarenteed WS Banks, the total reserves would be too high.
dupe
What's that Smell?? http://shutupnsing.wordpress.com/2013/10/06/from-the-head-of-the-fish/
Paging Dr Obomba Paging Dr Obomba Stat! (take two aspirin and call me on the golf course)
Good topic, didn't read in detail but jumped to the Conclusion and seems plausible. I've followed and studied this topic for over a decade, in various guises, and spend quite a bit of time examining the particular bottle-necks in the current socio-economic systems that could trigger such an irrecoverable cascading failure to a much lower output system.
Initially it was the energy grids I looked at but these seem fairly resilient with many and varied distribution sub-systems, (e.g. tankers on trucks or rail, gas and liquid fuel pipelines, electricity grid) there is a lot of redundancy built in to fall back on for to reboot using alternate systems. Then I looked into the centralised banking/financial or monetary systems but it seems even if they get incredibly shitty corrupted/incompetent and inefficient the overall system will still limp along, not stellar but not a complexity collapse either. Electronic money systems have changed much to do with the speed of market pricing signals and the efficiency/inefficiency of capital and resource allocations, ramping up mining/agri operations in response to price increases has also been accelerated with industrial technological advances, i.e. a commodity super-bull phase may have a considerably shortened cycle period.
Recently I've been looking closely into a potential bottleneck at the confluence of govt. socio-economic controls and electronic monies, the IRS IT systems. Govt. IT systems are typically shambolic affairs that never scale well on initial roll-out with the usual gambit of boondoggle contractors and poorly defined specs, etc. With the increasingly larger portion of economic activity now being centralised by govt. (~40%) and the tendency to try to administer welfare programs through IRS systems more and more risk is building up on this single sub-system. A major IRS IT system failure could have catastrophic cascading consequences spreading out to the financial and monetary systems and undermining social order quite rapidly with welfare payment failure. It could be precipitated by widespread power outages but they would need to be quite prolonged. More likely it could be precipitated by cyber-attack (conspiracy) or poor system design/operation (cock-up) leading to massive data corruption/loss and followed by an attempt to revert to historical manual functioning (impossible).
Learning my kid how to fish may wind up having practical application after all. I thought I was just demonstrating how to goof off.
I might become Amish. They alredy solved this problem.
Yes, but the Amish are unarmed and prefer to stay that way.
Yes, but the Amish are unarmed and prefer to stay that way.
And they will be some of the FIRST victims.
If the economy collapses the Amish will be wiped out as well.
Our society is the economic equivalent of a Ramjet engine. It runs good as long as it is running.
But if there is a flameout, it cannot restart itself in flight.
Roger Ramjet, he's our man
Hero of our nation
Only thing that's wrong with him
Is mental retardation.
Does anyone else remember the Roger Ramjet cartoons?
Number one.
Learn to grow food
Okay guys, the supply chain could be disrupted by any number of things. No need to panic, just prepare. Gradually get one extra of everything you use on a daily basis into the house. A case of water, toilet paper, coffee, aspirin, etc. Get some extra meat and chicken, wrap it in aluminum foil, stick it in a ziplock freezer bag and put it in the freezer. Cans of soup, lemonade mix, whatever. One extra item per trip to the grocery store will do it. Don't forget comfort food for each member of your family. For one person, it might be chocolate, for another it might be peanuts.
A full freezer and pantry brings peace of mind.
Why is it that with "economics" piss poor, reckless design and irresponsible implementation and oversight, we dismiss risk and eventual failure with the excuse of "complexity"? Nobody says such about bridges, dams and power systems.
I would highly recommend reading the timeline for the 2000 UK Petro strike. Very informative to how things break down.
Fuel crisis: How the drama unfolded
Fears of a fuel shortage were triggered last month when union officials announced that tanker drivers would be balloted on a strike. However, the real drama began this week, when policitians waded into the battle.
http://www.iwar.org.uk/cip/resources/PSEPC/fuel-price-protests.htm
http://en.wikipedia.org/wiki/Fuel_protests_in_the_United_Kingdom
Greetings Programs! You've been upgraded to Nodes!
common risk and resilience planning is urgently required
With more government planning comes more government control and its corollary: oppression.
planning needs to consider how to deal with non-reversion to pre-shock conditions
Again, reading between the lines, governments want to best be able to deal with all of those uppity citizens after the crash that they themselves (the bureaucrats) will have brought on...and the term oppression springs to mind
I'm not buying the hysteria. As long as the shadow banking system can pay the world's top military might to press fiat on subordinate economies, all is well in the Empire of Lies. They have options and law isn't one them. No one's going to force them to adhere to law. I forgot, who are we at war with again? And don't forget the power of the propaganda machine! What's Miley doing now I wonder!
Business as usual. Stay debt free, fix yourself internally and enjoy your life. Set your soul free of the insanity and the rest will follow.
Haha...
But not for long.
http://www.dailystar.co.uk/news/latest-news/342876/Sir-Bob-Geldof-All-hu...
Its pointless to stay debt free nowadays. Our economic system would not survive a currency reform. It would collapse immediately. All your debt would be no longer relevant.
Water, Food, Medical and Defense. Available without electricity.
The rest is periphial and won't matter without the first.
Good luck in the city. You're gonna need it. Just thinking about that gives me the willies.
This study is flawed in that it does not take the effect of Zombies into account in its discussion of pandemics.
But, seriously, there is no mention of asteroid impacts. That would really mess things up and that, I think, using Earth's history as a guide is the serious long-term threat. Hopefully, we'll have something in place to prevent an impact before one appears. Otherwise, it's a post impact world way beyond Mad Max.
Forget asteroids, try volcanos. Already happened multiple times since the late paleolithic, and those are just the ones we know about.
http://en.wikipedia.org/wiki/Extreme_weather_events_of_535%E2%80%93536
http://en.wikipedia.org/wiki/Great_Famine_of_1315%E2%80%931317
http://en.wikipedia.org/wiki/Year_Without_a_Summer
http://en.wikipedia.org/wiki/Toba_catastrophe_theory
Sizable asteroid impact = +90% mortality, all told. Way things are headed, no countermeasures can or will be implemented, so it's really pointless to worry.
Worry about what you can change.
Malthus called Economics a dismal science because, comparatively speaking, throughout history "bad"
economic times have been the norm with "good or best" economic times being relatively few and far between; the power elite playing a large role in that. The rise of a middle class was a recent phenomenon that allowed not only for the opportunity of good times but at least for the concept, or chance, of "better " times.
But human behavior being what it is, it is always only a matter of time until a power elite UNIMPEDED consumes the better or best times ultimately bringing the house down on their own heads as well.
The pendulum swings powered by human memory.
As long as a majority of people who had lived through the Great Depression remained alive the odds of "it" happening again were small. Once most of them were gone the power elite swung into action, changing banking laws to suit their own purposes. Now as a result we, once again, face the prevailing bad times. We are saddened at the world our children will now live in as opposed to the world we brought them up in. One day we and whatever is left of the middle class ie., those of us who lived the majority of our lives in the good times, will all be gone with the collective memory of that short era left to the history books. And absent a middle class and unimpeded, the power elite will prevail until like the tigers in Little Black Sambo they melt into butter.
I'll take an altruistic social society over "capitalism" any day.
Good luck with that. Something that has never existed, nor ever will. There are many ways to become informed, I suggest reading Menger, Von Mises, Hayek, Adam Smith, Antal Fekete. Don't be a serf.
Society is control for the masses. The 1% need no society. Societies/masses work is done. Machines and few workers/servants/entertainers are all that is required. Masses cause global warming, disease, waste resources, pollute, require expensive healthcare, places to dump their kids (schools), crime, need for prisons, complain, want free stuff, pay little to no taxes, poorly educated, driven by sexual/animal type behavior, all the time thinking the world would be better off if they were in charge. Yeah right. Who wants to be equal to that?????
someone said the middle ages were full of beans literally, thats' what people had to eat, it was later with more political stability and farm machinery which could make large wheat fields harvastable that mass produced bread (Wonder) came about. now global climate change is shifting the areas that will grow wheat, and human population extends into arable land, (and the central supply chain is overextended) so beans (and other local crops) are back in fashion - but people begin to adjust before it happens, by adopting a gluten free diet for instance. shopping at farmers markets. suppose you had a heart attack without the chest pain or the shortness of breath. suppose the central banking system collapsed and the story was buried on the back page of the newspaper. (the Feds progressive policy is not to run an economy for everyone but for a select percentage of persons and businesses. the more people who opt out, (who stop looking for jobs for instance, the better THEIR economy which is being run for a shrinking number of persons, the better it operates) the Fed is an experiment which works under a very narrow range of conditions which the Fed controls by simply excluding people. its made the current POTUS a pariah, the next one hasn't a chance if he maintains the status quo.
I am not sure I believe this systems theory stuff.
How do you model corruption?
How do you model CDOs? Maybe bring in Blyth Masters or whoever.
While I do believe the system complexity can be modelled, to a degree to show how it was designed for WS Bankster profit and not efficiency or against system failure, but each of the data points is at most a guess. Nassim Taleb has written of this.
It is almost like asking the realestate economist what he thinks? Well he is a shill and a moron, at best, a corrupt devil at worst...
This article just undelines the reason why people should try to be able to provide for themselves for long periods of time. Unfortunately few have prepared for social breakdowns. Support for a local economy is also vital in the long run because the local economy will be the seed for rebuilding a better world.
And then.... Fukashima X 400. Er, I guess only 397 now.
Nice article,
Dash it all, we already knew all that. Figure 4 jolly exciting.
Well, got to go: Keep Calm and Carry On!
"If a multi-network failure were to spread globally the ability of the external world to help the initially impacted region would be undermined. In this case there would be global systemic collapse."
Greater interdependency = greater chance for shtf everywhere. Especially in a globalized world.