My collection of paradoxes in the economy

For a while I’ve been collecting paradoxes. It seems that for any type of topic you dive into, you’ll encounter a set of fundamental paradoxes. A particular issue is rarely black and white. Rather, its consequences depend on what other factors are at play.

Not knowing exactly if something is good or bad, or which way a particular action or choice leads to is unsettling and frustrating when you are trying to make sense of the world.

As I understand it, Eastern cultures and philosophies are more comfortable with paradoxes. Yin-Yan, the icon of much eastern thinking, symbolizes how existence is a dynamic balancing of opposing, intertwined forces. The little dot in each of the forces, show how every truth contains a bit of its exact opposite. Paradoxes are simply a natural part of the way the world works. There’s no single, permanent truth.

My little collection of paradoxes confirms that even very basic questions and mechanisms are indeed rather messy, and I suppose the reason stands out is that most dialogue, argumentation and presentations in the media are clear-cut and absolute. Qualifying a statement by pointing out uncertainties takes time and it blurrs the seductively simple and sharp edge of unquestioning certainty.

Stronger government at lower cost

Government is facing two, almost conflicting, demands in the future:

We need a stronger public sector, but at a lower cost

We need more effective governance, also at a lower cost

Al Gore's nye bog, The Future: 6 hovedpunkter

I min anmeldelse af Al Gore's nye bog iPolitiken forleden havde jeg skrevet en sammenfatning af bogens hovedpunkter, der ikke kom med i avisen. 

De kommer her i stedet:

Al Gore beskriver i The Future de 6 overordnede drivkræfter, som efter hans mening tilsammen definerer vores fremtid.

Earth inc.

Verdens rigdomme koncentreres i takt med at globaliseringen skaber selskaber af hidtil uset størrelse og magt. Industriarbejdspladserne forsvinder, de outsources til billiglande eller overtages af robotter. En stor del af væksten er rent pengemæssig, den skaber ingen jobs og er ikke til gavn for de fleste. Resultatet er en foruroligende udhuling af samfundet, hvor nogle få bruger løs, og millioner kæmper for at overleve. Kapitalismen er den mest effektive måde at skabe fremgang og udvikling, mener Gore, men når kapitalen får frit spil, overtager vinderne alt.

Magten er lammet og uafklaret

Demokratiet er i dyb krise. Systemet er blevet hacket af gigantiske corporations, der med klækkelige penge bidrag og massiv lobbyisme reelt kan styre, hvad politikerne vedtager eller afviser. Gore kalder det ”blød bestikkelse” og ”et statskup i slow-motion”. Resultatet er at der ikke længere er nogen ledelse – nationalt eller globalt. Politik er lammet, på et tidspunkt, der i dén grad kræver styring.

Den globale hjerne

Digitalisering og smamenbinding af alt og alle. Privatlivet forsvinder, alle normale medier og jobs udfordres, kunstig intelligens, der vokser sig stærkere, en fælles bevidsthed, nervøst sitrende.

Det er her håbet findes, mener Gore: De kommende års vigtigste kamp er når den globale bevidsthed går imod Earth inc. blinde vækstkurs, og i stedet lader fornuften og sandheden råde.

For meget af væksten

Mennesket breder sig og vokser langt mere end kloden kan bære. Befolkningen vil vokse med nye milliarder, og alle knokler vi for at få mere: Kød, transport, bekvemmelighed. Væksten holdes oppe af målrettet politik og solide doser reklamer. Imens forsvinder naturgrundlaget under os med foruroligende hast.

Gen-opfindelsen af liv og død

Bioteknologien vil give mennesker indflydelse på naturen på et langt mere dybtgående og detaljeret niveau: Gensplejsede afgrøder bliver det nye normale, vi vil kunne dyrke organer, udvælge børn med attraktive gener og forlænge levetiden radikalt. Men teknologien kan også bruges til terror – eller bare uden forståelse for konsekvenserne.

På kanten

Der er der desværre ikke gode nyheder om klimaet. Vi går imod de værst tænkelige udfald, og vi er nødt til at forholde os til truslen nu, siger Gore. Vi får snart rigeligt at gøre med at tilpasse os til store forandringer og udfordringer, men samtidig er vi nødt til at få stoppet årsagen til katastrofen. Der skal sættes pris på CO2, i form af skatter, skatteregulativer og handelskvoter. Al Gore håber på teknologiske fremskridt og at vi kan skabe den samme hastige udvikling af bæredygtig energi, som vi har set indenfor computere og bioteknologi.

Ord, der trænger til en opstramning

Det er forbløffende, hvordan mange af de helt centrale ord, der definerer vores kultur har meget forskellig betydning, alt efter hvem man er.

Vi bruger ord som vækst, kvalitet, fællesskab, demokrati og kreativitet til at beskrive, hvordan vi ser verden hænge sammen, men det, vi forstår ved begreberne, kan være vidt forskelligt.

Resultatet er en kommunikation, hvor vi kan sige og høre de samme ord, selvom vi hver især mener noget forskelligt.

Faktisk kan betydningerne af nogle ord – vækst, eksempelvis - være direkte modsatte. Resultatet er at man kan anstrenge sig for at realisere én opfattelse af vækst, samtidig med at man forringer mulighederne for at opnå det, andre forstår som vækst.

Når et ord bliver udvandet eller det får en ny betydning, indebærer det, at det oprindelige begreb, som ordet beskrev, bliver vanskeligt at tale om.

Der er grundlæggende ord i vores kultur, som har fået så forskellige og brede anvendelser, at de ikke længere er præcise nok til at handle efter.

Der er ord for centrale ideer, der historisk har fået en bagage af associationer, som gør, at ordet i sig selv afskrækker mange fra at overveje det bagvedliggende begreb.

Endelig er der ideer, forhold og mekanismer der først netop er opstået, ellers som vil præge verden fremover, men som endnu ikke har fået et alment kendt ord, der gør det muligt for de fleste at diskutere og tænke på det.

Uden mere præcise forståelser af de ord, vi bruger, risikerer vi at forværre de problemer, vi vil løse. Uden de rette ord, kan vi ikke beskrive vores visioner.

Ved at diskutere ordene, giver vi dem mening og får selv mening. Vi skaber redskaber til at skabe forandring.

Hvad mener vi egentlig med….?

- Kreativitet

- Fællesskab

- Demokrati

Utilstrækkeligt i forhold til realiteterne og tidens problemer

- Forbrug

Forbruger, mindset og rolle, i modsætning til borger

Deltagelse, openness, sharing

- Frihed

Til hvad, for hvem

- Ansvar

Påtage sig ansvar, ansvarlig, i modsætning til u-ansvarlig

- Integration

Forpligtelse, Interdependence, indbyrdes afhængighed, connectivity

- Vækst

Udvikling, produktivitet, velstand, effektivitet

- Kvalitet

Nytte

- Lighed

Polarisering, mangfoldighed

Attention is the first resource that we will run out of

We create all this stuff, but we can barely find the time to use it – because we are so busy creating even more stuff.

And now the economy is crashing and unemployment is rising because we can’t consume fast enough to keep production growing.

It’s seems that the first resource, which we are running out of is attention. We can’t overcome to consume enough to keep up growth.

It’s a weird, backward logic – but it’s real, for now.

The more we have, the less we appreciate additional growth. It takes more to make us happier – while on the other hand, we need to run even faster and put even greater strains on the planet’s resources to increase consumption.

At some point it implodes, when gains are clearly losses.

Two ways of growing: Taking or sharing

It seems there a basically two different ways of growing:

- You can acquire more of something that already exists – in some cases by taking it from others – or:

- You can combine your resources with the resources of others, and, with a bit of luck, something extra and completely new will emerge through your interactions.

In other words: you can play a zero-sum game, where resources are finite, and your gain is someone else’s loss – or you can enter a non-zero-sum game, in which the entire pool of resources grows for all participants.

It’s a classic dilemma: Should you try to make the most of the situation for yourself, or should you share in the hope that you will be better off as part of a community.

My argument would be that we are moving towards more cooperation. It’s generally becoming a better deal to share.

Two trends in particular are changing the balance:
1)There’s a growing scarcity of resources, and 2) we’re increasingly connected.

Consequently, we are becoming much more interdependent – and I think that we are all becoming more aware of this reality.

We’re clearly approaching the limit to how much strain we can put on nature’s resources. The planet was once infinite for us, now it’s getting tight, so the battle for resources is evident - as the rising prices indicate.

This situation will only tighten. As we move along, we can either try to conquer from others – or we can cooperate to develop smarter ways of creating utility, expanding our possibilities through shared innovation.

One could argue that cooperation and sharing is how new true growth can happen. This is the amazing and hopeful insight of complex systems; that in the interaction between the elements of a system, something completely new can emerge – something, which is more than the simple sum of its parts.

It’s like magic, yet it’s completely normal, and it’s what drives this whole evolution onwards to new levels of complexity.

We need that kind of growth desperately these days, and luckily, it’s becoming much easier, cheaper, faster and efficient to share – not least because of digital networks, but also thanks to roads, shared language and culture, technical standards, trade agreements etc.

Furthermore, the fact that a large part of the value of our economy resides in bits means that in a great deal of our interactions, we don’t have to give up what we have when we share it with others. The cost of sharing is falling, as is the cost of connecting to others.

All told, there are strong indicators that sharing is becoming a more attractive strategy.

Is it productive to consume?

What does "productive" mean, anyway?

Virtues of the formal economy: There are reasons for having taxes and regulations

The ideas of the ”mesh” economy and ”collaborative consumption” are to create services built on shared access and shared maintenance of goods. Lots of businesses are based on this: Hotels, rental cars, car sharing, and airlines… What’s new is how digitization, urban density and a tight economy makes it possible to share many more things: Tools, sports equipment, car rides, little chores like shopping or assembling IKEA furniture.

In a sense it is a very efficient market: if someone has idle capacity, it can be offered to others and used easily and quickly and with a minimum of regulatory hassle and paperwork. Wonderful!

However, there are a few dilemmas that arise as the exchange becomes less formal, and you start doing a lot of peer-to-peer exchange and bartering.

In many ways it's the good old moonlighting economy, but digitally enhanced – and the trouble with moonlighting is that you can’t collect taxes from it, and there’s no way to enforce society’s normal regulation.

So, if you believe in having a well functioning and adequately funded public sector, good roads, public healthcare and education – or if you believe in regulation to keep track of pollution and unsafe working conditions – or if you believe in trade unions to protect decent wages and blatant exploitation of those who are too weak to negotiate – well, then you might feel that a growing informal sector is undermining the rights that others have fought hard to ensure over the past century.

It’s a paradox that the mesh economy is seen as a way of strengthening local communities and building stronger social interaction – but at another level, you can argue that it short-circuits the building blocks of society as a whole.

I have no doubt that the current commercial system, and our current way of regulating business and interactions is too rigid and often counter productive. Mesh-style initiatives are needed to challenge and explore.

But going local shouldn’t mean ignoring your obligations to contribute to society at the greater level.

A Laundry list of paradigms that are coming to an end

We will see less of this in the years ahead:

- The era of plenty oil and non-renewables ressources

- Ir-responsible consumerism – The freedom to do whatever you can pay for

- Analog media

- Reductionism

- Industrialism, one-way broadcasting

- The American/Western era

- Me-thinking

Work less hours

We’re hearing all the time that we need to work more, yet unemployment is high – as are stress levels among those who are fortunate to have a job. The new economics foundation (nef) in London recently published a report examining the case for a 21-hour workweek. It’s a radical idea, but in many ways it makes a lot of sense – if you are willing to examine some of the fundamental assumptions in our economy closely.

The launching of the report was marked by a lecture at the London School of Economics from Juliet Schor, Lord Skidelsky and Tim Jackson, all three of them who have been challenging the usual growth model very convincingly.

I can recommend the podcast from the event, it’s very refreshing to hear basic concepts like equality, growth, and well being and productive turned on their heads.

Juliet Schor summarized the three benefits of working shorter hour as:

• shorter hours lead to lower unemployment and more job creation

• shorter hours reduce ecological and carbon footprints

• shorter hours give people more free time, reduce stress, enhance family life and community.

Tim Jackson has a nice comment on the ways that advertising and rampant lending worked, untill very recently:

”We can provide you with money that you don’t have to buy stuff that you don’t need, to create impressions that won’t last on people that you don’t care about. It’s pathological”.

As so often, it boils down to a very fundamental uncertainty and re-thinking of what we want to achieve – how do we define the good life.

Lord Skidelsky is working on it, he’s writing a book, and so far he has summarized it in 7 components:

Health, security, respect and dignity, personality, friendship, harmony with nature and leisure.

The economic outlook as seen from Davos

There are always some amazing panel sessions at Davos, and luckily we mere mortals can tune in via the World Economic Forum website. One of the heavy-duty sessions was about the economic outlook for 2012; with participation from a handful of the central players determining what will happen.

Martin Wolf, of the Financial Times chaired the panel, and started off with a few salient points to set the stage for the discussion.

He started out by observing that "The mood in Davos is that people are feeling relief in the way that somebody who has just been reprieved form hanging feels a relief. In stead of feeling the immanent prospects of catastrophe, there is a sense that things have been done which have eliminated very substantially the immediate risk of disaster, particularly in Europe, particularly because of the activities of European central bank, although not exclusively so. And that therefore we can start to think about the slightly longer term, which means the next few months, or perhaps even longer.

Martin Wolf then pointed out that the current economic crisis has been going on for nearly 4,5 years now, and by the time we reach September, according to IMF's forecasts, Chinas economy will have expanded by 60 percent over the past 5 years, the Asian developing and emerging countries, which are half the worlds population will have expanded by 50 %, the emerging world by about 35% and the developed world by essentially zero. So these 5 years will have seen the most extraordinary and unprecedented speed of transformation of the relative weight of countries.

Diminishing returns of material goods and happiness

One of the lessons of the many studies of happiness is that the more you have already, the more it takes to make you happier. In that sense, we’re on a curve of diminishing returns, which drives us to exponentially higher levels of consumption in order to satisfy our desire for happiness.

Meanwhile, the planet’s natural resources are in overshoot. We’re extracting more and faster than the biosphere can re-generate. The fat, virgin sources of materials are getting depleted, and we’re moving to the margins, where it gets ever more costly – in terms of money and disruption – to extract resources.

We’re in a pinch; we need much more to feel happier, but it’s getting harder and harder to produce it.

Same words, different meanings

Fascinating, how many of the core words that define our culture have very different meanings, depending on who you are.

We use words like growth, quality, community, democracy and creativity to describe our aspirations, but we hear different meanings behind the concepts.

You can describe very different realities with the exact same words.