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By Peter Cochrane, 5 January 2009 13:05

COMMENT

Compiled in my hotel room in Swindon UK and dispatched via a free wi-fi service

Christmas lunch seems long past and the decorations have been packed away until next year. It's a new year and I have been pondering the events of the last one and the past few decades. It has been abundantly clear for a long time that our politicians, bankers and managers in every sphere have failed to grasp a few essential basics.

So rather than put together a set of personal resolutions for the new year I thought I would post a wish list. I know it is a long shot but just suppose for a minute we could get them all to grasp the following fundamental concepts:

1. Everything in our universe is fundamentally non-linear
2. Chaos is the natural mode
3. Linearity is just a special case, or short-lived window
4. Everything is connected. Nothing is 100 per cent independent or isolated. The key to cause and effect is the degree of coupling and/or connectedness
5. Correlation does not imply causality
6. Technology is actively engaged in exacerbating points 1 to 5 above
7. To date we have no mathematics or computer models capable of dealing with points 1 to 6 in the general case and we have thus had to be very specific and focused
8. Making linear assumptions, hugely simplifying models, following hunches, assuming history is a good guide, dreaming up policies on the fly and guessing are fundamentally lethal in a world governed by points 1 and 2
9. We live in a closed system (Planet Earth) with finite resources

So what does it all mean? Let's address this with a few specific examples.

Example 1: Global warming

We all know that CO2 is the big problem and it is down to the pollution created by the human race, right? Wrong! CH4 (methane) is potentially a far bigger cause for concern. Not only is it far more difficult/impossible to control, it is present in our atmosphere to similar damage levels as CO2.

What is really worrying though is that the experts cannot agree just how much is in the atmosphere, where it all comes from and goes to, and worse, by what multiple it is worse as a greenhouse gas than CO2. The most commonly assumed number seems to be around 20 or 21 fold but I have found publications citing 60, and even 170-fold worsening factors. So depending on which figures you choose, CH4 is or isn't on a par with CO2.

The extremely crude planetary models we have seen to date make it impossible to say for sure what is happening. The net result is a 'change all the light bulbs and recycle everything society' based on very poor assumptions generated by questionable computer models and various well-meaning (or not?) political/scientific agendas.

We have known and understood a lot about the oil, and other base materials that have run down since the Club of Rome Reports in the 1970s. We have also known about the implications of overpopulation and limits to food production for at least three decades.

Given what we know, it is surprising to see huge investments in 'not a hope' transport, recycling and alternative energy schemes that actually exacerbate the very problems we are trying to address. Even worse, we have failed to fund the big programmes necessary to address the key problems and major opportunities that might just save the day.

Example 2: Money crisis
During the past decade we have had three big money problems caused by ignorance, fear, greed and the creation of false value. The dot-com Bust, the Enron/Worldcom Debacles and now the Sub-Prime Disaster are symptomatic of the same failure mechanisms. At a most fundamental level I figure ignorance and greed are the primary drivers in every case!

If our models for global warming are poor, then our models of the global banking system are 100 times worse - if they exist at all! In truth, no one knows how the system works but no one is willing to admit it, or confess to their ignorance, or even ask the question.

We have seen this situation building for a long time. From the Great Depression of the 1930's to Black Monday in 1987, there have been a lot of hints and near misses. Well hang on to your wallets because it ain't over yet - for sure we are going to see a lot more!

As the world gets more connected and reaction times get shorter, we are priming the planet for a series of 'limit cycle events' amplified by the fact that everything and everyone is online and reacting in near unison.

This has been evident in this latest banking fiasco initiated by fundamentally flawed business models driven by greed, and aided and abetted by the orchestration of the media and online banking. The result? Near synchronous money movements and investment decisions on a global scale resulting in a chaotic system collapse.

Example 3: Growth
Every academic, accountant, financier, banker, politician and manager I know has been brought up on a diet of 'growth is good'. But is continued growth sustainable? Well, no. It mostly appears to be unsustainable and bad for overall business and the planet.

Finite resources dictate that most sectors cannot grow continually on a global scale. The 'bit business' looks like it could be one exception provided the energy and materials sector can keep supplying.

Moore's Law may well be endless (for all intents and purposes) and our capacity to generate, transmit, store and use bits has no end in sight. At the same time the energy per bit demand is falling, and our software profligacy can be cut back by more than 99 per cent. We really don't require applications of greater than 1GB to write a letter or send an email - 1MB will do the job nicely!

Unfortunately, most other sectors like transport, food and material goods and services - the heart of GDP generation - are most certainly limited. And of course, so is the population of our planet. The biggest and most difficult changes for human systems are therefore going to be caused by the essential move to sustainable GDP generation and overall societal support.

The big problem is that no one has been educated and trained in such a task area, and the books haven't been written, the models have yet to be created and societal change has to be engineered.

In the past change on such a scale has typically taken more than a lifetime (or two) but I'm not at all sure that we have that luxury this time around.

The good news is our technology and our young people have both the will and, most likely, the fundamental tools to do the job. The bad news is that those politicians, bankers and managers in positions of power today don't!