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Command and Control vs. Nature and Feedback

July 13, 2013 -- I am a great believer in natural self-balancing systems. The heart of natural systems is the feedback loop.  For example each year nature produces too many wildebeests, about a half million. These ugly second cousins of cattle find their numbers cut in half each year as they migrate across the Serengeti plane as a sort of thundering-heard-buffet for predators higher up the food chain.  In years with a bumper crop of wildebeests are followed by years with abundant predators. In years of drought animals herds, up and down the food chain, thin out. The system is robust, adaptable and unfortunately, like much of nature, brutal. A poet speaks of the circle of life -- but the reality is blood thirsty lions tear flesh from bones, and vast herds die of painful thirst or starvation.

Feedback loops are everywhere. They are in our thermostats keeping us comfortable; they (at least briefly) entertain us with toys like the little bird shown here -- that appears to drink randomly from a glass. Feedback is used in navigation systems that guide spacecraft and in radios to keep stations locked in. It guides trends in fashion and politics making hemlines rise and fall and agendas both right and left wing slide in and out of fashion.

Feedback is not just for simple systems, anyone who went through puberty is familiar with how complex the human hormone system is and what happens when it is destabilized.

In what is today known as Gabon in Western Africa there are seventeen nuclear fission reactors. They are remarkable because they spontaneously began operating around two billion years ago, and they continued to operate in a stable manner for up to one million years. Further, at the Gabon
reactors many of the radioactive products of the nuclear fission have been safely contained for two billion years. Nature designed these reactors using feedback. Some prior unstable versions either mealteddown or failed to achieve reaction.  Human attempts at creating atomic reactors have not been as successful as these self-stabilized reactors. To date human designs have had at least seven major accidents with fatalities and have never solved the waste storage issue.

When feedback is in balance it is like a fast spinning top, when it looses balance it wobbles uncomfortably either ending in a return to balance or some kind of death of the system. The beauty of feedback is that it is simple and robust. A vast forest can run itself indefinitely, yet a tiny patch of lawn in front of a house is a never ending unstable system, requiring fertilizer, mowing, watering, weeding and repeatedly patching dead spots.

Humans are good at unbalancing systems. We all know the devastation introducing a new species into an eco-system can have. Bunnies are cute and tasty so human settlers brought them to run wild on islands without predators, multiplying until they starve. Rabbits were brought to New Zealand and released for both food and sport at various sites as early as the 1830s. Once rabbits became established, their population increased to plague proportions several times. The first rabbit plague began in the early 1870s and the most recent began in the late 1980s. Rabbits have cost New Zealand many millions of dollars, through the direct cost of controlling them, and the loss of production from farms. Their impact has been little short of an ecological disaster, as the vegetation grazed off by rabbits has never recovered. The worst affected areas – once well covered with, grasses and shrubs – now have very little vegetation cover, which has led to soil erosion by wind and rain. The loss of soil has left areas where only the hardiest colonizing plants will now grow. Burrowing by rabbits in some soil types and on steep slopes has also led to soil erosion. Similar meddling has introduced weeds and insects adversely changing the area they are introduced to.

It took us over one hundred years of managing forest fires and parks to learn suppressing small fires such as from lighting strikes was creating unhealthy forests. These became vast tinderboxes that spawned massive destructive super wildfires. Routine small-scale fires are a natural and important disturbance in many temperate forests, and this is seen in plant adaptations such as thick bark, which enables a species to withstand or resist recurrent low intensity fires, while less well-adapted associates perish. Forest rangers failed to understand that Pine trees have late-opening cones. While closed, these cones hold a viable seed bank in the canopy that remains protected until fire affects the tree. After fire, the cone scales open, releasing the seed into a freshly prepared ash bed. Without this natural regeneration old forest stagnate and animals have a less viable habitat on the forest floor. Once again we thought we were protecting forest when really were harming them. 

In the 1980’s Computer Aid Design Software became sophisticated enough that it could model engineering forces like, stress, shear and moments. However when The famous Notre Dame Cathedral was modeled the modern engineering math said the structure would not work. In  other words the Masons of the mid 1600 knew something that had been forgotten. Historians began to look into how the building was created. The Notre Dame Cathedral was among the first buildings in the world to use the flying buttress (arched exterior supports). The building was not originally designed to include the flying buttresses around the choir and nave. After the construction began and the thinner walls (popularized in the Gothic style) grew ever higher, stress fractures began to occur as the walls pushed outward. In response, the cathedral's architects built supports around the outside walls, and later additions continued the pattern. Some supports fell down, while others held. The designs that were stable became the standard for the rest of the supports. This is an example of organic design based on natural feedback. There was no powerful math, just trail and error, leading to an efficient effective design. Feedback once again was the simpler and more effective answer. 

People who work in certain reality based professions must be very prosaic about the process – there work demands this. Policemen, Nurses, Collection Agents, Judges, Auditors and even Assassins require a certain professional distance from the people they become involved with, in order to do their job. These professions contribute the vital feedback in our society that keeps it in a fine balance.   

Human emotional and moralistic norms often compel us to interfere with balanced systems without understanding the full consequences. This is often is what unbalances economic systems. For example in a capitalist economy, housing price rise and fall based on supply and demand, so does food, fuel and clothing costs. The system is elegant and self-regulating. In a command economy prices are set by an all-knowing central control committee. In Cuba that ratio of what rent, tomatoes, gasoline and pants sell for is very different than here. India has been enjoying an economic boom, with steady job growth and a rapidly growing economy. Yet the government is nearly bankrupt because it cannot muster the political will to eliminate fuel subsidies. India is clogged with inefficient polluting vehicles because fuel subsidies have removed any incentive to conserve fuel, upgrade vehicles or to use public transit. In Portugal youth unemployment for the summer tourist season of 2013 has passed 50% but the local bars and cafes cannot find staff because the socialist state welfare is so lucrative and tipping in socialist Portugal is considered bourgeoisie. In Both India and Portugal the problem is clear -- but the governing politicians are unable to get past the deep emotional ties these subsides are linked to. 

You can see many examples of how taking feedback out of a system ruined many government controlled economies. For example in the United States feedback from supply and demand created the Fox television network. The news is biased and reactionary the entertainment is rude crude in your face blatant bad taste. It is by all measures a bad product -- but it is financially successful because it has viewers in large numbers. In January of 2002, Fox News surpassed CNN in total viewers and held its lead. Meanwhile on the other side of the globe, in a command and control economy we have Bolshoi Ballet, one of Russia’s national symbols. It has an annual government subsidised budget of $120 million. The theatre reopened in October 2011 after a five-year, $1.15 billion renovation that had been a personal pet project of former president and current Prime Minister Dmitri Medvedev. Despite all these taxpayer patronage, attendance is down, often playing to a half-full house and in five years they do not “entertain” as many views as the Simpson’s do in any one episode.

We have all heard the socialists and their cries for more funding of the arts. One over educated intellectual snob even told me that people should be forced to listen to classical music. Every developed country has its bit of socialist funding for so called “quality” information and entertainment. American PBS, the UK has the BBC and Canada has the CBC. There are also numerous corporate sponsors of ballet, orchestras, opera and museums. Even some success in the private sector with shows like cirque du soleil. But still the facts remain clear that more people enjoy WWF and Nascar than museums. Many more people will pay $300 to hear the Rolling Stones or Justin Bieber and they don't line up to listen to baroque or Rachmaninoff.  The feedback loop of viewer choice is telling you something - something that some people don't want to hear -- to quote Don Henley “We all know that crap is king”.

In the early 1990’s Canada and US deregulated long distance billing. Despite dire warnings from phone companies like AT&T and Telus, that without long distance revenue, land line home phone rate would top $200 a month -- in fact the opposite occurred. Landline rates dropped and deregulation in the long-distance sector has shown that competition is a key factor in keeping telephone service prices low. Domestic prices for long-distance calls have dropped from an average of $2 a minute in 80’s, to approximately 5 cents a minute today. And these price decreases occurred mostly in 1998 and 1999. That’s just after the CRTC deregulated the long-distance rates of the former monopolies.

Not all moves to free market systems go smoothly. In fact often what goes wrong in these transitions is that only part of a system can be deregulated. For example Enron convinced many regional government including Alberta and California that power deregulation would bring with it the same benefits that long-distance deregulation did. This was doomed from the start. The system was split between energy production and power line infrastructure. Under the new system energy would be competitive but power lines could not be run twice so that was to stay a monopoly. The power companies all fought to control their traditional lines and kept charging under continued regulation what they always had. The energy production was split among players and sold to the grid by an auction process. Efficient plants like big coal plants bid low and ran 24/7 as demand crept up the price would rise and less efficient plants, at higher prices, would come on the grid. That was the theory. The reality was very different; the middle efficiency plants would refuse to come on line until the price swung out of control then they would come on. Some plants could not start up quickly and the system was gammed to convince them to shut them down prematurely at key times and then over charge for power while they scrambled to come back on line. Despite having all the components of an adequate and functioning power grid, there were blackouts and sharp price increases. 

If a small business is unable to adjust the realities of the market make it disappeared. It is a delicate balance. Enterprises have been destroyed by both, lavish overspending and by penny pinching overt cost cutting. Businesses fail quickly when they misdirected finances or misunderstandings the trends and conditions. 7 out of 10-business fail to complete their first year, they are the still born of the business world, often starter by the over optimistic or the outright delusional.  All private enterprise must answer to the harsh mistress of the marketplace, that is why it works so well. 

Business that are over financed by benevolent venture funding or are protected by government sponsorship may endure longer but they never become world class. They fail to learn to compete. The list is endless of organizations that are limping bureaucracies, because they are not subject to market feedback. French automobiles, British banks, American trains, Landline phones in Thailand, Italian and Spanish Airlines, subsidised farming almost anywhere in the west, real estate development in Dubai, Ferry service on the Canadian west coast, Natural gas development in Russia, Construction companies in Japan.

In the public sector you have no real feedback. If too many civil servants are stamping forms, you don't layoff, you adjust the budget and move on. If the Union negotiates too hard, there is little political will to fight, simple give in. Unless you reach a breaking point like Greece the bureaucracy just builds and metastasizes. This is at the core of why communist countries and dictatorships do little more than kick money up to the leaders. Free Press and Elections are not a perfect feedback system, but at least it is some feedback.

When I worked in the department of Education (finance division) we were always faced with these politically correct dilemmas. There were large numbers of children with physical and emotional disabilities who were unable to function in the school system. Their parents saw the treasury as a bottomless pit of cash that cruelly turned away their children. A ground swell of media attention required the minister to pour ever-increasing portions of the education budget toward these students. Some of these students required two full time aids to help them do their schoolwork and navigate the schools. What the public did not see, that we who ran the chequebook could clearly see, is the harm the rest of the students -- without them even knowing it.  A promising group of thirty athletes did not know the school was suppose to get a better gym – instead it got an unused wheelchair ramp. Some gifted computer wiz kids did not have access to machines, a struggling student was not able to get more attention because we had to raise the student to teacher ratio. But the truth in government is the minister cannot be accused of tossing even a small number of kids in wheelchairs out of the schools, regardless how many others suffer.  Don't get me wrong the answer is not forgetting about those that fall behind, I am just saying that emotional issues are tough, they are not just one sided and political solutions are imperfect because they often hurt the parties who are not aware they are being held back. There is no free lunch.

Some called World War II the “last good war”. What they meant was that it was an all out war. The objectives were clear and the conflicts unbridled, in a winner take all battle of ideologies. The Wars that followed had many conflicting agendas. The Korean war technically never ended. In the Vietnam war the superpowers fed arms to the local sides in attempt to fight each other but not openly as this could lead to nuclear war. Secretary of Defence Robert Strange McNamara oversaw the US effort. He was a former Harvard professor, his is speciality was accounting and control. He demanded and got a vast array of reports and statistics from up and down the command chain. Enemy dead body counts, miles or road taken, ammunition expended, bridges controlled the list was endless. Retired Army general, Douglas Kinnard, published a landmark survey called The War Managers that revealed the quagmire of quantification. A mere 2 percent of America’s generals considered the body count a valid way to measure progress. “A fake—totally worthless,” wrote one general in his comments. “Often blatant lies,” wrote another. “They were grossly exaggerated by many units primarily because of the incredible interest shown by people like McNamara,” said a third general.

In retrospect the whole war was run on a broken feedback system. Data collected was inflated at each level of the command chain. It also resulted in certain military targets being lost and retaken over and over again just to meet quotas. There is a great truth in what HP founder Bill Hewlett used to say, “What get measured gets done” but they also said you had to be careful what you measured. Vietnam was a humiliating triumph of bureaucracy over getting down to the business at hand.

McNamara made a mistake as old as time. Setting objectives and expecting ridged results in the field to fulfill the master plan and never questioning if the results were what you really set out to achieve.

Systems based on pure feedback are ruthlessly and efficient but once stabilized they are rugged and stable. Human intervention has always run counter to this as we try to invoke our emotions, our perceptions and our will on chaotic systems. These unnatural systems seldom achieve long term success.