Professor Dirk Helbing of ETH Zurich’s Risk Center clearly missed the 20th century.
The media release is below.
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Global networks must be redesigned
Our global networks have generated many benefits and new opportunities. However, they have also established highways for failure propagation, which can ultimately result in man-made disasters. For example, today’s quick spreading of emerging epidemics is largely a result of global air traffic, with serious impacts on global health, social welfare, and economic systems.
Helbing’s publication illustrates how cascade effects and complex dynamics amplify the vulnerability of networked systems. For example, just a few long-distance connections can largely decrease our ability to mitigate the threats posed by global pandemics. Initially beneficial trends, such as globalization, increasing network densities, higher complexity, and an acceleration of institutional decision processes may ultimately push man-made or human-influenced systems towards systemic instability, Helbing finds. Systemic instability refers to a system, which will get out of control sooner or later, even if everybody involved is well skilled, highly motivated and behaving properly. Crowd disasters are shocking examples illustrating that many deaths may occur even when everybody tries hard not to hurt anyone.
Our Intuition of Systemic Risks Is Misleading
Networking system components that are well-behaved in separation may create counter-intuitive emergent system behaviors, which are not well-behaved at all. For example, cooperative behavior might unexpectedly break down as the connectivity of interaction partners grows. “Applying this to the global network of banks, this might actually have caused the financial meltdown in 2008,” believes Helbing.
Globally networked risks are difficult to identify, map and understand, since there are often no evident, unique cause-effect relationships. Failure rates may change depending on the random path taken by the system, with the consequence of increasing risks as cascade failures progress, thereby decreasing the capacity of the system to recover. “In certain cases, cascade effects might reach any size, and the damage might be practically unbounded,” says Helbing. “This is quite disturbing and hard to imagine.” All of these features make strongly coupled, complex systems difficult to predict and control, such that our attempts to manage them go astray.
“Take the financial system,” says Helbing. “The financial crisis hit regulators by surprise.” But back in 2003, the legendary investor Warren Buffet warned of mega-catastrophic risks created by large-scale investments into financial derivatives. It took 5 years until the “investment time bomb” exploded, causing losses of trillions of dollars to our economy. “The financial architecture is not properly designed,” concludes Helbing. “The system lacks breaking points, as we have them in our electrical system.” This allows local problems to spread globally, thereby reaching catastrophic dimensions.
A Global Ticking Time Bomb?
Have we unintentionally created a global time bomb? If so, what kinds of global catastrophic scenarios might humans face in complex societies? A collapse of the world economy or of our information and communication systems? Global pandemics? Unsustainable growth or environmental change? A global food or energy crisis? A cultural clash or global-scale conflict? Or will we face a combination of these contagious phenomena – a scenario that the World Economic Forum calls the “perfect storm”?
“While analyzing such global risks,” says Helbing, “one must bear in mind that the propagation speed of destructive cascade effects might be slow, but nevertheless hard to stop. It is time to recognize that crowd disasters, conflicts, revolutions, wars, and financial crises are the undesired result of operating socio-economic systems in the wrong parameter range, where systems are unstable.” In the past, these social problems seemed to be puzzling, unrelated, and almost “God-given” phenomena one had to live with. Nowadays, thanks to new complexity science models and large-scale data sets (“Big Data”), one can analyze and understand the underlying mechanisms, which let complex systems get out of control.
Disasters should not be considered “bad luck”. They are a result of inappropriate interactions and institutional settings, caused by humans. Even worse, they are often the consequence of a flawed understanding of counter-intuitive system behaviors. “For example, it is surprising that we didn’t have sufficient precautions against a financial crisis and well-elaborated contingency plans,” states Helbing. “Perhaps, this is because there should not be any bubbles and crashes according to the predominant theoretical paradigm of efficient markets.” Conventional thinking can cause fateful decisions and the repetition of previous mistakes. “In other words: While we want to do the right thing, we often do wrong things,” concludes Helbing. This obviously calls for a paradigm shift in our thinking. “For example, we may try to promote innovation, but suffer economic decline, because innovation requires diversity more than homogenization.”
Global Networks Must Be Re-Designed
Helbing’s publication explores why today’s risk analysis falls short. “Predictability and controllability are design issues,” stresses Helbing. “And uncertainty, which means the impossibility to determine the likelihood and expected size of damage, is often man-made.” Many systems could be better managed with real-time data. These would allow one to avoid delayed response and to enhance the transparency, understanding, and adaptive control of systems. However, even all the data in the world cannot compensate for ill-designed systems such as the current financial system. Such systems will sooner or later get out of control, causing catastrophic man-made failure. Therefore, a re-design of such systems is urgently needed.
Helbing’s Nature paper on “Globally Networked Risks” also calls attention to strategies that make systems more resilient, i.e. able to recover from shocks. For example, setting up backup systems (e.g. a parallel financial system), limiting the system size and connectivity, building in breaking points to stop cascade effects, or reducing complexity may be used to improve resilience. In the case of financial systems, there is still much work to be done to fully incorporate these principles.
Contemporary information and communication technologies (ICT) are also far from being failure-proof. They are based on principles that are 30 or more years old and not designed for today’s use. The explosion of cyber risks is a logical consequence. This includes threats to individuals (such as privacy intrusion, identity theft, or manipulation through personalized information), to companies (such as cybercrime), and to societies (such as cyberwar or totalitarian control). To counter this, Helbing recommends an entirely new ICT architecture inspired by principles of decentralized self-organization as observed in immune systems, ecology, and social systems.
Coming Era of Social Innovation
A better understanding of the success principles of societies is urgently needed. “For example, when systems become too complex, they cannot be effectively managed top-down” explains Helbing. “Guided self-organization is a promising alternative to manage complex dynamical systems bottom-up, in a decentralized way.” The underlying idea is to exploit, rather than fight, the inherent tendency of complex systems to self-organize and thereby create a robust, ordered state. For this, it is important to have the right kinds of interactions, adaptive feedback mechanisms, and institutional settings, i.e. to establish proper “rules of the game”. The paper offers the example of an intriguing “self-control” principle, where traffic lights are controlled bottom-up by the vehicle flows rather than top-down by a traffic center.
Creating and Protecting Social Capital
“One man’s disaster is another man’s opportunity. Therefore, many problems can only be successfully addressed with transparency, accountability, awareness, and collective responsibility,” underlines Helbing. Moreover, social capital such as cooperativeness or trust is important for economic value generation, social well-being and societal resilience, but it may be damaged or exploited. “Humans must learn how to quantify and protect social capital. A warning example is the loss of trillions of dollars in the stock markets during the financial crisis.” This crisis was largely caused by a loss of trust. “It is important to stress that risk insurances today do not consider damage to social capital,” Helbing continues. However, it is known that large-scale disasters have a disproportionate public impact, in part because they destroy social capital. As we neglect social capital in risk assessments, we are taking excessive risks.
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As I stated in my immediately prior post, it is worse than simple tyranny, it is a path to inevitable total disaster for all. THAT is exactly the result covertly desired by the tyrants. More importantly, that is what makes tyranny attractive to them. They deeply resent the responsibility for being human and seek to destroy mankind and themselves in the process of getting even with reality for imposing that curse upon them. The power, control, and stolen wealth is nothing more than a smoke screen to hide that fact from everyone including themselves.
These global über-control ideas may sound attractive to the naïve progressives and utopians who somehow think they will be the controllers of everyone else, but to the rest of us, who don’t want then in control of us, it sounds like simple tyranny.
There is a fundamental principle of control theory: only requisite variety can can respond to the variety exhibited by the thing controlled and its environment. See: http://pespmc1.vub.ac.be/REQVAR.html In a system built of billions of active choosing agents each facing thousands of choices per day or hour, how can even well meaning top level “planners” acquire and process the necessary information in time to make right decisions for all? They cannot.
They will always be working with incomplete and easily misinterpretable information arriving too late to be valid or even useful for the current global context. The decisions they make will always be out of phase with the realities of most or all of the individual active choosing agents. Such a system will inevitably be unstable and will fail catastrophically due to countless parasitic positive feed back loops. This even with the best of intentions and most honest and honorable of planners.
How much worse would real world politically motivated planners such as those selected by a UN be? Horribly and disastrously worse. I contend that ANYONE who advocates top down command and control as a solution for anything knows this and it is collapse that they wish to achieve. In the process of fighting the instabilities, they will be forced to clamp down on variety until all there is is the stability of total collapse and death. See every top down planned economy that was ever attempted as cases in point.
I remember when people were truly alarmed at the notion that computers would “take over the world”. And *that* was back when they were using vacuum tubes.
Now, people *want* computers to take over the world, which is far more worrisome. That’s because these computers will be running programs — called ‘models’ these days — and these models will be written by people like Michael Mann.
I don’t think anyone doubts that Michael Mann would like to rule the world, and that he would prefer doing it with the use of normative/predictive models. This idea will of course have occurred to quite a few others with similar, and more obvious, aspirations. And likely they are inspired by a perceived success with climate models.
I apologize Gamecock for giving a false impression. I read just that paragraph and tried to make something intelligent of it. Epic fail actually. I like french dressing on my word salads.
He’s either tossing a few insincere bones to the de-centralize legions to throw them off or he’s honestly trying to show the potential (to him) downside of central –planning. Or like so much research today he just showcases both sides of a theory and doesn’t add much new data to either. Like an endless ‘on the other hand’ GOTO loop……
IOW, central planning has benefits (less overhead duplication for one, volumetric efficiencies in some areas, etc) but also limits in efficiency once the lines of communication to/from the field get too long/confused/translated/PC’d and the flexibility necessary atrophies into a large pile of rules and procedures that only benefit the planners. And central planning for central planning’s sake is usually what we associate what central planning actually becomes if left to the empire building gov’t types. And therein lies the problem: an otherwise reasonable solution to inefficiency becomes itself a self-perpetuating monument to inefficiency. Like the UN…
Considering the networked disasters of global environmentalism — malaria, poverty, freezing elders in the UK — or on smaller scales, like the Euro-zone, why would anyone deliberately build larger command-and-control networks?
Global trade is more like the Internet: lots of redundancy, many alternative paths, largely self-healing. Freedom and incentive produce answers.
Centralization increases the risk and magnitude of something going wrong. Nations & individuals would assume all is being taken care of by Big Daddy and would, therefore, take no precautions nor make preparations themselves. Recovery would also be far slower because no one besides Big Daddy would have anything to recover with, and he would be overwhelmed. Witness what happened in New Orleans, New Jersey, and NY. The States, cities, and individuals all assumed that Uncle Sammy was gonna take care of them, so they made few preparations, and they were overwhelmed.
Ditto the financial markets. Previously savvy/cautious investors have become increasingly susceptible to scams and frauds because they have come to believe that the SEC and its rules will protect them from fraud and that Big Daddy will bail them out if they lose money.
These scenarios are bad enough due to the natural behavior of people and groups (and their gullibility regarding politicians’ promises). Then add that that Big Daddy is incompetent, and there is real trouble
He kills his own argument. Global central control is as “top-down” as it gets.
I’m impressed with Ken and Jim. When I tried to read it, it was just word salad to me.
I assume it’s a call for fascism.
““Guided self-organization is a promising alternative to manage complex dynamical systems bottom-up, in a decentralized way.” — Not sure about the “guided” part of this, but it sounds like a pretty good description of capitalism. If, by “guided”, he means democratic capitalism, I’d be very inclined to agree. The problem though, is this guidance is usually left to unelected, very undemocratic elites.
he does make a few fair points re: “For example, when systems become too complex, they cannot be effectively managed top-down”.