Developing St. Petersburg

A View of the Redeveloped St. Petersburg Waterfront

St. Petersburg

Developing a Florida City’s Reputation

St. Petersburg was recently named as one of the top 52 places in the world to visit in 2014 by The New York Times: “…St. Petersburg is anything but stationary. With a redeveloped waterfront, a stunning Dali Museum, and sophisticated restaurants in place, the downtown energy is now heading up historic Central Avenue…”

This remarkable transformation from a sleepy home for retirees chatting on green benches to an international destination was sparked by the “Intown” Redevelopment Plan.

First adopted by the City Council in 1982, it is the most recent manifestation of the city’s policies that promote rapid development to accommodate an influx of people responding to a seemingly endlessly repeated message of “…the nation’s playground, a southern garden of perpetual well-being.” (Sitler, 2006) The city focused “…on economic development and organizing the city to provide the ideal conditions for consumer consumption and tourist recreation” since the area’s first railroad terminus was located in the city at the junction of 1st Ave South and 9th St. in 1888. (Salmond 2004)

“Intown’s” success contrasts sharply with the stubborn economic depression experienced by the residents living on the south side of St. Petersburg who have effectively been excluded from participating in or benefiting from, not only the current growth in the downtown area, but also from the economic growth of St. Petersburg.

In a belated attempt to address the social and economic problems of the south side of the city, following the approval of Pinellas County Board of Commissioners 2012 Workshop Session: The Economic Impact of Poverty, members of the County Commissioners and St. Petersburg City council began taking steps to authorize the Southside St. Petersburg CRA.

The longstanding economic malaise of the near south side of the city, coupled with the inability of other redevelopment initiatives to reverse their respective areas’ economic ill health, prompts concerns about the ability of the new Southside CRA to stimulate the desired economic changes for its current residents versus gentrification of the area. They also raise questions about the effectiveness of the underlying economic development policies and practices employed, as well as the goals, theories and assumptions on which they are based.

What, then, are the questions  we should consider to evaluate the effectiveness of redevelopment, and, if and when we determine the ‘answers,’ what should we do to achieve it?

That will be the subject of subsequent posts.

 

 

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Leverage Points

Changing the System Part II

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“The definition of lunacy,” Betalden adds, “is to keep doing what you’ve always done and expect different results.”

Now that we understand ‘system,’ how can we change the structure of the economic system to produce more of what we want, economic equality, and less of that which is undesirable, inequality?

One techniques to help understand how to change a system’s structure involves applying interventions at key leverage points, places in the system where a small change could lead to a large shift in behavior.  In “Thinking in Systems,” Donella Meadows enumerates, in ascending order, 12 key leverage points in terms of effect on the system.  Here are the top 6:

6.  Information flow – the structure of who does and does not have access to information.

Missing information flows is one of the most common causes of system malfunction.   Adding or restoring information can be a powerful intervention.  It’s important that the missing feedback be restored to the right place and in compelling form.   There is a systematic tendency on the part of human beings to avoid accountability for their own decisions.   An example is the rapid draining of the Ogallala Aquifir, an underground pool of fresh water that stretches from Northern Texas to Wyoming.  Closely related is the proposed Keystone XL pipeline, originally planned to pass thru areas of the Ogallala Aquifir, that is supposed to transport tar sands oil from Alberta to the oil refineries on the Gulf Coast of the US.

5.  Rules – incentives, punishments, constraints

The rules of the system define its scope, its boundaries, its degrees of freedom.  Constitutions are the strongest examples of social rules.  Laws, punishments, incentives and informal social arrangements are progressively weaker rules.  Rules are high leverage points.  Power over rules is real power.  If you want to understand the deepest malfunctions of systems, pay attention to the rules and who has the power over them.

4.  Self-organization – the power to add, change, evolve system structure

The power of self-organization (emergence) seems so wondrous that we tend to regard it as mysterious, miraculous, heaven sent.   Self-organization is basically a matter of an evolutionary raw material – a highly variable stock of information from which to select possible patterns – and a means for experimentation, for selecting and testing new patterns.  The intervention point here is obvious, but unpopular.  Encouraging variability and experimentation and diversity means “losing control.”  Self-organization produces heterogeneity and unpredictability.   It reqires freedom and experimentation, and a certain amount of disorder.  These conditions that encourage self-organization often can be scary for individuals and threatening to power structures.  As a consequence, education systems may restrict the creative powers of children instead of stimulating those powers.  Economic policies may lean toward supporting established, powerful enterprises rather than upstart, new ones.  And many governments prefer their people not to be too self-organizing.

3.  Goals – the goal or purpose of a system

“Right there, the diversity-destroying consequence of the push for control demonstrates why the goal of a system is a leverage point superior to the self-organizing ability of a system.  If the goal is to bring more and more of the world under the control of one particular central planning system (Wal-Mart), then everything further down the list, physical stocks and flows, feedback loops, information flows, even self-organizing behavior, will be twisted to conform to that goal…

“What is the point of the game?  To grow, to increase market share, to bring the world (customers, suppliers, regulators) more and more under the control of the corporation so that its operations becomes ever more shielded from uncertainty…to engulf everything…It’s the goal of cancer, too…

“That’s what Ronald Reagan did, and we watched it happen.  Not long before he came into office, a president could say “Ask not what government can do for you, ask what you can do for the government,” and no one even laughed.  Reagan said over and over, the goal is not to get the people to help the government and not to get government to help people, but to get government off our backs.  One can argue, and I would, that larger system changes and the rise of corporate power over government let him get away with that.  But the thoroughness with which the public discourse is the United States and even the world has been changed since Ronald Reagan is testimony to the high leverage of articulating, meaning, repeating, standing up for, insisting upon, new system goals.” – Donella Meadows

2.  Paradigms – the mind-set out of which the system – its goals, structures, rules, delays, parameters – arises

Paradigms are the sources of systems.  From them, from shared social agreements about the nature of reality, come system goals and information flows, feedbacks, stocks, flows, and everything else about systems.  You could say paradigms are harder to change than anything else about a system, and therefore this item should be lowest on the list, not second-to-highest.  But there’s nothing physical or expensive or even slow in the process of paradigm change.  In a single individual it can happen in a millisecond.  All it takes is a click in the mind, a falling of scales from the eyes, a new way of seeing.

So how do you change paradigms?  Thomas Kuhn, who wrote the seminal book about the great paradigm shifts of science, has a lot to say about that:

“You keep pointing at the anomalies and failures in the old paradigm.  You keep speaking and acting, loudly and with assurance, from the new one.  You insert people with the new paradigm in places of public visibility and power.  You don’t waste time with reactionaries; rather you work with active change agents and with the vast middle ground of people who are open minded.” – Thomas Kuhn

1.  Transcending paradigms

“There is yet one leverage point that is even higher than changing a paradigm.  That is to keep oneself unattached to the area of paradigms, to stay flexible, to realize that no paradigm is “true,” that every paradigm, including the one that sweetly shapes your own worldview, is a tremendously limited understanding of an immense and amazing universe that is far beyond human comprehension.” – Donella Meadows

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Taking a Systems View

“If a factory is torn down but the rationality which produced it is left standing, then the rationality will simply produce another factory. If a revolution destroys a government, but the systematic patterns of thought that produced that government are left intact, then those patterns will repeat themselves…There’s so much talk about the system. And so little understanding.”—Robert Pirsig, Zen And the Art of Motorcycle Maintenance.

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In Thinking in Systems, Donella Meadows uses a Slinky® to introduce a central concept about systems: that behavior is related to structure the way the elements and interconnections work together to achieve a function or purpose.   Systems aren’t just any old collection of things.  A system is an interconnected set of elements that is coherently organized in a way that achieves something.  For example, the elements of your digestive system include teeth, enzymes, stomach and intestines.  They are interrelated through the physical flow of food, and through an elegant set of regulating chemical signals.  The function of the system is to break down food into the basic nutrients and to transfer those nutrients into the bloodstream (another system) while discarding unusable products.  A school is a system.  So is a city, and a factory, and a corporation, and a national economy.

Systems produce the effects they do because of the way they are structured, the interconnections between elements, and their purposes.  The elements of a system are often the easiest parts of a system to notice because many of them are visible, tangible things.  The elements of a tree are roots, trunk, branches and leaves.   But before going too far in that direction, it’s a good idea to stop dissecting out elements and to start looking for the interconnections, the relationships that hold the elements together…Some interconnections in systems are actual physical flows, such as the water in the tree’s trunk or the students progressing through a university.   Many interconnections are flows of information – signals that go to decision points or action points within a system…

If information-based relationships are hard to see, functions or purposes are even harder.  A system’s function or purpose is not necessarily written or expressed explicitly, except through the operation of the system.  Purposes are deduced from behavior, not from rhetoric or stated goals.

You can understand the relative importance of a system’s elements, interconnections and purposes by imagining them changed one by one.  A tree changes its cells constantly, the leaves every year or so, but it is still essentially the same tree.  If you change the players of a football team performance is usually not significantly affected.  Change the rules of the game from football to basketball and you have, as they say, a whole new ball game.  Changes in purposes can be drastic.  What if you keep the players and the rules but change the purpose – from winning to losing?

 

steoy-behaviour

Systems fool us by presenting themselves – or we fool ourselves by seeing the world – as a series of events.  We are less likely to be surprised if we can see how events accumulate into dynamic patterns of behavior.  Long term behavior provides clues to the underlying systemic structure.

Leverage Points – Places to Intervene in a System

Systems can be complicated and surprising in the way they resist change.  Leverage points, the silver bullet, the trim tab, the miracle cure, are points of power that when engaged can cause changes to the system out of proportion to their relative size.  In descending order of influence:

  1. Transcending Paradigms – That no paradigm is ‘true,’ that every one, including your own, is a tremendously limited understanding of an immense and amazing universe that is far beyond human comprehension.
  2. Paradigms – The shared idea in the minds of society, the great big unstated assumption, constitute that society’s paradigm, or deepest set of beliefs about how the world works. E.g. Growth is good. One can ‘own’ land. The selfish actions of individual players in markets wonderfully accumulate to the common good. Paradigms are the sources of systems.
  3. Goals – The purpose of function of the system. The diversity-destroying consequence of the push for control demonstrates why the goal of a system is a leverage point superior to the self-organizing ability of a system.
  4. Self-Organization – The power to add, change, or evolve system structure. In biological systems that power is called evolution. In human economies it’s called technical advance or social revolution. The genetic code within the DNA that is the basis of all biological evolution contains just four different letters combined into words of three letters each. Intervening here is obvious but unpopular. Encouraging variability and experimentation and diversity means ‘losing control.’
  5. Rules – Incentives, punishments, constraints. As we try to imagine restructured rules and what our behavior would be under them we come to understand the power of rules. They are high leverage points. Power over the rules is real power.
  6. Information Flows – The structure of who does and does not have access to information. Missing information flows is one of the most common causes of system malfunction. Adding or restoring information can be a powerful intervention, usually much easier and cheaper than rebuilding physical infrastructure.

Systems work well because of three characteristics:

  • Resilience – the ability to bounce or spring back into shape, position, etc., after being pressed or stretched. Elasticity. Resilience arises from a rich structure of many feedback loops that can work in different ways to restore a system even after large perturbations. Because resilience is something that is very hard to see without a whole systems view, people often sacrifice resilience for stability or productivity or some more immediately recognizable system property.
  • Self-Organization – The capacity of a system to make its own structure more complex, to learn, diversify, evolve. Like resilience, self-organization is often sacrificed for purposes of short-term productivity and stability, the usual excuses for turning creative human beings into mechanical adjuncts in production processes. Self-organization produces heterogeneity and unpredictability. It requires freedom and experimentation, and a certain amount of disorder. These conditions often can be scary for individuals and threatening to power structures. Out of simple rules of self-organization can grow systems of great complexity.
  • Hierarchy – the arrangement of subsystems aggregated into larger subsystems, aggregated into still larger subsystems. E.g. A cell in your liver is a subsystem of an organ, which is a subsystem of you as an organism. Hierarchies evolve from the lowest level up. When a subsystem’s goals dominate at the expense of the total system’s goals, the resulting behavior is called suboptimization. Too much central control is just as damaging. To be a highly functional system, hierarchy must balance the welfare, freedoms, and responsibilities of the subsystems and total system – there must be enough central control to achieve coordination toward the large-system goal, and enough autonomy to keep all subsystems flourishing, functioning, and self-organizing.
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Simple, Complicated, Complex

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The creation of complexity from simplicity – Chris Madden

The term complexity was popularized in the mid-20th century by Warren Weaver. Weaver identified three broad categories of systems: simple, complicated, and complex.

Simple systems are made of only a few interacting inert objects like billiard balls or satellites. Complicated systems, like automobiles or airplanes, may have thousands of parts or more. However, once designed and built, even complicated instruments perform in very predictable, mechanical, ways. Bicycles, automobiles, and even robotic systems turn out to be everyday items whose degree of complicatedness we take for granted.

Early scientists –– Galileo, Descartes, and Newton – developed a set of analytic methods to reduce these simple systems to basic laws. Analytic methods were literally understood in terms of cutting apart all objects and all claims to truth to their root causes and assumptions in order to reassemble them into complete explanatory systems. These methods were so effective that by the early 1800s Laplace could assert:

“Given for one instant an intelligence which could comprehend all forces by which nature is animated and the respective situations of the being which compose it – an intelligence sufficiently vast to submit these data to analysis – it would embrace in the same formula the movements of the greatest bodies and those of the lightest atom; for it, nothing would be uncertain and the future, as the past, would be present to its eyes.”

In other words, there are no accidents; everything that is going to happen is determined by what has already happened, and everything that has already happened can be determined from current conditions.

Early in the 1900s, however, belief in analysis and the ability to predict the future and determine the past from present conditions began to be questioned.   French mathematician Henri Poincare’ explained that:

“…it may happen that small differences in the initial conditions produce very great ones in the final phenomenon. A small error in the former will produce an enormous error in the latter. Prediction becomes impossible.”

Complex* systems have features that are also complicated and may act in patterned ways, but whose interactions are constantly changing. An air traffic control system is complex because its functioning depends on many variables that keep varying, such as weather, aircraft downtime, peak loading, etc.

With complicated systems, one can usually predict outcomes by knowing the design (or having a detailed engineering manual at hand). In contrast, depending on the interplay of the elements in the system, complex systems may produce highly divergent outcomes.

It is impossible to predict the way a complex system will respond with sufficient accuracy. One is limited to establishing the conditions characteristic of a complex system that lead to emergence,** then working creatively at leverage points to change the configuration of the system until the desired ends are produced.

*For a system to be classed as complex, it must manifest several necessary qualities:

1. Emergence (self-organization)

Emergence (e.g. ants, birds flocking, human social groups) is a primary quality of a learning system where these collectives develop capacities that can exceed the possibilities of the same group of agents if they were made to work independently; where people that need not have much in common, much less be oriented by a common goal, can join in a collective group that seems to develop a clear purpose.

**The conditions for emergence:

  • Internal diversity—a source of possible responses to emergent circumstances. One cannot specify in advance what sorts of variation will be necessary for appropriately intelligent action.
  • Internal redundancy—the complement to diversity; enables the habituated, moment-to-moment interactivity of the agents that constitute a system.
  • Neighbor interaction—the neighbors that must interact with one another are ideas, hunches, queries, and other manners of representation.
  • Distributed control—one must relinquish any desire to control the structure and outcomes of the collective; one must give up control if complexity is going to happen.
  • Randomness—the structures that define complex social systems maintain a delicate balance between sufficient coherence to orient agents’ actions and sufficient randomness to allow for flexible and varied response.
  • Coherence.

2. Bottom up

Emergence is an example of “bottom up” organization; it does not require a “leader,” per se. Emergence is a paradox: a manifestation of a collective intelligence, but intelligent group action is dependent on the independent actions of diverse individuals. (“Intelligence” is the quality of exploring a range of possible actions and selecting ones that are well suited to the immediate situation; a repertoire of possibilities, and a means to discern the relative effectiveness of each possibility, not unlike creativity.)

  • Non-polarized groups can consistently make better decisions and come up with better answers than most of their members and…often the group outperforms the best member.
  • You do not need a consensus in order…to tap into the wisdom of a crowd, and the search for consensus encourages tepid, lowest-common-denominator solutions which offend no one rather than exciting everyone.
  • The rigidly hierarchical, multilayered corporation…discourages the free flow of information.
  • Decisions about local problems should be made, as much as possible, by people close to the problem…People with local knowledge are often best positioned to come up with a workable and efficient solution.
  • The evidence in favor of decentralization is overwhelming…The more responsibility people have with their own environments, the more engaged they will be.
  • Individual irrationality can add up to collective rationality.
  • Paradoxically, the best way for a group to be smart is for each person to act as independently as possible.

3. Scale-free networks

A so-called scale-free (decentralized) network, which consists of nodes nodding into grander nodes, usually on several levels of organization, is more robust than a centralized network because if a node were to fail, it is unlikely that the whole system will collapse.) A decentralized network will decay into a centralized network under stress. For example, when time is a scarce commodity, the most common organizational strategy is a central network with a leader or teacher as the hub and employees or students at the ends of the spokes. This works against the “intelligence” of the organization by preventing agents from pursuing their own self-interest and obsessions, preventing diversity of experience.

4. Nested organization

An immediate implication of a decentralized architecture is that distinct levels o of organization can emerge.

5. Ambiguously bounded, but organizationally closed systems

  • Complex systems are “open”; that is they are constantly exchanging matter and/or information with their contexts. In a situation where a collective is working on a project, it is rarely a simple matter to discern who has contributed what, especially if the final product is at all sophisticated.
  • Complex systems usually arise from and are part of other complex systems, even while being coherent and discernible unities. Where does an agent stop and a collective begin? The question is sometimes easily answered. After all the distinction between an ant and an anthill seems relatively straightforward. However, if one considers more complex systems, for example, and individuals personality, the situation becomes much more difficult.
  • Distinguishable but intimately intertwined networks can and do exist in the same “spaces.” Consider the relationship between one’s neural system and one’s system of understandings, both of which can be understood in terms of decentralized networks, but neither of which can be collapsed into the other.

6. Structure-determinism

Structured-determined behavior is one of the key characteristics used to distinguish a complex unity from a complicated (mechanical) system. The manner in which a complicated system will respond to a perturbation is generally easy to figure out, simply because its responses are determined by the perturbation. For example, if a block of wood is nudged, its response will be quite different than if you nudge a dog. The response will not be determined by you, but by the dog. What is more, not even experience with nudging will provide an adequate knowledge of what will happen if it is repeated—for two reasons. First, a complex system learns. That is, it is constantly altering its own structure in response to emergent experiences. Secondly, systems that are virtually identical will respond differently to the same perturbation. Hence one cannot generalize the results from one system to another…it problematizes the contemporary desire for “best practices” in education—a notion that what works well in one context should work well in most contexts. That only makes sense when talking about mechanical systems.

7. Far-from-equilibrium

Complex systems do not operate in balance; indeed, a stable equilibrium implies death for a complex system.

8. Short-range relationships

Most of the information is exchanged among close neighbors, meaning that the system’s coherence depends mostly on agents’ immediate interdependencies, not on centralized control or top-down administration. A “win-win logic”; an agent’s situation will likely improve if the situations of his/her/its nearest neighbors improve. A “we” is usually better than an “I” for all involved.

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A Perfectly Designed System

systems-thinking the perfect system

“A system is perfectly designed to get the results it gets.”Paul Batalden

Part III

Over the past 40 years the US economic system has been, and continues to be, systematically altered to funnel more and more of America’s wealth to the already rich, the “have-mores,” and away from the “have-nots.” The shift of wealth is accompanied by a commensurate shift of more and more economic and political power to the already powerful, undermining the foundations of democracy. If we want to live in a society where the people govern themselves, share the same rights and responsibilities, and decide for themselves how the products of the economy are to be distributed, we must learn to work together to define that society and create it.

A sense of progress toward ideals gives meaning to life and makes choice significant. The belief that the future depends on what we do between now and then enhances this quality.

Many of our problems derive from trying to get rid of a dissatisfaction we feel; for instance with the way the car is working , or how much a certain item costs. This is reactive problem solving, an effort to get rid of what we don’t want. We tend to respond more to our dislikes than our likes, more by our hates than by our loves. It often results in unforeseen consequences that may be worse than the original problem. For instance, DDT.

In proactive problem solving we decide what we want and try to create it. It reduces the likelihood that we will overlook the consequences of our solutions. When embedded in proactive planning, designing a future and finding ways to move toward it as effectively as possible is called idealized redesign. But no idealized design can remain ideal for long. The goal then is not an ideal state or system but an ideal-seeking state or system. Its designers need not have all the answers, but they should design into the system the capability of finding them. The redesigning is never complete. It is subject to continual revision in light of newly acquired information, knowledge, understanding, wisdom and imagination.

German philosopher Friedrich von Schiller believed that human development depends on the successful negotiation between contradictory forces of existence; in fact, there is “no other way to develop the manifold aptitudes of man than to bring them in opposition with one another.” For Schiller, these forces could indeed be harmonized in the balance between sensibility and reason that is the aesthetic condition, or what Schiller called the Spieltrieb. The character of Spiel is the will to play, the will to create, also the will to beauty. Creating must be playful, for according to Schiller, it is only in play that humans are really human. The domain of Spiel opens up, it seems, an aesthetic void, where the product created or even the time it takes cannot be scripted.

In the aesthetic condition the process of creativity or innovation can be thought of as knowledge “production;” as an ever-expanding space of possibility that is opened and enlarged simply by exploring the space of what is currently possible. A society for the future might be thought of as being oriented toward creating the as-yet unimagined – indeed, the currently unimaginable. Such a ‘goal’ can only be understood in terms of exploration of the current possibilities. Rather than focusing on perpetuating entrenched habits, society must be principally concerned with ensuring the conditions for the emergence of the as-yet unimagined.

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MORE, and MORE, and MORE, and MORE INEQUALITY

“If we keep doing what we have been doing, we’ll keep getting what we’ve always gotten,” – Paul Batalden

Income inequality in the United States has been growing for almost three decades.  A new study, an analysis of tax filings, shows that the income gap between the richest 1 percent of Americans and the remaining 99 percent widened to unprecedented levels in 2012. The top 1 percent of U.S. earners collected more than 19 percent of household income, breaking a record previously set in 1927.

Previous posts  The Grapes of Wrath and How Winner-Take-All Politics Created the Great American Inequality – describe how over the past 40 years the economic system was altered so that more and more of America’s wealth is funneled to the already rich, the “have-mores,” and away from the “have-nots.”  The already-wealthy’s siphoning off of a disproportionately large and ever increasing portion of America’s wealth forces more and more people into lives of poverty, frustration, illness, ignorance and domination.  Increasingly they are without the money they need to take advantage of opportunities to live the lives they want.  At the same time that a few very wealthy people enjoy lives of unimaginable privilege, the web of life that supports everyone’s existence is being destroyed.

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System structure is the source of behavior.  System behavior reveals itself as a series of events over time.

How to change the economic system to produce more of what we want, economic equality, and less of that which is undesirable, inequality?  Before we can start to make the changes we think will produce the benefits we want, we need to understand how the economic system actually works.  The first and most difficult step in this process is changing the way we think:

“I’ll believe it when I see it,” should actually be:  “I’ll see it when I believe it.” – Dr. Wayne Dywer

Trying to understand how people, the national economy, the nation’s wealth and the earth are affected by one another can be challenging if not impossible without thinking in terms of systems.  Systems aren’t just any old collection of things.  A system is an interconnected set of elements that is coherently organized in a way that achieves something; it must consist of three kinds of things:  elements, interconnections, and a function or purpose.  For example, the elements of your digestive system include teeth, enzymes, stomach and intestines.  They are interrelated through the physical flow of food, and through an elegant set of regulating chemical signals.  The function of the system is to break down food into the basic nutrients and to transfer those nutrients into the bloodstream (another system) while discarding unusable products.  A school is a system.  So is a city, and a factory, and a corporation, and a national economy.

Systems produce the effects they do because of the way they are structured, the interconnections between elements, and their purposes.  The elements of a system are often the easiest parts of a system to notice because many of them are visible, tangible things.  The elements of a tree are roots, trunk, branches and leaves.  But before going too far in that direction, it’s a good idea to stop dissecting out elements and to start looking for the interconnections, the relationships that hold the elements together…Some interconnections in systems are actual physical flows, such as the water in the tree’s trunk or the students progressing through a university.   Many interconnections are flows of information – signals that go to decision points or action points within a system…

If information-based relationships are hard to see, functions or purposes are even harder.  A system’s function or purpose is not necessarily written or expressed explicitly, except through the operation of the system.

You can understand the relative importance of a system’s elements, interconnections and purposes by imagining them changed one by one.  A tree changes its cells constantly, the leaves every year or so, but it is still essentially the same tree.  If you change the players of a football team performance is usually not significantly affected.  Change the rules of the game from football to basketball and you have, as they say, a whole new ball game.  Changes in purposes can be drastic.  What if you keep the players and the rules but change the purpose – from winning to losing?

Understanding the economy as a system is an important first step in decreasing economic inequality.  It does not get us all the way to our desired destination, however.  More about that in our next post.

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The Grapes of Wrath

GrapesOfWrath

“Tom, you gotta learn like I’m learnin’. I don’t know it right yet myself. That’s why I can’t ever be a preacher again. Preachers gotta know. I don’t know. I gotta ask.” – Casey in  “The Grapes of Wrath” (Movie)

“As a small percentage of the nation lives at the pinnacle of wealth, an increasing number of Americans are sinking into third world economic and living conditions – and being blamed for their plight… Shake a stick in post–financial collapse America, and one hits poverty. It’s everywhere: tent cities in municipal parks, under freeway overpasses, along river walks. Food lines stretching down city blocks. Foreclosure signs dotting suburban landscapes. Overstretched free clinics providing a modicum of healthcare to people no longer insured. Elderly people whose pensions have vanished and whose hopes for a decent old age have evaporated. Unemployed men and women looking for clothes for their kids at thrift stores and food for their families at pantries.” – Sasha Abramsky in The American Way of Poverty:  How The Other Half Still Lives.

In their ground-breaking book, “Winner-Take-All Politics – How Washington made the rich richer – and turned its back on the middle class,” authors Jacob S. Hacker and Paul Pierson identify the culprits behind the great economic crime of our time— the yawning, and still growing, income inequality gap between the vast majority of Americans and the richest of the rich.

They found that runaway inequality and the present economic malaise reflect how a political system that traditionally has been responsive to the interests of the middle class was hijacked by the super-rich.

Hacker and Pierson trace the rise of the winner-take-all economy to the late 1970s when, under a Democratic president and a Democratic Congress, a major transformation of American politics occurred with big business and conservative ideologues organizing themselves to undo the regulations and progressive tax policies that had helped ensure a fair distribution of economic rewards.  Deregulation got under way, taxes were cut for the wealthiest, and business decisively defeated labor in Washington.  The transformation continued under Reagan and the Bushes as well as under Clinton, with both parties catering to the interests of those at the very top.

The cause of the transformation is most often attributed to a memo written by Lewis Powell on August 23, 1971, to the US Chamber of Commerce that outlined his recommendations to the Chamber to combat what he felt was a serious “attack on the American enterprise system” by “leftists” and “perfectly respected members of society.”

During the Eisenhower and Kennedy administrations and continuing thru the mid-1960s, while America and The Soviet Union were locked in the Cold War, some American business leaders enjoyed places of privilege and responsibility in American society.  E.g. the so-called “Rockefeller Republicans.”   But by the late ‘60s, with President Johnson’ escalation of involvement in the Vietnamese War, more and more people began to perceive business as complicit in the war in order to help profits.  Business lost much of its cache’ of a contributor to social welfare.

After the war, reflected by the election of Ronald Reagan in 1980, business rode a resurgence of public acceptance of its values to increased political power.  Making lots of money became an accepted and valid goal in itself.   During this time a fundamental change in the way business was conducted steadily took hold in the business world.  Corporate officers jettisoned their affinity for social responsibility in favor of the single goal of making money.  Management to “meet the numbers,” epitomized by Jack Welch at GE, resulted in ever more severe policies to increase profits at the expense of people.

Over 40 years later a more sinister perspective of business emerges  as we are able to see and evaluate the accumulating effects on society of business’s fixation on profits at the expense of people:  a rapacious, no-holds-barred, champion of cancerous capitalism that in its quest for power and profits is literally destroying not only the American and world economies, but democratic government and the planet’s environment as well.

Business exceptionalism’  typically rationalizes this excess by invoking  the defense:  business/capitalism cannot be held responsible for its negative effects on people, society and the environment because it is the integral, sustaining, essential part of the American economy; it is responsible for allowing us to live the American Dream; business ‘efficiency’ must not be curtailed under threat of collapse of the American Way-of-life.

But its single-minded fixation on increasing profits at the expense of other social goals highlights the basic philosophical difficulty inherent in capitalism:    it is like a cancer.  To survive it must continually grow at the expense of its host.   It takes control of society, appropriates people and resources according to its requirements, but ultimately kills society.

In stark contrast, humanity cares about its members; it is concerned with and works to improve each individual’s welfare.  Humanity’s concern for its individual members is reflected in the way society and social institutions including schools and government are constructed so that they support this purpose.  As might be expected, the difference in philosophical purposes between capitalism and humanity results in dramatically different societies, with the latter resulting in far better individual welfare than the former.

This then, according to George Lakoff, is the battle between capitalism and caring, between hegemony and participation, between authoritarianism and freedom.  It is a stark contrast, but if freedom is to prevail, the battle must be waged on all possible fronts simultaneously.  The next posts will begin to explicate how that might be done.

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How “Winner-take-all Politics” created the great US inequality

The superrich have grabbed the bulk of the past three decades’ gains.

Still struggling in the wake of “the great recession,” average Americans are feeling frustrated, angry and betrayed. Their lives are not what they expected from the American economy. The continuing transfer of trillions (1,000,000,000,000′s) of dollars to the 1% of Americans who were  by far already the richest people living in the country, has left little reason to be optimistic about the future.

In their ground-breaking new book, “Winner-Take-All Politics – How Washington made the rich richer – and turned its back on the middle class,” authors Jacob S. Hacker and Paul Pierson identify the culprits behind this great economic crime of our time— the yawning, and still growing, income inequality gap between the vast majority of Americans and the richest of the rich.

What they find is that runaway inequality and the present economic crisis reflect what government has done to aid the rich and what it has not done to safeguard the interests of the middle class. The winner-take-all economy is primarily a result of winner-take-all politics. Their investigation shows how a political system that traditionally has been responsive to the interests of the middle class has been hijacked by the super rich.

Hacker and Pierson trace the rise of the winner-take-all economy back to the late 1970s when, under a Democratic president and a Democratic Congress, a major transformation of American politics occurred. With big business and conservative ideologues organizing themselves to undo the regulations and progressive tax policies that had helped ensure a fair distribution of economic rewards, deregulation got under way, taxes were cut for the wealthiest, and business decisively defeated labor in Washington. And this transformation continued under Reagan and the Bushes as well as under Clinton, with both parties catering to the interests of those at the very top.

What to do

Hacker and Pierson cite research that shows Americans are “conservative egalitarians.” That is, they are skeptical of government but are concerned about inequality of income, wealth and opportunity, and are supportive of programs to address them.

Unfortunately, although Americans know inequality is there and that it’s been growing, they seriously underestimate its magnitude, especially the earnings of the people at the top.

Add to this the fact that Americans are uninformed about politics. They find it hard to link their broad economic concerns to specific policies, primarily because they have no organizations that follow the tortuous trail of policy development and interpret it to them so they can vote accordingly.

Newspapers, especially community newspapers, and unions used to fill these functions. Now, with the decline of unions, newspapers have to carry the full load. But with media splintering into ever smaller audience slices plus the tendency of people to choose entertainment over hard news – coupled with the loss of advertising revenue – newspapers have closed and/or withdrawn support for quality news.

In the past Unions have helped people in the community turn out the vote – this is where elections are won and lost. Unions have effectively followed the policy-making process and helped interpret the twists and turns and guided people in casting their vote. Now, with the union’s loss of power, how can American’s begin to counteract the effects of the winner-take-all politics? That will be the subject of future posts.

How Rich Are the Superrich?

A huge share of the nation’s economic growth over the past 30 years has gone to the top one-hundredth of one percent, who now make an average of $27 million per household. The average income for the bottom 90 percent of us? $31,244.

Note: The 2007 data (the most current) doesn’t reflect the impact of the housing market crash. In 2007, the bottom 60% of Americans had 65% of their net worth tied up in their homes. The top 1%, in contrast, had just 10%. The housing crisis has no doubt further swelled the share of total net worth held by the superrich.

Winners Take All

The superrich have grabbed the bulk of the past three decades’ gains.

Out of Balance

A Harvard business prof and a behavioral economist recently asked more than 5,000 Americans how they thought wealth is distributed in the United States. Most thought that it’s more balanced than it actually is. Asked to choose their ideal distribution of wealth, 92% picked one that was even more equitable.

Capitol Gain

Why Washington is closer to Wall Street than Main Street.

member max. est. net worth
Rep. Darrell Issa (R-Calif.) $451.1 million
Rep. Jane Harman (D-Calif.) $435.4 million
Rep. Vern Buchanan (R-Fla.) $366.2 million
Sen. John Kerry (D-Mass.) $294.9 million
Rep. Jared Polis (D-Colo.) $285.1 million
Sen. Mark Warner (D-Va.) $283.1 million
Sen. Herb Kohl (D-Wisc.) $231.2 million
Rep. Michael McCaul (R-Texas) $201.5 million
Sen. Jay Rockefeller (D-W.Va.) $136.2 million
Sen. Dianne Feinstein (D-Calif.) $108.1 million
combined net worth: $2.8 billion

Congressional data from 2009. Family net worth data from 2007. Sources: Center for Responsive Politics; US Census; Edward Wolff, Bard College.

Who’s Winning?

For a healthy few, it’s getting better all the time.


Sources

Income distribution: Emmanuel Saez (PDF)

Net worth: Edward Wolff(PDF)

Household income/income share: Congressional Budget Office

Real vs. desired distribution of wealth:
Michael I. Norton and Dan Ariely (PDF)

Net worth of Americans vs. Congress: Federal Reserve (average); Center for Responsive Politics (Congress)

Your chances of being a millionaire: Calculation based on data from Wolff (PDF); US Census (household and population data)

Member of Congress’ chances:
Center for Responsive Politics

Wealthiest members of Congress:
Center for Responsive Politics

Tax cut votes:
New York Times (Senate; House)

Wall street profits, 2007-2009:
New York State Comptroller (PDF)

Unemployment rate, 2007-2009:
Bureau of Labor Statistics

Home equity, 2007-2009: Federal Reserve, Flow of Funds data, 1995-2004 and 2005-2009 (PDFs)

CEO vs. worker pay: Economic Policy Institute

Historic tax rates: Calculations based on data from The Tax Foundation

Federal tax revenue: Joint Committee on Taxation (PDF)

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Fostering Creativity and Motivation

This TED talk by Sir Ken Robinson was a wakeup call to everyone concerned with education in the US: there is a severe lack of the creativity in circulation. The talk begged the question: “What is creativity and where does it come from?”

Sir Ken Robinson’s RSA Animation on Changing Education Paradigms.

As it turns out, changing education paradigms to encourage creativity is linked to changing motivation paradigms. If we change the way schools are organized to incorporate new thinking about the best ways to motivate workers to tackle the complex problems of our modern society, we find that it also creates the environment required to foster creativity.

Drive – The Surprising Truth About What Motivates Us by Daniel Pink

The use of rewards and punishments to control our employees’ production is an antiquated way of managing people. To maximize their enjoyment and productivity for 21st century work, we need to upgrade our thinking to include autonomy, mastery and purpose.

Tasks can be divided into two categories:

•Algorithmic – a task which follows a set of established instructions down a single pathway to one conclusion.

•Heuristic – a task that has no algorithm, you have to experiment with possibilities and devise a novel solution.

In the U.S., only 30% of job growth comes from algorithmic work, while 70% comes from heuristic work. A key reason: Routine work can be outsourced or automated; artistic, empathic, non-routine work generally cannot.

External rewards and punishments can work nicely for algorithmic tasks but they can be devastating for heuristic ones. Solving novel problems depends heavily on the intrinsic motivation principle of creativity.

The starting point for any discussion of motivation in the workplace is a simple fact of life: People have to earn a living. If employee compensation isn’t adequate or equitable, the focus will be on the unfairness of the situation.

Without fairness in baseline compensation you’ll get very little motivation at all. But once we’re past that threshold, carrots and sticks can achieve precisely the opposite of their intended aims. Rewards can transform an interesting task into a drudge. They can turn play into work. Traditional “if-then” rewards can give us less of what we want. They can:

• Extinguish intrinsic motivation,

• Diminish performance,

• Crush creativity, and

• Crowd out good behavior.

• Encourage cheating, shortcuts and unethical behavior

• Become addictive, and

• Foster short-term thinking.

These are the bugs in our current operating system.

For those driven by intrinsic motivation – the drive to do something because it is interesting, challenging, and absorbing – is essential for high levels of creativity.

Self-Determination theory argues that we have three innate psychological needs – competence, autonomy and relatedness. When those needs are satisfied, we’re motivated, productive and happy. When they’re thwarted, our motivation, productivity, and happiness plummet. Therefore we should focus our efforts on creating environments for our innate psychological needs to flourish.

Autonomy

To encourage Type I behavior, and the high performance it enables, the first requirement is autonomy. People need autonomy over:

• Task – What they do,

• Time – When they do it,

• Team – Who they do it with and

• Technique – How they do it.

Encouraging autonomy doesn’t mean discouraging accountability. People must be accountable for their work. Motivation 3.0 presumes that people want to be accountable and having control over their task, time, team and technique is a pathway to that destination. While Motivation 2.0 (control) required compliance, Motivation 3.0 (autonomy) demands engagement. Only engagement can produce mastery – becoming better at something that matters.

Mastery

Only engagement can produce mastery – becoming better at something that matters. Solving complex problems requires an inquiring mind and the willingness to experiment one’s way to a fresh solution.

Mastery abides by three peculiar rules:

• Mastery is a mindset: It requires the capacity to see your abilities not as finite, but as infinitely improvable. Type I behavior has an incremental theory of intelligence, prizes learning goals over performance goals and welcomes effort as a way to improve at something that matters.

• Mastery is pain: It demands effort, grit and deliberate practice. As wonderful as flow is, the path to mastery – becoming ever better at something you care about – is a difficult process over a long period of time.

• Mastery is an asymptote: It’s impossible to fully realize, which makes it simultaneously frustrating and alluring.

Purpose

In Motivation 3.0, purpose maximization is taking its place alongside profit maximization as an inspiration and a guiding principle. The new “purpose motive” is expressing itself in three ways:

•In goals that use profits to reach purpose. Giving employees control over how the organization gives back to the community might do more to improve their overall satisfaction than one more “if-then” financial incentive.

•In words that emphasize more than self-interest; and

•In policies that allow people to pursue purpose on their own terms.

One cannot lead a life that is truly excellent without feeling that one belongs to something greater and more permanent than oneself.

Motivation, creativity and problem solving go hand in glove. We cannot predict the solutions to complex problems. Instead we must simultaneously support environments that foster motivation and creative problem solving as well as evaluating and implementing the solutions that emerge. That process will be explained in the following posts.

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The 5th Discipline: Learning Organizations

learning org-1

The Fifth Discipline: The Art and Practice of the Learning Organization by Peter Senge – available in a short synopsis – popularized the concept of the ‘learning organization.’  It introduced  systems thinking as a primary method to convert companies into learning organizations.  The five disciplines represent approaches (theories and methods) for developing three core learning capabilities: fostering aspiration, developing reflective conversation, and understanding complexity.

According to Peter Senge learning organizations are:…organizations where people continually expand their capacity to create the results they truly desire, where new and expansive patterns of thinking are nurtured, where collective aspiration is set free, and where people are continually learning to see the whole together.

The basic rationale for such organizations is that in situations of rapid change only those that are flexible, adaptive and productive will excel. For this to happen, it is argued, organizations need to ‘discover how to tap people’s commitment and capacity to learn at all levels.’.

While all people have the capacity to learn, the structures in which they have to function are often not conducive to reflection and engagement. Furthermore, people may lack the tools and guiding ideas to make sense of the situations they face. Organizations that are continually expanding their capacity to create their future require a fundamental shift of mind among their members.

According to Senge, real learning gets to the heart of what it is to be human. We become able to re-create ourselves. This applies to both individuals and organizations.

Learning_Org-2

Systemic thinking is the conceptual cornerstone (‘The Fifth Discipline’) of his approach. It is the discipline that integrates the others, fusing them into a coherent body of theory and practice. Systems theory’s ability to comprehend and address the whole, and to examine the interrelationship between the parts provides, for Peter Senge, both the incentive and the means to integrate the disciplines.

Alongside systems thinking, there stand four other ‘component technologies’ or disciplines. A ‘discipline’ is viewed by Peter Senge as a series of principles and practices that we study, master and integrate into our lives. Each discipline provides a vital dimension. Each is necessary to the others if organizations are to ‘learn’:

  1. Personal Mastery
  2. Mental Models
  3. Building Shared Vision
  4. Team Learning

An excellent summary of Peter Senge’s contributions and place in the development of learning organizations can be found at infed.org, including implications for leadership.

Additional Resources

Creating a Learning Society by Joseph Stiglitz and Bruce C. Greenwald;

Learning Together:  Children and Adults in a School Community by Barbara Rogoff

For Honda, Waigaya is the Way by Jeffery Rothfeder

In Conversation:  Eric Ries on How to Gain Competitive Advantage

The Lean Startup:  How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses by Eric Ries

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