Saturday, January 23, 2016

Take a system that works, and don't change it much

I don't like change. I don't like getting a new version of Windows. I don't even like buying gasoline at a new place. I mean really, I don't like change.

It's not that I think everything's perfect. I accept change when it brings obvious improvement. But a lot of change is change for the sake of change, ribbons in place of menus in AutoCad and Excel. And a lot is change to make you want to buy the new version. Like your phones. Or like my parents' new car every three years, back in the golden age. It was expected behavior. You were expected to buy a new car every three years. You're expected to buy a new phone every couple years.

Me, I don't have a phone.

Anyway, I guess you'd say I like change to be minimal. For example, before I retired I did AutoCad drawings for a manufacturing firm. Drawings and parts lists. Parts lists by hand. For every set of drawings, there was a list of wooden parts, and a list of metal parts, and a list of plastic parts. And a second list of wooden parts. And the four lists had to be compiled to get summary lists of material requirements that were used for ordering. And it was all done by hand. For every set of drawings.

Mundane repetition drives me crazy.

It was all done by hand when I started. It was all automated when I left. But here's the thing. I took each existing form, one at a time, and made a form in Excel that looked just like it. I made the computerized forms look just like the forms that were done by hand. Minimal change. It wasn't like I thought I had a better idea of the information they needed to gather. I was happy to start with a system that had been in place for years, a system that had been working for years.

Minimal change. Next, I figured out how to automate those forms. I got AutoCad to gather information from the drawings and put it into those Excel forms. And I got Excel to take that information and compile it on the summary forms. I got it all working. And when I was done, we were clicking a button to create a list, instead of writing out material requirement lists by hand.

The key to the whole thing was minimal change. Take a system that works, and don't change it much. Just make things better by eliminating the tedium.

I don't like change.

The economy is a system that had been in place and working for many years. It's not working now, I'll give you that. But I'm not the one looking at the economy as it is now and demanding change. I look at the economy when it was working and ask what made it go bad.

Like you, I want to make things better. But I don't want to throw away everything that seems to be a problem. Minimal change. I want to fix the one thing that created all the other problems. This is where we differ, you and I.

The one thing that created all the other problems is a money problem: the growth of private sector debt. Every time I say that, somebody says I mean private debt should be zero. No. I'm the minimal change guy, remember? Anyway, we couldn't eliminate private debt if we wanted to. But we can change the policy target. We can change the target from "having more debt" to "having less debt".

But we can't even do that until we change the mindset that says "we need more debt for growth".

The mindset has to be this: There is an optimum level for debt in our economy. Too much debt is no good. Too little debt is no good. We need the "just right" level, like Goldilocks. The just-right level of debt is the level that least hinders and most encourages economic growth. This is the mindset we need.

See how I put "hinders" first there, before "encourages"? People tend to forget that debt hinders growth. Policymakers forget. Or maybe they don't know. Maybe they think we get something for nothing when we use debt? Nah, that's just silly. It doesn't work that way. There's no such thing as a free lunch.

So maybe we are at peak oil. Or maybe growth cannot go on forever, and we just happen to be at the place where growth stops, the place where "forever" reaches its untimely end. I don't think so, but I don't know about such things. What I do know is that when there is a problem with money, it looks like a problem with everything money touches -- oil, for example, and toilet paper, and cabbage patch dolls, and exponential growth in general.

I think most of our product-shortage problems are results of problems of the money. I could be wrong about product shortages. But I'm not wrong about the problems of the money. What we need to do is fix the problems of the money, first. And after that we will be able to tell if there really is a peak oil problem, a drug shortage, a food shortage, and all the rest.

Take a system that works, and don't change it much. Find the first thing that went wrong, and fix that. See if the other problems start to go away on their own.

I thought I wrote about this before, but maybe not. At work back in the 1980s, the accountant was showing me something on the TRS-80 Model II computer -- you know, the one with the 8-inch floppy disks? Yeowza. The program was written in BASIC. This was back before GW-BASIC and way before VBA. Long ago. His program crashed.

The guy looked at the code where the error was, and found the variable he wanted to check. Then he typed in three or four commands to check a value and change it or whatever he was doing, I don't really remember now. But I do remember that there was an error in the first command he typed. The computer kicked back an error message. The accountant didn't see it because he was looking at the plan in his head instead of the words on his screen. So he typed the next command, and two more, and he got a result that didn't make sense to him.

It didn't make sense to him after the last command he typed. But it didn't make sense to the computer after the first command he typed, the one where he got an error. It's like that with the economy too. We have to find that first problem. And we have to read the error message.

The accountant missed the problem that returned an error message. He finally realized there was a problem after the last command he issued. But by then, the original error message had scrolled off the screen. It was too late to figure it out, then.

Hell no, I didn't tell him. The evidence already scrolled off the screen.

We have to find the original problem in our economy. The other problems are consequences of the first one. Okay, the economy isn't the same as a computer. Maybe not all of our economic problems are consequences of the excessive accumulation of debt. But most of 'em are. The only way to solve those problems -- and the only way to discover which ones are not consequences, but actually problems in their own right, is to go back to the beginning, back to when things were good, and start looking for the first error we might have missed along the way.

When we finally do that, we will discover that the first error was to allow the excessive growth of private sector debt. That's how we'll know which problem to fix first.

But we better do it soon. The screen is scrolling.

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