Obama's First Stumble

It had to happen.

It's kind of a relief.

Nobody's perfect.

The bailout/stimulus proposal which came out this week won't work!

It's not Barack's fault. He needs to rely on his advisers even as he occasionally transcends them.

It's really not their fault either. They don't know any better. No one told them that their failed models need updating.

But it'a too important to ignore. Between the Federal Budget and potential stimuli/bailouts, there are trillions of dollars at stake. More importantly, there is the opportunity to transform the economy into one that is sustainable and more just.

We are at the edge of a precipice that we created, and we only get one chance to step back and save the economy.

Does it make sense to continue to spend government money based on analysis which has proven to be wrong so many times?

Would it make sense to allocate a small portion of new government spending on the development of a new structure for public policy analysis which has proven itself many times?

The answers are obvious.

There is a team of the best minds in the fields of particle physics, complexity science, actuarial science, and computer science ready to be assembled. They can build a model with the best data mining, enterprise risk management, dynamic financial analysis, data visualization, demographic, probability, and management analytics available.

Such a model can supplement existing economic, financial and public policy models in determining where spending will have optimal effect, what the uncertainties are, how to make adjustments dynamically, how to handle interactions, and all the other factors existing models ignore or miss.

The best minds in Washington are doing their best, but is isn't good enough. Some of the programs proposed will have some positive impact, but no one knows how much, or whether more innovative approaches would have much more effect.

What if we find, that using the best analytics possible, the impact of bailout and stimulus activity can be increased 100 fold or more over the next decade?

Should we at least consider it?

The global economy is collapsing.

Social Security is effectively bankrupt.

The healthcare system is crumbling under its own weight.

The deficit is dangerous, particularly if forecasts of the future US economy are distorted.

None of these issues are adequately addressed in proposals made to date.

The Federal Budget, along with all bailout and stimulation activity is a complex system which impacts a web of other complex systems. Government spending impacts the healthcare system, the infrastructure system, the prison system, the retirement system, the welfare system, the education system, and a variey of other systems, not to mention foreign relations.

Each of these systems has subsystems like housing, transportation, energy, goods, services, environment, medicine, and so on.

No model in place in Washington can deal with the interconnections, demographics, uncertainties, management, and data requirements of such a complex network.

We can transform the economy successfully . We can evolve into a country with sustainable and just results.

We have the intellectual resources.

We have the technical resources.

Yes we do.

Lee

paradigmactuaries.com

The website noted in the title to this blog is complementary to the blog. They are vehicles for communicating a new vision of reality.

The book, Harmonious Universe, still to be published, describes a worldview emanating from discoveries in particle physics, complexity science, and actuarial science which provides a roadmap to unity.

Starting with the fundamental constituents of nature, the waves, fields, particles, and other components of the atom, we build up to society and its institutions with mathematics and metaphor.

This is part of a conversation which began before Plato, and will continue beyond us. It is about the eternal notions of justice, truth, beauty, love, and being.

The website describes the book and some related thoughts. Included are descriptions of analytical stuctures which have been developed to better understand our economy.

We now have 36 blogs discussing various aspects of the new perspective. Some, like Republican Think Tank are satirical. Some, like The Science of Philosophy, are academic.

In all cases, the idea is the same, probe reality to discover truth from which justice and beauty can emerge.

In Abraham, Martin and John, we look at how Martin Luther King and Kahill Gibran probe truth and set the stage for positive aspects of the 1960's.

In The Edge of Chaos, we talk of an Economic Manhattan Project to get the US economy back on track.

In The Math of Reality, we consider how institutions like the New England Complex Systems Institute and the Santa Fe Institute are moving science toward more holistic modeling. By combining the new data mining, data visualizaton and analytical structures with those of actuarial science we see how traditional modeling relative to public policy issues can be enhanced and made more valuable.

The remaining blogs continue to expand the vision . The goal is to have the blog address all issues of Harmonious Universe and put them into a lasting perspective.

Along the way we hope to find some truth of our own.

Lee

The Math of Reality

The Santa Fe Institute (SFI) and The New England Complex Systems Institute (NECSI) are poised to assist the Obama Administration in the greatest transformation of the US economy in over a century. Prior economic revolutions, whether the automobile, the computer, or the steam engine have emerged from a narrow sector of society. As we approach 2009, all sectors are ready for a revolution...a creative destruction.

Obama is on the right path. He sees that by transforming existing financial, manufacturing, and other sectors he can begin a growth spurt of unprecedented levels. The SFI and NECSI can be sure he has the tools to get there.

In NECSI reflections on 2008, the application of complex systems thinking to large scale problems was noted. NECSI has worked on identifying factors key to the understanding of the current global economic crisis. It has uncovered elements of the healthcare system which, properly aligned, provide dramatic improvements in meeting health and financial goals of the system as a whole.

Likewise, the SFI has made dramatic advances in the understanding of and the development of practical applications of systems thinking.

Using understanding of mathematical patterns derived from the study of the smallest components of reality, the atom and its constituents, they have developed methodologies critical to the resolution of deep problems in more complex systems like the human body and society at large.

Self-Organizaton is one of the conceptual frameworks which have proven valuable in this new approach to understanding. When events cascade, as has recently happened with the global economy, standard economic and financial modes are rendered worthless. Self-Organization helps explain why such results occur, using notions like heavy tailed distributions and power laws.

Agent Based Modeling is another complexity science tool which allows for the transcendence of traditional assumptions of classical statistics. Rather than attempting to find traditional mathematical structures to mimic reality, such tools allow reality to inform and define the mathematics itself.

Combined with data mining and visualizaton advances and tools of actuarial science which allow for demographic and credibility adjustments, these complexity science structures provide a bridge to an analytics for the upcoming century.

As the Obama team begins to address the deep problems plaguing all elements of American culture, it will discover the enormous power and utility of the advanced modeling now largely confined to labs, universities, and organizatons on the cutting edge of society.

It will see the need for such tools and begin to import them into daily decision making. Society will be transformed and the economy will grow while meeting environmental, social, and resource needs.

Yes we can.

Lee