Belmont Club

The entropy devil

Somebody had to say the obvious. Barack Obama is tying himself in knots. Andy Grove does in the Washington Post.

We have gone through months of chaos experimenting with ways to introduce stability in our financial system. The goals were to allow the financial institutions to do their jobs and to develop confidence in them. I believe by now, the people are eager for the administration to rein in chaos. But this is not happening.

Until the administration does this, we should not embark on attempting to fix another major part of the economy. Our health-care system may well be ripe for a major overhaul, as are our energy and environmental policies. Widespread recognition that all of these reforms are overdue contributed to Barack Obama’s victory in November. But if the chaos that resulted from initiating such an overhaul were piled on top of the unresolved status of the financial system, society and government would become exhausted. Instead, the administration must adopt a discipline; not initiating a second wave of chaos before we have a chance to rein in the first. …

Leading an organization, let alone a society, out of the chaos phase and into a new order requires explicitly clear and consistent messages from the top. The leader must paint a picture of the new and fill in lots of detail so that all relevant parts of society understand what they need to do to contribute. The answers to the questions “What is wrong?” “What are we going to do?” “How are we going to do it?” and “What should we expect?” should be drummed home relentlessly. This needs to be an ongoing process, where clarity, consistency and repetition are key. It is hard work and requires a laser-like focus on the solution.

First things first. Strive to achieve stability in our financial system. When the momentum is clear enough to allow trust in the system to return, then tackle the next mega-problem. As Machiavelli said, “One change always leaves the way open for the establishment of others.”

I made a similar observation in past posts, and wrote, not long ago, that Obama’s desire to turn the economic crisis into a laboratory for his own political vision was a disaster waiting to happen. Andy Grove understands the dangers well. But does Obama? I wrote:

Maybe part of the reason the White House is frazzling itself into the ground is that they’re trying to remake everything. Everything has now become part of the delta. Everything is changing. Now they are facing the revenge of the second derivative: the rate of the rate of change. They are trying to restructure the government so it is run with Czars instead of cabinet secretaries; “engaging” hostile nations with little or no preconditions and getting blown off; changing the basis of the economy to conform to their untried vision of the future; creating the single greatest expansion of government since FDR; redesigning health care; holding consultations on everything and planning to save the world from Climate Change. They’re busy because crisis creates an “opportunity” for their own vague revolution.

The cumulative consequence of these actions is a vast increase in the amount of risk the entire system has to endure because variables are being added faster than they are being solved. The margins are gone — removed by design. The margins are in the way. But while things might hold together for so long as the road ahead is smooth, what happens if things hit a bump? What happens in the Obama administration, too preoccupied to “even fake an interest in foreign policy meets a sudden challenge?

So far the Obama administration has only had to deal with the economy. And despite their campaign handwringing about how much less safe America has become, its foreign enemies, perhaps still picking themselves up off the ground from the pasting they received at the hands of George W. Bushchimp, have not yet made a move. But one day they too may notice that nobody is at home.

Even Tom Friedman understands that not everything is as it should be in Obama’s policy universe. He’s missing the obvious, which even Friedman can see. “First, to get out of a crisis like this you need to let markets clear. You need to let failed companies, or homeowners, go bankrupt, unlock their dead capital and reapply it to thriving entities. … Second, we need to get a market going that would bring fair value and clarity to the “toxic mortgages” crippling the balance sheets of our major banks. …” This is economics 101. It’s the default policy action. So why doesn’t Obama do it? Or more to the point, why can’t we appoint someone off the street to do it? We could, but we can’t because Friedman still persists in creating the supercategory of tasks, one which only a Lightworker can accomplish. Friedman writes:

Third, the president may have to make some trillion-dollar decisions — like nationalizing major banks or doubling the economic stimulus — with no real precedent and without knowing all the long-term ramifications.

This is a task which manifestly requires a special person to perform because it will have to be done by inspiration, rather than calculation, there being “no real precedent” and “without knowing all the long-term ramifications”. It’s the kind of job you assign to Moses or to Luke Skywalker. But if we return to the simple clods of earth, why would one rationally hope that President Obama gamble the future of the country in some cosmic casino? Maybe this obsession with monumental tasks is to retrospectively justify the idea that we need this “extraordinary man”.  It’s a curiously medieval concept. Democracies are different from aristocracies in that they assume that government requires no special people; no one anointed by Divine Right. The reason for that is that the history itself provides the surprises.  God if you will, already blows through the grass with a restless spirit. We don’t need our own jumped up Locomotives of History. The sources of surprise are already there. What humanity often needs isn’t more vainglorious surprise but ordinary simplicity, clarity and focus. We don’t need someone to Feel the Force. All we need right now is someone with common sense.