The Story of Systems: chapter II

Can you tell your linear thinking, from your systems thinking?

If linear thinking and systems thinking could speak, their conversation might go something like this…

Linear: “if we want to improve the way a system works, what we need to do is improve how each part of it works. Simple. A system is the sum of its parts. If we fix the parts, we fix the system”

System: “no, no, no! if we want to improve the way a system works, we have to improve the connections between the parts. It’s about understanding the and”

Linear: “but the trouble with systems is that most problems are the result of things I can’t influence anyway. The way the system works is not down to me, it’s the others”

System: “not so fast! the thing about systems is that they’re in here as much as they are out there. If you’re in a traffic jam, you are the traffic jam! We are all part of the systems we’re trying to change”

Linear: “but at least if we do something that works now, it will work in the future. Fix it and forget it”

System: “nope. Chances are you just can’t see the consequences yet. Systems have an immune response that tends to absorb or neutralise the short term. Re-setting your clocks to slow time helps you see systems change”

Linear: “but at least every symptom has a cause, right? There is a direct line from one to the other”

System: “sure there’s a connection, but it’s almost never direct. It’s much more circular, dependent on other factors, and almost always not the answer you first thought of”

Linear: “my head hurts”

System: “that’ll be because we’re used to thinking in a linear way. We think of everything as a machine: even ourselves. I blame the Industrial Revolution. Let me tell you some stories…you’ll see what I mean…”

Once upon a time in America

“Once upon a time in America…

…there was a president called Jimmy Carter who was wrestling with two big problems of the day. The first was a politically-charged debate about high levels of migration across the border from Mexico (does that sound familiar to modern ears?). Now, Jimmy didn’t get held hostage by linear thinking, otherwise he would have suggested, as others did, that America should hire more border guards and build a wall. Instead, he looked at the system and went somewhere else. How about, he said, spending money on building the Mexican economy, and keep that up until migration reduced to normal?

The other problem Jimmy had was that America felt it was importing too much oil, like it felt it was importing too many people. Jimmy’s solution for oil wasn’t linear either. His idea was to tax gasoline in proportion to the fraction of oil consumption from imported oil. That meant, if imports kept going up, so would the tax rate, and that would do three things: squeeze demand for oil consumption in America, create new ideas to substitute oil as a source of energy, and lower imports.

Linear: “imagine how different America and the world would have been!”

System: “I know. [wistful glance]. Linear thinking is such a trap. The world is littered with tales of well-intentioned but counterproductive linear solutions: food aid undermining local agriculture; drug busts creating higher drug-related crime by squeezing the supply / increasing the price of the (now scarcer) narcotics of choice.

PS, Jimmy Carter was the one who put solar panels on the White House roof. And, yes, Ronald Regan took them off again!”

System: “but since you mentioned food and oil, you reminded me of a story about both. Would you like to hear it?”

Linear: “I feel like I should”

System: “ok then”

Once upon a time in Venezuela

“Our story begins in Venezuela in the 1970’s….

It starts with a simple premise: the government thought that keeping oil revenues in the country would boost the country’s wealth. Solution: nationalise the oil industry. Simple.

Nationalisation definitely did what the government wanted, and the country got a lot richer. For a while. Unfortunately, like a bad landlord, the Venezuelan government was addicted to the income, and investing in the assets would have reduced that income; so they didn’t.

During the first few years that was fine and nobody noticed the slowly (and then later, quickly) declining production levels, as the equipment started breaking more and more often. From 1970 to the mid 1980’s, production declined by 55% and productivity (because the equipment was so flaky) by 70%. All in a country where oil represented something like 60% of total government revenue. That’s a lot. Fast forward to the 2020’s and Norway is 20%. Even Saudi Arabia is only at Venezuela level.

As production and revenues collapsed, compounded by a falling world oil price, the Venezuelan government did what governments often do to plug the gap between national income and spending: borrow more, and tax more. And, when that wasn’t enough, they did what governments do next: print money. Quantitative easing anyone?!

The inevitable consequence of printing money was inflation, which got so high (above 30% from the mid-1980’s, and 80% by the end of that decade) that food became unaffordable to many people, with the political unrest that almost inevitably follows.

In a repeat of linear thinking, the government set out to fix the food price problem by imposing price controls on food. The trouble with that though, was farmers had experienced the same inflation everyone else had, so they couldn’t produce food for such low prices. So, completely rationally, they stopped producing food.

What the Venezuelan government did next confirmed they were trapped in linear thinking, even after all the experiences of a non-linear system pushing back with unintended consequences.

They conscripted people to work on farms to secure food production (it happened again in 2016) by introducing a decree that any employee could be ordered to work on the land, to fight a food crisis.

The replay of this linear thinking (D to fix C to fix B to fix A) ended with a terrible thing: enslavement to agriculture; as the result of a good thing: shared national wealth from the biggest oil reserves in the world.”

Once upon a time at home

Linear: “I need a lie down”

System: “of course. When you get back up, will you remember how to spot systems thinking?”

Linear: “I think so:

• Understand the and. The connections between things matter as much as the things

• Systems are in here as much as out there. We are all part of the system we’re trying to change. It is not ‘everyone else’

• The immune-response of systems can sabotage the short term. Reset our clocks to slow time

• Symptoms and causes are not obvious. Forget straight lines. Think circles and loops

System: “perfect.

Goodnight.

Tomorrow’s a new day”