Economics

Simple, Complicated, Complex, Chaotic – a way to make sense – part 3

Previous posts introduced the Cynefin framework and described a bit of how it helps make sense.

Where it gets messy

Distinguishing between the complicated and complex quadrants is the biggest challenge.

As I ponder the Cynefin framework, I realize that distinction is the cause of many heated differences of opinion.

It is also the cause of many unintended consequences. I’ve talked about that a lot on my blogs.

Applying the solutions from the complicated quadrant to issues in the complex quadrant is the conceptual cause of most of the harm from those unintended consequences.

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Jim Ulvog

Simple, Complicated, Complex, Chaotic – a way to make sense – part 2

Previous post introduced the four quadrants of the Cynefin Framework: simple, complicated, complex, and chaotic.

One of the major implications of the framework is to highlight that the world is not neatly ordered. 

In addition, leadership styles need to change based on the nature of the situation.

Boundaries

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Jim Ulvog

Simple, Complicated, Complex, Chaotic – a way to make sense – part 1

For the last week I’ve been pondering a new tool to help understand the world around me. It’s called a sense-making model by its inventor.

The Cynefin Framework was developed by David Snowden. It’s pronounced cunevin or ku-nev’-in.

This series of posts will give an overview, provide two links to videos, and apply the model to several areas.

The model has four quadrants. The primary driver is how the relationship between cause and effect changes based on the nature of the situation.

Simple

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Jim Ulvog

“Your help is hurting” – More unintended consequences

“The world is complicated.”

In a video from PovertyCure, Peter Greer tells the story I mentioned earlier of how in just one summer help from a U.S. church destroyed the egg market in a small Rwandan village.

Second hand clothes sent to Kenya destroyed the textile manufacturing industry and the cotton farms. Sad unintended consequences.

 

[youtube=http://www.youtube.com/watch?feature=player_embedded&v=Ii_k_AUqo8I&t=197]

 

Superb quote from the video: (more…)

Jim Ulvog

Unintended consequences – “Your help is hurting,” government to government version

Previous post described how development aid can sometimes cause hurt.

Part 2 of that discussion describes how government-to-government aid can sometimes make things worse and prevent development.

Jerry Bowyer interviews Peter Greer in Your Help Is Hurting, Part II: The Unintended Consequences Of Giving Dictators Foreign Aid.

Mr. Greer uses the example of the president of Zimbabwe distributing food received as a part of international aid only in the areas that vote for him.

Want to eat? Vote for him. Want to oust the dictator? Your family and community starve.

Not quite what was intended when governments approved the grant.

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Jim Ulvog

Improved self-governance is key to development in Africa

That is the core point made by Dr. Mo Ibrahim on how to develop the economies of all 57 African countries. He explains his ideas at: Mo Ibrahim On How (And Why) Africa Should Solve Its Own Problems.

He wonders why African people are so poor. He thinks of where Ghana, Egypt, China, India, and Singapore were 50 years ago. Then, Ghana and Egypt were the richest countries of those five. Look how far the other three have advanced.

The problem is bad governance in both the public and private sectors.

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Jim Ulvog

Unintended consequences – “Your help is hurting”

How would you like this to be your legacy on the missions committee?

After the genocide in Rwanda, your church decides to help the village by providing eggs to everyone. Great idea, right?

Absolutely.

You help for a while and then you sense God is leading you to help in another area now that things are settling down in Rwanda.

Cool, right?

Sure.

Unfortunately, what you didn’t realize is there was an entrepreneur who had bought some hens and sold eggs in the community. He was growing his business and providing food to more and more people.

No business can compete with free, so when you started helping with your ministry of giving away eggs, his business went under. He moved on to another business so he could feed his family.

When you pulled out of the town, there were no eggs. That protein was unavailable.

Not so great.

Not so cool.

You drove out of business the guy who was previously meeting local needs and then you disrupted the food supply.

You left the community in more distress than when you first arrived.

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Jim Ulvog

How many people die from reusable grocery bags?

5.5 per year in the county of San Francisco.

Plus a large increase in the number of ER visits.

That is the statistical conclusion from the Grocery Bag Bans and Foodborne Illness study by Professors Klick and Wright. You can download the study for yourself at the link in the previous sentence.

(Why is this post here instead of one of my other blogs since it is a bit off-topic from the focus here? Two reasons. First, my unintended consequence discussion is on this blog. Second, this illustrates the concept of unintended consequence which has huge implications for the missions community.)

In his article The Disgusting Consequence of Plastic-Bag Bans, Ramesh Ponnuru summarizes the study as follows: (more…)

Jim Ulvog

“Deck the Halls with Macro Follies” – Economists sing your favorite holiday carols

Remember the rapping economists we saw here and here?  They’re back!

Just in time for Christmas, EconStories imagines their fantasy Christmas album featuring the classic hits from Keynes, Hayek, and other renown singers you know and love.

Enjoy the greatest collection of economic hits ever aggregated.

[youtube=http://www.youtube.com/watch?feature=player_profilepage&v=7uKnd6IEiO0#t=41s]

 Remember, the only one who has the power to create presents out of thin air is Santa himself.

If you want a few 20 second explanations of how to slow or increase the economy, check out the new interpretations of your favorite songs of the season.

Link, if you need it: http://www.youtube.com/watch?feature=player_profilepage&v=7uKnd6IEiO0#t=41s

hat tip Cafe Hayek

Jim Ulvog

Here’s a graph to show why it feels like this is a lousy recovery

If it feels like the recovery that started over 3 years ago isn’t really going anywhere, there’s a reason you might be thinking that.

This is a graph of the percentage of the population that is employed. The exact description is civilian employment as a percent of the population. That means what proportion of the population is employed.

Check it out:

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Jim Ulvog

Another graph illustrating why it feels like the recession hasn’t ended

The recession officially ended in June 2009, which means we’ve seen just over 3 years of recovery. GDP has finally passed the peak from before the recession. Yet it doesn’t quite feel like recovery, at least here in California. Saw another graph that shows why it feels so odd.

In a graph called The Zero Recovery, Tim Kane calculates the number of people who are employed as a percentage of the population. For the last six recessions he tracks the change in the employment to population ratio from the start of the recession. For the previous five recessions the drop wasn’t as severe as this one and there had been substantial recovery by the 4½ year point after the start of the recession.

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Jim Ulvog

2 more unintended consequences

One of the big ironies in life is called unintended consequences – You try to do something good or helpful to fix a problem and there is some completely unexpected problem caused by the good & helpful thing.

Two examples from today’s reading. First, making forest fires worse. Second, getting sick from reusable grocery bags. My previous examples were from the international aid world.

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Jim Ulvog

Again, here’s why it feels like the economy hasn’t recovered

Why doesn’t it feel like the real GDP has recovered from the recession? 

Because employment is still in the tank.

Mark J. Perry printed an update to his graph of the GDP and employment numbers at Chart of the Day: Structural Shift in the U.S. Economy.  I mentioned this graph earlier.

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Jim Ulvog

Reshoring

I have a post on my other blog, Outrun Change, that discusses the reshoring trend.  More companies are bringing their manufacturing back to the U.S. because of changing economics of offshoring.   One challenge in reshoring is improving the skills of American workers so they can use the latest technology.

Reshoring – huge opportunity if we want it and a skill-set challenge we can overcome

Jim Ulvog

How to create inflation when kindness was intended – unintended consequences 2

A peculiar irony of charity is sometimes you get the unintended consequence of creating problems when you are trying to help someone.

I have several things to say on point. Currently I’m reading Toxic Charity: How the Church Hurt Those They Help and How to Reverse It, by Robert D. Lupton.  Very sobering – $11 on Kindle.

Before I talk about Mr. Lupton’s book (and I’ll have *lots* to say), I wanted to share an experience I had a long time ago.

While working at another CPA firm, I had the incredible, delightful opportunity to do several audits on the overseas operations of a large international NPO.  Their name doesn’t matter, because they are not part of the story.  I have tremendous respect for them and the work they are doing. If you have known me a while, then you know who I am talking about.

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Jim Ulvog