Category Archives: Systems Thinking

Cracks in the Fuselage

Southwest 812 on the ground after the emergency landing.

on the ground after an emergency landing 4/1/11.


Follow LJF97 on Twitter What Conservatives and the Tea Party get right, and what they miss.

Anyone who looks closely at “Business as Usual” inside the Beltway or at local government can find waste and corruption. So it’s easy for conservatives, members of the Tea Party, liberals and progressives to rail against and rally around fighting waste, corruption, and abuse of power.

While liberals and progressives tend to focus on government corruption and the abuse of power, conservatives and the Tea Party tend to focus on what they see as waste in government. They advocate a laissez faire model of government – that government is best which governs least. It is difficult to argue against this. The United States is founded on freedom of expression and free enterprise. American citizens, residents, and guests are free to do what they want, as long as those actions don’t infringe on the rights of others.

However, this lack of infringment on the rights of others is a reasonable and restrictive qualifier which opens the door to regulations and enforcement. Simply put, just as we are free to pursue happiness, we are justified in establishing police forces to protect us from others whos pursuit of happiness infringes on our rights. Self-regulation is ineffective: a fox guarding a henhouse is going to eat chicken. Similarly, regulation without enforcement is pointless. Enforcement consisting of a slap on the wrist, a wink, and a martini sets up a positive feedback loop that reinforces the action rather than a negative feedback mechanism that changes the behavior. Continue reading →

The Furman Paradox & The Cornick Postulate

The Furman Paradox: “You want to be ahead of the curve, but not too far ahead. When the word on the street is sell, and you understand something others don’t, it may be time to buy. And remember, it’s a systems phenomenon, look for the feedback.”

The Cornick Postulate: “There are things that seem too good to be true, and yet are true – love, a child, sunset. These cannot be bought and sold; these are non-transactional phenomena.”

Renewable Energy, The Wall St. Journal, Faux News

George Gilder, writing in the Wall Street Journal, 11/18/10, in California’s Destructive Green Jobs Lobby complained of the defeat of the repeal of the “Global Warming Solutions Act.”

“Economic sanity lost out in what may have been the most important election on Nov. 2—and, no, I’m not talking about the gubernatorial or senate races. … This was the California referendum to repeal Assembly Bill 32, the so-called Global Warming Solutions Act, which ratchets the state’s economy back to 1990 levels of greenhouse gases by 2020. That’s a 30% drop followed by a mandated 80% overall drop by 2050. Together with a $500 billion public-pension overhang, the new energy cap dooms the state to bankruptcy.”

Gilder also wrote: “California officials acknowledged last Thursday that the state faces $20 billion deficits every year from now to 2016.” That’s $120 Billion over the next 6 years. This is a state of 37 million people (US Census). It should be able to borrow that money at 4% or 5% – which is $3083 per capita. Borrowed at 5% interest over 20 years, it’s $20.35 per person per month – which does not seem to be enough to push someone into bankruptcy.

Continue reading →

Apple v Microsoft; On Strategy

“Microsoft sells different flavors of soda. Apple sells water, coffee, tea, beer, wine, vodka, cheese, meats, breads, … and it also sells soda.”

Stock Price and Corporate Valuations

On Oct. 28, 2010, Apple closed at 305.24, about 4% below its the historic high of 319, reached on October 18, 2010. Apple’s earnings per share, EPS, is $15.15. It’s price earnings ratio, P/E, is 20.147. It’s market capitalization is $279.59 Billion.

That same day, Microsoft closed at $26.28, at 45% of it’s historic high of 57.625, reached on 12/17/1999. Microsoft’s EPS is 2.11, P/E ratio is 12.48, and market capitalization is $227.42 Billion, $52 Billion less than that of Apple.

If you look at a graph of their stock prices, Microsoft climbed spectacularly from 1986 to 1999, then plummeted and has been basically flat since it crashed in 2000. Apple climbed much more slowly, until recently, and may still be rising. However, while the graph may tell one thousand words, it doesn’t tell the whole story. And there are two flaws:

  1. The graph is an approximation of the stock price of AAPL and MSFT from the period of 1980 to 2010. It is neither complete, detailed, or rigorous. Complete details can be found on the Internet. The graph shows that Microsoft grew during the ‘80’s and ‘90’s then spiked dramatically and crashed around 2000. Actual high point was Dec. 17, 1999. The low of 21 reached on Dec. 29, 2000. Apple was doing pretty badly during the ‘90’s, however, since Steve Jobs return in the mid to late 90’s turned around. The stock price increased to 100 in 2007 or 2008 to 318 earlier this month.
  2. The graph doesn’t show the increase in market capitalization. An investment in Microsoft of about $3,000 at the IPO in March, ’86 would have been worth about $1.0 Million at the peak in Dec. ’99, and would still be worth about $455,000 today, an increase of 15,200%. Apple and Microsoft went from Million-Dollar companies in the early 1980s to companies worth $280 and $227 Billion, respectively today.

But perhaps the real insight is to view of these curves from a systems thinking perspective. Is the Microsoft stock price curve an example of overshoot and collapse? Will it recover or has it reached a steady state? Is Apple peaking? Is it about to collapse? Will it drop, and stabilize, like Microsoft, to a point less than half of it’s peak? And if so, if not now, when? Continue reading →

Toyota Recall: Instructions and Observations

2009 Corolla Sedan

2009 Corolla Sedan

If your car is accelerating out of control, whether it’s a Toyota, a BMW, or any car,

  1. Put your foot on the brake – and press the brake with a steady pressure.
  2. Put the car in Neutral. (Just like manual tranmissions, automatic transmissions have a “Neutral” setting. You shouldn’t drive if you don’t know this.)
  3. Turn on the Hazard lights.
  4. Pull over.
  5. and Above All,Don’t Panic.

Putting the car in “Neutral” disengages the transmission from the accelerator, assuming there isn’t a transmission problem. Don’t turn off the engine: you will lose the ability to brake and steer. Don’t put the car in “Park.” It will slam to a halt, throw you and your passengers against the steering wheel or the windshield, damage the engine, and you will be rear-ended by the jackass tailgating you.

It also works regardless of what is causing the problem – and it might not be because of sticky accelerators. Writing in the LA Times, Jan 30, Ralph Vartabedian and Ken Benslinger, note that:

The pedal maker denies that its products are at fault. Some independent safety experts also are skeptical of Toyota’s explations. ‘We know this recall is a red herring,’ one says.

Federal vehicle safety records reviewed by The /LA/ Times also cast doubt on Toyota’s claims that sticky gas pedals were a significant factor in the growing reports of runaway vehicles. Of more than 2,000 motorist complaints of sudden acceleration in Toyota and Lexus vehicles over the last decade, just 5% blamed a sticking gas pedal, the analysis found.

Continue reading →

Barack Obama, a Systems Thinker in the White House

President Barack Obama.

President Barack Obama.

In his State of the Union Address <video, transcript Englsh, en español>, President Obama said “The best anti-poverty program is a world classeducation

.” He described a positive, or reinforcing, feedback loop. Education enables people to accomplish more, earn more, and better educate their children, who also accomplish more and earn more. It is one of the most important differences between the populations of New Jersey and West Virginia. This is described in detail in Thinking in Systems, by Donella Meadows<link>, (C) 2008, published by Chelsea Green<link>, ISBN 978-1-60358-055-7.

The President also asked for a better health care plan. I can answer that in five words: “Single Payer; Medicare For All” <link>  just approved by the California Senate. Medicare works for my octogenarian father. Health Insurance Care doesn’t work for a 20-something friend of mine. He just graduated from college. He has no job and therefore no medical insurance. If he was a full-time student he’d be covered on his parents’ insurance. A simple reform would cover recent graduates until they find a job that pays a living wage and provides health insurance benefits. Another would be by expanding Medicare to cover all citizens. This is much easier said than done. Our medical care system cannot adequately care for approximately 50 million people – one out of six. This can’t be changed overnight – we need to train more doctors and nurses, and build more hospitals, but it must be changed.

Image showing mountain strip mined for coal.

Mountain strip mined for coal. Chris Dorst, Charleston, WV Gazette.

Energy is another set of systems problems. No one who has seen a once pristine valley after strip mining or “mountain-top removal”  uses the term “Clean Coal.” Countries like Denmark, Ireland, Israel, Japan, and Sweden built their economies with education not extraction of natural resources. As the President alluded to, conservation and clean, renewable energy technologies – solar, wind, geothermal, hydro – can be implemented faster, at a lower cost, and with fewer negative economic externalities than traditional fuel intensive resource based technologies like fossil fuel and nuclear power. This suggests another of the differences between New Jersey and West Virginia – the “Blessings of Education” versus the “Resource Curse” <link> from which economies built on extraction of natural resources suffer.

Arklow at Sunset

Arklow Bank Wind Park, off Arklow Bay, Ireland. Image courtesy Oneworld.net, UK.

The President needs economic advisors who start think in terms of ecological economics <link1 / link2>, of metrics like the Genuine Progress Indicator, GPI <link>, rather than Gross Domestic Product, GDP <link>. Simply put, ecological economics is neoclassical economics with a better understanding of the long term and of costs. Spending one dollar – or one trillion dollars – to clean up a mess is not as good as allocating those resources to build factories, houses, libraries, museums – the infrastructure, culture, and community of a nation.

Coal Miner Deaths

In China, 407 Coal Miners Died THIS YEAR

. 104 Died THIS WEEKEND in the Xinxing coal mine – described by Chinese authorities as a SAFE

mine. 528 miners were underground at the time of the explosion – in which 19.7% of the miners were killed! China Mine Disaster Continue reading →

Systems Thinking and Politics, or Rachel Carson and Donella Meadows meet The Frankenstein Monster

The Frankenstein Monster as interpreted by Boris Karloff may have been a big guy who didn’t know his own strength – again unbalanced reinforcing loops. As interpreted by Mel Brooks he was just misunderstood. Once those reinforcing loops were balanced – put the big lug in a tux – all hell didn’t break loose.

Frankenstein_monster_Boris_KarloffSystems Thinking

is a framework and a toolkit (check out Stella and i Think from I See Systems ) with which ecologists and ecological economists can model the real world of the carbon and hydrologic cycles, ecosystems and economic “bubbles.” But how do we model systems that are difficult to quantify? Is it science fiction, as in the psychohistorians of Asimov’s Foundation Series ( e-book )? The actions of the government of the United States have profound effects on this country and the world. Can we use Systems Thinking to model political movements? Did Bill Clinton and James Carville, George W. Bush and Karl Rove and Barack Obama, David Axelrod and Dan Plouffe use  Systems Thinking to create a balancing feedback mechanism and win an election? Could they have?

As we were taught in high school, the Constitution set up a system of government of three balanced branches. The “checks and balances” of the Executive enforcing the laws written by the Legislative and interpreted by the Judiciary. This is a system with balancing feedback mechanisms.

Continue reading →