Monday, April 06, 2009

Planning for the Future

Predictions are difficult, especially when they're about the future.

There's an interesting new website up, Wrong Tomorrow, that strives to track and report on the predictions of various pundits and prognosticators. Turn out that my prediction that the Mexican state won't see 2012 is up for testing--though, highlighting one weakness of the site, it takes my prediction out of context, dropping the first half of my prediction that some form of state-shell may exist in Mexico for decades. I didn't intend my prediction to be inherently testable or not testable--perhaps in the future I will be more careful to conclude with an empirically testable prediction...

While predictions and record-keeping can be interesting, and can even serve an important purpose by highlighting the past inaccuracies of someone offering a new prediction, I'm more interested in the methodology of prediction. After all, each of us, every day, stakes our lives and our family's lives on our ability to predict the future. I talked briefly about my theory of prediction in my essay Hedging the Future Solution Space, which highlights that, while predictions may be fun, the more utilitarian approach (until I can figure out how to be 100% correct in predicting everything) is to outline the possibilities and then see how we can make choices today that will fare best regardless of the outcome. If you check the investment theory outlined in that article, it would have worked out quite well over the past 18 months. I only wish I had followed it more closely myself (I was leveraged long oil and short the S&P500, but excessively weighted in the former so that my gains in my S&P super-bear fund didn't cover my recent losses in oil--though I'm holding my 2011 crude oil calls because I still think there's a good chance of the price shooting up again).

So, over the next few weeks, this will be the focus of my posts: the development of a future modeling and decision-making methodology that will maximize outcomes in a very uncertain future. I'll be focusing on a decision-making system for the individual, but many of the principles will work equally well for Nation-States and Corporations. In my mind, the key difference between these actors is that it is always the individual (as opposed to the currently reigning politician or CEO who can just walk away) that ultimately must carry the bag for failure to integrate the need for resiliency into our decision making. Therefore a goal of my methodology will be to optimize future resiliency in the absence of perfect knowledge of the future outcome.

Readers may also find my litigation checklist of interest.

36 comments:

Theo_musher said...

in the comment section a few posts back:
"I don't think people will actually revolt unless there is a sudden realization that the dream of perpetually increasing material consumption--what all these government programs are implicitly selling--is a fantasy. That might happen, but I'm not counting on it. I think the ability of the political machine to package itself in an acceptable manner exceeds the ability of the masses to broadly see through this facade. More likely, in my opinion, is a slow, grinding reduction in the overall size of the pie and a simultaneous increase in the relative concentration of wealth among a few..."

That seems to be an overarching prediction you have about the future in general.

My overarching prediction is that "Perpetually increasing material consumption" will transform, into "perpetually increasing actual wealth" and that the economy will continue to grow in the future. It will be more solid growth. Kind of like, if the recent past growth has been getting fat on junk food, the future growth will be building muscle on health food.

I think this because I think the past OVERALL trend of economic growth (Looking at it in terms of decades, even centuries)has been growing muscle on health food. Just because there has been a lot of chicanery doesn't change that fact.

So I am just predicting that a past pattern will continue into the future. I also think that some basic assumptions of peak oil doomers are wrong, because they discount the role of intelligence in economic growth/

Theo_musher said...

The economic system itself is intelligent. Its a collective intelligence, like the biosphere is a collective intelligence.

The economy is designed to grow, just like biological life is designed to evolve and diversify and spread out.

My prediction for the future is that the economy and the biosphere will begin to grow together in greater harmony. The economy will no longer grow at the expense of the biosphere.

I predict this because the economy is a collective intelligence that becomes more intelligent over time and this is the smart thing for it to do.

There is an opportunity right now to make a lot of money bringing the economy into harmony with the biosphere and growing them together. This is what intelligent people are doing like Jigar Shah of Sun Edison.

Lonnie said...

Theo,
I believe that your analysis is correct, as far as the end result being more in harmony with the bioshpere to the extent this is possible, given the constraints of physics.

My concern is that it will take crisis to bring about this particular state. I think what you are advocating is what Daly has been teaching for decades. The economy can keep growing in a qualitative manner versus a quantitative manner. Unfortunately, intelligence or technology can only go so far for so long, again given the constraints of physics. Were we to accelarate toward your theory of a qualitative state then that finite point would be further into the future

Theo_musher said...

Well, one key concept is biomimicry.

A basic example is recycling. Nature recycles everything.

An excellent resource is a book called "Natural Capitalism" if you go to Amazon you will find a lot of new books on related subjects, like economic growth vs. scarcity.

IMO all wealth creation is mostly qualitative rather than quantitative. Even resource extraction has to do with intelligence. You can't make money of any commodity without said commodity being able to be put to intelligent use. Like oil. if there were no machines, no pesticides, no plastics, no pharmacuticals, it would have no value.

There needs to be a shift to renewable resources but the economy will still continue to grow. Intelligence is not going to reach an endpoint any time soon.

Lonnie said...

I am reading Lovins book now on Natural Capitalism among others and I agree with you, nature does recycle everything. The end result, ultimately, is heat. I am a huge fan of Amory Lovins. I am not a dooms dayer by any means and I think that what Lovins espouses is a path that we should strive for. I do think that Amory Lovins would be the first to admit that we do live on a finite planet and that his solutions are temporary when taken in the context of the huge picture.

Theo_musher said...

Interesting. I just ordered (from the library) a couple books by Herman Daly. I just found out one of them "Steady State Economics" is available online.

Here is an interesting quote:

"Should we, by a kind of reverse land reform, reinstate a landlord class? Landlord rent is unearned income, and we find income based on ownership of that which no one produced to be ethically distasteful. No one loves a landlord. Adam Smith tells us that landlords love to reap where they have never sown, and not many lament the historical demise of the landowning aristocracy. But not all the long-run consequences of this demise are favorable. Rent may be an illegitimate source of income, but it is a totally legitimate and necessary price, without which efficient allocation of scarce resources would be impossible. Henry George said let rent be charged but then tax it away. Socialists, after trying to get along without rent, now say charge some rent but pay it to the government, who is now the landlord. In the United States neither of these things has happened. The largest resource owner, the government, has followed a give-away and low price policy, both on resources it owns and on those, such as natural gas, whose price it regulates (Energy Policy Project, 1974, Chapter 11). It has done this to favor certain capitalists, to promote growth, and to ease the labor-capital conflict and win votes in both camps."

He's explaining why resources are such a low percentage of GDP and why the price of scarce, mon-renewable resources is so low.

I actually think a Landlord Class is going to re-emerge. I envision a Green type of corporate feudalism, which I don't think will be as scary as people think.

There are other collective models that might work also. But there needs to be more intelligent allocation of resources. People that are in a position to do this through technological innovation are in a position to make a lot of money. Like innovations in solar technology. The Sun is not going to grow, but the ability to capture usable energy from it will grow with investment in that sector.

Theo_musher said...

This is the economic model of the future:

http://www.princeofdubai.com/

Dubai is archaic yet modern, arguably the most modern city its controlled by a feudal monarchy.

The future of economic growth is massive green development projects in the developing world. The income from this model will be in the form of rent. Success will be measured by the ability to provide a high quality of life and attract people to live there.

SunEdison, follows this model in a way also, even though its not a real estate development project. But the income is all from PPV's. So in a way its like the income is from rent. Its renting the use of the sun to people, through giving the equipment that captures the energy away for free.

Lonnie said...

What about the developed countries? Where does economic growth lie for them? You are not suggesting that the developed countries are the landlords for these massive green developments so as to provide economic growth in the neoclassical sense are you?

It's about scale, ultimately. Less population coupled with less consumption. Tax the resource to limit use not the value added which encourages consumption.

Theo_musher said...

Well, here are the trends:

Jetson Green Green Books

Growth will be in making everything Green. Big Green development projects. One way this is talking place is real estate development firms going into economically depressed areas, with brownfields and doing bioremdiation and creating huge Green developments. LEED certification green roofing, paperless construction, buildings that generate their own power etc. and all that stuff. One example is

Destiny USA.

So the trend is to take worthless land. So my thought is that this would work especially well in many areas in the third world. I am not implying it will be all Western Companies doing it. There can no doubt be partnerships. But anyway, the model that is being used in Canada and the US can be used in the developing world. I think the most opportunity is there for growth. Its easier to start from scratch.

Lonnie said...

Theo,
I looked at Destiny USA and it seems to be business as usual to my unsophisticated eye. I don't see it as any kind of paradigmatic shift. It looks like more of the same 'green' marketing to get us to come and buy more stuff that we really don't necessarily need. I'm the first one in line to buy it. Any project that touts 1 million square feet of retail space is just the same ole same ole.

My belief is that we will experience a devolution of sorts. Mom and pop will ultimately survive the large developments. Again, I think it's all about scale. Maybe that is simply because I'm too dense to grasp the big scale of such a project. But, 'sustainable' is thrown around a lot in marketing and it really isn't ultimately close to being sustainable. My 2 cents.

Theo_musher said...

The Future of Green Building in the economic downturn

Lonnie said...

Theo,
You will get no argument from me that Green Building is the ONLY way to build. My case is simply that Green Building is not the ANSWER, just part of a shorter term remedy. Green Building will not sustain perpetual growth, that's my only point.

It just seems counter intuitive to call a million square foot retail space 'green'. Maybe I'm just ignorant.

Lonnie said...

One last thing then I'll shut up.

Dubai?

Theo, I was mistaken...I thought what you were talking about was qualitative growth but now I'm not so sure. My bad.

Theo_musher said...

Three of the top Ten Green Skyscrapers are there. Its a desert.

Its not like they are clear cutting the Rain forest to build there. There was nothing there in the 1960's. Its not oil money that built it either. Its audacity. People able to think big.

Its a hub basically to develop Africa. We have the technology to Green the Desert

We can green the entire middle East and then build Massive Green cities on sustainable bases of local food and energy production, wheras before it was a wasteland.

That's growth.

Theo_musher said...

The key is to make healing the land profitable. Once you are able to do that, you heal the land and create economic growth. The economy grows as ecological health grows.

So if you are really committed to continuing to be pessimitic, you have too choices:

Deny that healing the ecology can ever be profitable.

OR

Claim that there is no room for healing the environment. Which is really silly, because its so obvious.

Theo_musher said...

Here is the cure for pessimism:

We Are the Weeds

Lonnie said...

I said I would shut up...but

I'm not sure this is 'healing' the environment. Unless, Las Vegas is healing the environment. It is manipulating the environment in an energy intensive way.

Rehabilitating those rain forest and retrofitting existing infrastucture to be 'greener' is more akin to 'healing' the environment. Creating resorts in the desert on slave labor wages isn't qualitative growth.

Theo_musher said...

You can always e-mail me, if you want to have a private conversation

ted_heistman@yahoo.com.

So far you don't seem to get what I am saying. Lots of people we share the Earth aren't hippies and aren't going to either become hippies or die anytime soon.

So that means we have to all work together. Its just a fact that there is lots of green development going on in Dubai. It doesn't matter if its not your taste. Lots of people are motivated by making money. I am saying you can have permaculture and also spectacular real estate development projects such as skyscrapers.

Theo_musher said...

Its the possibilities of the region that capture my imagination.
Any thing seems possible in the UAE from a design standpoint:

Zero Emissions city in the Deset

Who could have predicted this?

Neven said...

How much emissions does it cost to build this zero emissions city? How much emissions does it cost to get water and food to that region? It's in the desert, right? Nowadays you can add -wash to most of the plans that use the word 'green' in it.

I believe there will have to be some kind of contraction first to get people to wake up, and then, if enough knowledge is conserved, then perhaps, after quite some time and quite some sacrifices, yes, the economy might grow in the sense Theo_musher alludes to. But first people's consciousness has to alter radically.

There are too many global problems at the moment for the intelligent economy to solve. It would take a lot of sacrifice, quantitatively and qualitatively, sacrifice people aren't prepared for and aren't prepared to make unless they have to. Either they stick their head in the sand, or they come up with optimist visions such as Theo_musher's. One could call that stick your head in Dubai sand. ;-)

The Problem of Growth-series on this blog is the best stuff by far I have read, because it addresses the root cause of all the global problems and then proposes solutions. Everything else I have read so far on the topic of solutions is old thinking (what did Einstein say about that?) and greenwash.

In my view we all have to take two steps back and once we have done this, take a long, hard look at how things stand and then take a step forward or even better: sideways. I've decided to dedicate at least a few years at making Jeff Vail's idea of Rhizome reality. It's the best way for me and the world around me.

Ryan said...

http://www.slate.com/id/2215339/

This is a good Slate article on "What else could we be wrong about?"

It examines failures of "experts" to predict the fall of the Soviet Union, 9/11, and the lack of WMD's in Iraq, the economic crash of 2008-??, and then asks "what if we're wrong about other conventional assumptions".

Neven said...

I was doing some reading up on George Mobus' excellent QuestionEverything-blog, and this piece reminded me of the problem I have with the way Theo_musher presents his case:

"So the G-20 is meeting in London to figure out the best logistics and tactics to restore the global economy to its prior growth-oriented consumer-based ways. There is no strategic thought here at all. The strategy is 'Let's do what we did before because, well, that is what we did before and it all seemed to work OK.' Until it didn't.

And most of the world wants that to happen."

"What is the foolishness here? That even though the reality of energy's relation to economic activity, and the latter's relation to global warming, and all of it related to overpopulation, is obvious to anyone who bothers to look, people still avoid facing the truth. Because the truth implies sacrifice and hard manual labor and giving up toys."

"The human subconscious is a marvel for turning rational thinking into rationalizing in order to satisfy emotional demands. And our unconscious minds are fantastic at avoiding any sense of self-blame for anything that is going wrong in our world."

More: http://questioneverything.typepad.com/question_everything/2009/04/april-fools-.html

Theo_musher said...

Neven, did you even peek at the Abu Dabi link?

It explains how its been built and where the water is coming from. Do you know what LEED certification even is?

Are you sure you don't have an emotional agenda of your own in wanting to see people suffer? Like some kind of revenge fantasy?

Would it upset you if people people started making money in a green collar economy? Its already happening, sorry to say. I mean. I'm not sorry about it. The most profitable construction projects to make right now are green buildings.

Demand for Grass fed beef is estimated to be 10 times greater than supply. People are converting cronfeilds in Iowa to perennial pasture and restoring the soil and making more money than corn and soy bean farmers still getting subsidies.

sorry buddy.

Lonnie said...

Neven,
Just for discussion and a wild theory:

Have you ever considered that maybe there is some secret agenda and that maybe they do have a clue and the answer is to go ahead and wreck this train and get it over with to start the rebuilding process?

Theo_musher said...

Here's a good example of a Failed doom prediction by Kuntsler

Theo_musher said...

Jeff is either ignoring me or too busy to post (which is likely being a lawyer with a family)

But anyway Jeff, I think what gets in the way of accurately predicting the future is wishful thinking.

In James Kuntsler's case he hates sub-urbia. So he wishes it would go away. First he predicts Y2K will utterly wipe it out, then Peak Oil. Lately, I think he assumes its too late for any of his urban planning ideas to come to fruition. So he's just basically a pessimist.

I think pessimism is another distortion. It causes people to look at positive people with a jaundiced eye. By positive, in this case I mean "action oriented" Nietzsche talked about the "slave morality" and the "master morality" that's pretty loaded with bad (or unPC) connotations, but I still think the basic premise is sound. Robert Anton Wilson thought so too.

He designed four quadrants of interpersonal styles.
Hostile Strength/Friendly Strength
Hostile Weakness/Friendly Weakness

I think most peak oil doomers are in the lower left quadrant. I think many people high up in the Military are in the upper left quadrant. I am sure some are decent people. But they are in the killing bussiness. Nukes, for example just aren't friendly anyway you lok at it. People with an interpersonal style of hostile strength IME show lack of creativity. They just like to control things other people have created.

I think people like Geoff Lawton are in the "Friendly Strength" quadrant. There are lots of other people in thnat quadrant that are concerned about the environment but are also "go getter" type people. They aren't worried about passively predicting the future. They are concerned with making the future.

That takes us to the third distortion I see. And that is a materialistic worldview. A materialistic worldview tends to negativity because it is inherently passive. Many with this worldview don't even recognize the possibility for the existence of people in the top right quadrant.

They don't believe in free will. So they tend to look at everything in the Universe as mechanical and constantly in the process of winding down. They see mostly inertia and the second law of thermo-dynamics winding down.

Lonnie said...

Theo,
First, I want to thank Jeff for his essays. I just found this site a couple of weeks ago and have been reading with interest and checking out blog history as much as I can. I am mostly a lurker just trying to absorb the amount of information that needs to be dealt with.

So, I decided to start giving my opinion for the first time here on this blog...

I am a middle aged man, I make a very decent living and I would consider myself at the top of the consumer chain. Based on my limited posting to you, Theo, I came away from our last conversation thinking that you might think:

a) I am a hippie
b) I am a pessimist
c) I am a dooms dayer
d) I am not a forward thinking person
e) I believe I am right

Sorry to dissapoint you but in my mind none of these things apply. No one can predict the future, we can look at the present and the past and try to rectify our mistakes and move on. As a college student many years ago, I considered myself an environmentalist and idealist. I studied forestry and found out I was not willing to make the monetary sacrifices to excel in my field. I took the well worn path and now think it might have been a mistake, or not. Now 30 years later, I am rediscovering Daly and Boulding, Leopold and Lovins. It all makes more sense, now, because I have witnessed it first hand.

My motive for becoming involved and investigating is 'action oriented' and not because I think or know I am right. I would much rather you be right, Theo.

Here is the ultimate dilema for you, though:

My basic belief that technology will not overcome entropy and that there are going to be consequences, will be a mere blip on the radar if your theory ultimately proves correct. I can start conserving, live in a commune or a tent in the woods...it won't change the outcome of your theory.

However, if your theory proves to be totally flawed...

Theo_musher said...

Believe it or not Lonnie, the key to overcoming the problem of entropy is in understanding the relation between quantum physics and spirituality. If our Brains are Quantum computers able to access a greater reality that interpenetrates the material world, then we don't live in a closed system.

The fact is, we have never lived in a closed system. The proof is all the biological life we see all around is. It all represents negative entropy.

The human mind is an even superior negative entropy creator than Mother nature, her self.

This isn't a new development, its just a reality that is hidden from people with a mechanical materialistic Newtonian worldview.

Theo_musher said...

Materialists simply cannot factor in true human creativity. They can't factor in free will. They can't factor in human consciousness at all. Except to say that its something that some how leaks out of our brains like insulin leaks out of our pancreases.

Kale said...

Please do tell Theo, explain to me how life on earth is negative entropy?

Theo_musher said...

Kale,

You really don't know? I didn't simply make up the concept of "negative entropy." It was a major premise of the ideas of Karl Popper, Buckminster Fuller, and in a sense, Pierre Tielhard De Chardin, Erwin Shrödinger.

These are the philosophers I believe Robert Anton Wilson picked up the concept from for his book "Prometheus Rising"

So its out there.

Theo_musher said...

Here is a good Shrödingerlink from Die Off dot Org of all places!

What is life?

Kale said...

Theo, thanks for the link. I'll have a read later looks interesting. I've got to get out in the garden right now. Spring has sprung the sun is out :)

Theo_musher said...

Cool. No problem. Here is an excellent article about Bucky's take on it

Meetings with Remarkable Buckminster Fuller

"He was very approachable, very warm and saintly, radiating a very loving aura – in sharp contrast to Herman Kahn who was hugely aloof and sneering, radiating little warmth. In the two men you could see the polarities of intellectual vision. Kahn was convinced that the planet was in deep trouble and that Malthusian economics dictated Darwinian survival strategies (e.g., he advocated and defended America’s policy of exporting pollution to Third World countries). Fuller, on the other hand, was convinced that Universe is sentient, that Cosmic Intelligence always prevails, and that cooperation, not competition, was the key to real progress. Mentally I called Herman “Fat Hope” and Bucky “Slim Chance.”

Within hours I had decided Bucky would make the ideal grandfather. So when I found him sitting one row behind me at one of the talks, I scribbled my request on a sheaf of conference notes and handed it to him: “Do I have your permission to adopt you as my grandfather?”

Bucky scrawled an unhesitating response: “Indeed you do! It gives me great joy and an increase of responsibility.” This simple act proved to me that Bucky represented the noblest spirit of humanity, the archetypal Community Elder who has grown beyond tribal concerns and was in effect one of the True Sages of Planet Earth. Such beings are not universally recognized under the military-industrial power structure – but I’m sure that as the Aquarian Age proceeds, they will come into their own."

So the extrapolation I am making is that the Universe is Sentient, Life feeds off Negative Entropy, We human beings are by extention alive and sentient also and have the ability to Order the Universe even faster than Mother Nature.

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