Path dependency, trends and other viral connectivities.

weblog September 24 2009
Jozi
Every month or so I go off to a chiropractor who adjusts my neck and straightens out the odd kink, and for a day or two everything is clear, my eyeballs see without strain and the energy flow through my body is as it should be. Then gradually [or even suddenly as the case may be] the old fault lines reassert themselves, and I fall out of alignment, until the old headaches return, the toothaches grow more bold; the sinuses re-block themselves, and it becomes time again to have it all adjusted again. I call it routine maintenance.

So is it with our society. We can lower the top, raise the bottom, squeeze the middle: but all the old kinks return, because there are always so many actions we take without noticing their effect; so many little steps that are taken without conscious thought. Like trees we just grow, and without the splints of corrective force our natures will take us where we are wont to go. So the paths we choose become the paths we know, and to say otherwise is to forget we made a choice somewhere, sometime: thinking we were going somewhere else, when our paths converged upon a choice of destination

Thus without knowing, we take the gentlest paths down the most convenient slopes, to the bottom where the going is easiest.

In a forest only the tallest trees can reach the sun: thrusting through the crowded thickets.

So it is with humans… Lies and denials through the politics of resistance, ill fit the aspirations of assertive growth, and like the kinks in my neck they will return at every unconscious moment when our awareness slips, and when we find ourselves baulked..

I have just finished a first browse through a new book called ‘False Economy’ by one
Alan Beattie of the Financial Times [London]. The basis of Mr Beattie’s premise is
that the difference between success and failure or atrophy, for the countries of the
world lies in the effectiveness with which they iron out the kinks and/ or the choices
they make in economic policy, that ultimately determine whether the country goes
forward or remains mired in a depressed state of stasis. Sometimes these choices are
recent as they would be with say, South Africa [which he doesn’t discuss], and more
often they are ancient, as they are with Russia, which he does.

His central image is the difference between the Giant Panda, a creature that somehow
morphed into an evolutionary cul de sac, and which cannot survive without state
support, and the household moggie[pussycat]; that super adaptive creature that has
become a ubiquitous part of all the world’s societies… the ultimate survivalist.

In his entertaining, and seemingly well researched tome [albeit poorly referenced] Mr
Beattie reminds us that it is the power of vested interest that supplies the almost
insurmountable “kinks” that prevent the movement of a society towards its holy grail
of super-development. He draws on a series of examples from, for instance the power
of an absentee landed gentry in Argentina, putting limits on that country’s growth, so
that the country, at one time, quite recently, the potential competitive equivalent of the
USA, has gradually stagnated into a third class power. At the other end of the scale he
describes how the vested interests of corrupt border customs procedures limit the
development of African states, particularly those that are landlocked.

His key phrase is a concept called ‘Path Dependence’ a phrase that rings resonantly of
Robert Frost’s classic piece “The road not taken”… “Two roads diverged in a wood”
and we took the path, unlike Frost, that was more travelled on… and that “has made
all the difference.”

Beattie made no comment in his exhaustive range of analysis regarding the paths that
the newly democratised South African State opted for in its post apartheid evolution.
Had he done so he would certainly have found fruitful ‘grist to his mill’ in the body of
racially inspired legislation that have epitomised the new State’s route to the future a
route predicated on past experience, and which seem more than likely to mire the
country in stagnation and frustration.

South Africa is a country that, unable to shake of its heritage of discriminative
legislation, passed new legislation to affirm those previously disadvantaged by the
racist apartheid era. Thus it has created an elite class of so-called “black diamonds’
who have racked up their pay to astronomical levels, exploiting to the full the
immutable laws of supply and demand … ie legislation requires that [so-called] black
empowered executives fill upper level positions in all organisations. However for
historical reasons the supply of such persons is extremely limited [and will continue
to be, see below].

Thus all manner of managerial workers now enjoy pay levels that even modestly
successful entrepreneurs can only dream of… For instance: the former Town Clerk of
old whose pay scale was on a par with the local school headmaster has now been
retitled as a Town Manager and earns five or six time the wage of the luckless
schoolmaster… some even earn more than the State President..

There is of course no real shortage of [so-called] black persons to take the post of
Headmaster, [or more appropriately in our enlightened times: head teacher] so
Headmasters remain poorly paid as do all educators, and other low
level workers, who are generally in ample supply, relative to demand.

In fact, in order to cement the place at the top of those persons fortunate enough to
have acquired some body of qualification somewhere, the education system has itself
been carefully demolished in the guise of an “improved” new post revolutionary
system. This system is so brilliant at developing the country’s potential that of some
two million children who started school under the new system in 1996 fewer than one
thousand were found to be sufficiently numerate to cope with the demands of a
university science education 13 years later. Not more than six thousand were of a
literate enough standard to cope with the demands of a university career.

Not only is the new system unable to produce school leavers of a reasonable standard
but all the teacher training institutions were closed, the technical colleges were
merged into universities and the national system of apprenticeships tossed out in
favour of an army of tax financed training bodies, that, to date, have [allegedly] barely
trained as many citizens in fifteen years as were produced in a single year under the
old discredited system. The party apparatchiks [known as “cadres”] who have been
seconded to run all these training bodies, and most other training institutions [and just
about everything else that qualifies as a sinecure], have what Beattie would describe
as an unacknowledged vested interest in ‘failure’ since too many well trained black
citizens will bring down the price of black managerial labour. An unwillingness to
compete is identified as a contributing source of atrophy in the existence of many less
successful economies.

Interestingly South Africa would represent a fascinating example to Mr Beatty of a
developing State that is in fact un-developing or de-developing. Over a period of
seventy years the country, at one time poised to compete favourably with the
emerging Australian State in the 1940’s, has morphed into an under-developing state
as a direct result of just such an unwillingness to compete firstly in the form of the
Apartheid State and now more latterly in the form of the new Affirmative State.

For instance: over the period 1994- 2009, the contribution of the manufacturing
sector to the Gross domestic product has declined from 24% to 14% and falling. The
country has become a net food importing country. The only sectors of the economy
showing signs of growth are those in government services. Even commodity output,
Beattie’s notorious “Resource curse” is in net decline. Routinely higher inflation rates
than those of trading partners means higher than standard interest rate patterns which
inhibit local investment and damage export opportunities, by causing an abnormal
strengthening of the exchange rates.

In 2008, the country was driven into recession principally because the electricity
supply agency failed to upgrade its supply capacity, to cope with even the modest
growth target that were achieved at the height of an [in retrospect] artificial “boom”,
inspired more by the circular process of selling off assets to comply with the legal
requirement for [so-called] Black ownership, than because of any real investment
growth.

The conclusions Beattie arrives at in his “surprising economic history of the world” is
that the various success stories that punctuate the path of human development are
almost exceptions to the rule, that once a vested interest group gains control over a
decision path, the probability of a change is so remote that stagnation is almost
fore-ordained. There is a good reason why my chiropractor can afford to send his kids
across the world to go to school; he knows that my neck will continue to be
troublesome no matter that he straightens it out every few weeks or so, and that I and
the rest of his customers, will have a continuing need for his services.