Wednesday, January 18, 2012

OpenOperations "Visual Economy" HighSchool Challenge

Open Operations is issuing a Challenge to EVERY HIGH SCHOOL IN THE USA, heck, in the world, to develop and present simple system visualizations in two categories:

1) Visual model for how Personnel System Methods make an Adaptive Organization.

2) Visual models for how Credit, currency, criminology & policy Methods make a Scalable National Economy. (5 subsections)

For more details, see below.

Why this challenge, now?  In many domain areas, we have endless criticism of things that are wrong, and and many illogical things to correct.  Take CREDIT, CURRENCY, CRIMINOLOGY AND FISCAL/TAX POLICY in general.   Despite growing numbers of critics, gridlock abounds, and OUR COUNTRY IS BECOMING A LESS RATHER THAN A MORE PERFECT UNION.  Identifying what's wrong is no longer rate limiting.  Our biggest problem is in coordinating coherent responses to what are still very distributed perceptions.  Our group-awareness of context is lagging context change, and is never adequately close to being coherent.

What to do?  Target aggregate context awareness.  How?  Here's our idea.

I just had a long talk with Peter Groen of CosiTech about the evolution of domain-specific exaqmples of "campaign momentum."

Peter is an IT person focused on distributing enabling IT tools, starting with OpenSource Health IT. He's basically the co-father of the VA's ViSTA open-source healthcare system.

I tried to impress upon Peter that there's a developmental step - widely discussed in biology - that is prior to coherent demand for tools.  Peter grasped it, and agreed in principle.

In health, for example, the bulk of our population had, after decades of education, arrived at a coherent view of personal & public health as systems.

The elements of that context awareness?  Recognition of a system, with components like vitamins, trace minerals, organs, blood pressure, infectious agents, immune responses, draining swamps, clean water, epidemiology, etc, etc.   Few now argue about the details, and instead share a common view.

With that common view came coherent context awareness.  Subsequently, citizens & clinicians began recognizing and crating tools to fill holes where the context model demanded data.  Health IT tools became obviously demanded, as one obligatory part of SYSTEM INSTRUMENTATION, but only once group awareness of a system was established.

Similarly, specific types of navigation tools proliferated AFTER more people realized that the world was round and circled the sun, not before.  For personal/public health, the response was rapidly spreading demand for all the diagnostic-tracking tools we know today, from charting of diets/exercise/toxins/nutrition all the way up to shareable electronic health records & statistics from public databases.

In the case of other systems?  We're just beginning to build coherent public awareness.  Take:
  military personnel systems;
  currency systems;
  public policy systems ... .


Why? First, we're not teaching the prior need for coherent context awareness to students.  Second, we don't provide enough ways for youth to PRACTICE the overriding return-on-coordination that scales up to trump any & all heroic but unscalable local practices.  Why memorize data BEFORE knowing what it's for?  Most data is irrelevant, most of the time.   Data can be generated or retrieved upon demand.  Adaptation primarily involves creating & capturing new methods for determining what tiny fraction of data matters, when it finally matters.

This is a distributed problem where adults have all the relevant data, but where AMERICA DOES NOT KNOW WHAT AMERICA KNOWS.   Worse yet, we don't know how little we need to know!   When that occurs, it's up to youth to come up with their own, coherent group-awareness of group-context.

Since DATA IS MEANINGLESS WITHOUT CONTEXT, we must first build group context-awareness before trying to utilize all the data we've been producing like projectile vomit.

Ergo, for neglected domains where coordination is now rate-limiting, our absolute first need is to disseminate simple models for visualizing & picturing system and system-component models.  

In our current context, we need simple models letting any Trudy, Nick or Harriet visualize how personnel (not just personal) methods make an organization, and how credit/currency/criminology policy methods make a national economy.  

With an iterative approach to such frameworks, people can fit in more detailed visualizations of sub-systems like credit systems, currency systems, criminology systems, and policy systems ... that are actually coherent visualizations of actual systems, rather than uncoordinated and unscalable ideologies. 
   The necessary visualization models need to be as simple as the currently popular but absolutely culturally worthless mobile-phone video games. :)

We have an emerging electorate that visualizes Grand Theft Auto better than they do Grand Theft Economy!   We can fix that.  The way to fix it soonest is to go through a logical process.

1) CREATE multiple, simple visualizations of context.
     Is the world flat or round?   
     Is an economy a dynamic equilibrium among distributed, conflicting, forces .... or a centrally commanded feudal system of, by & for the 1%, narrow-minded ideologues?

2) ADEQUATELY DISTRIBUTE competing, summary visualizations of as many models as possible.  Let juries of our peers - in Open Source courts or "selection markets" - converge to what is or isn't coherent.

3) CONVERGE to adequately shared context awareness. Then let the explosion of Open Source tools begin.  

If we can have Open Source Health tools & practices, then we can also have Open Source Policy tools & practices ... but only after achieving adequately shared public awareness of an economy as a coherent system.  If we as land and sea-faring nomads can invent celestial navigation tools and practices, then we, as Context Nomads, can also invent tools for navigating any context whatsoever.  To navigate, you first have to model which signs are most useful, and then monitor and leverage them appropriately.

Hence, Operations Institute, the OpenOperations Forum and Cosi Open Business & Economics are collaborating on a Challenge to EVERY HIGH SCHOOL IN THE USA, heck, in the world, to develop and present simple system visualizations in two categories:

1) Visual model for how Personnel System Methods make an Adaptive Organization.

2) Visual model for how Credit, currency, criminology & policy Methods make a Scalable National Economy.
Upon reflection, it seems necessary to divide scalable economics into 5, overall stages, especially for students being introduced to scalable systems theory.
     a) credit operations      b) monetary operations      c) regulatory operations      d) national policy operations [public ambitions]      e) a->d combined (adjusted, actual or "dynamic" national policy).

All models submitted for review must include a metric representing the sum "quality of distributed decision-making."   That metric will drive coherency as a selection criteria, thereby building in adaptive rate as the continuous goal, regardless of any pattern of context inputs.

All team members must be named, and - to practice coherent coordination - at least 4 disciplines must be represented.  For example: art student, choreography student, physics student, engineering student, etc, etc.

We suggest that all visualizations be submitted as YouTube videos and/or mobile phone apps.  We'll work with partners to create appropriate channels.

Open Operations Forum and collaborators will begin developing a distributed network of rewards for participating student teams.  Our initial approach will be to connect students to professions in any & all fields targeted above, and also to professionals in those fields who contribute by participation.   Thereby, participation result will be its own rewards.

Those with additional suggestions for further student incentives are free to contact us.

Saturday, January 14, 2012

More on Maintaining the Quality of Distributed Monetary Operations Decision-making

Any complex system that follows the general methodology recipe laid out in the prior post, has a chance to grow.

Any system that exceeds coherency tolerance limits, has a chance to implode, regardless of size or past.

As we lecture to engineers, methods drive results, but only with constant addition of new methods for retaining coherence among existing methods. Just avoid screwing up existing methods, and new options will always become obvious. Our bigger race is over tempo. There are always very few options that will scale.  It boils down to who will recognize & explore emerging options first - and converge soonest to the inevitable?

Metaphorically, whenever some sub-group decides it's okay to change the tires, without consulting drivers/passengers in a moving car, that's when things can go horribly wrong. Pick your imagined permutations of screwups by stakeholder groups in any system.

Then imagine what underlying method they might always use to maintain coherence within all their nested tolerance limits, thereby allowing system growth.

While data & direction & tactics/strategies/policies are all meaningless without context, there has to be one, overall method that is constant regardless of context.

We're always juggling emerging variables, within coherency tolerance limits, while searching for permutations that maximize further options. That is the general solution to the Traveling Entrepreneur Task. It's a constant parsing problem. Since expanding options are synonymous with more levels of indirection, it's also synonymous with system growth, which simply amounts to re-ordering from less-flexible to more flexible and adaptive systems.

That just brings us back to endlessly parking available energy, and the concept of reverse-entropy. Why? Just statistical fall out from the rules originating with the last Big Probability Event (supposedly a Bang). All methods we know are just permutations of those given rules.

To be logically consistent with reverse-entropy, monetary operations, as one minor part of cultural growth, are simply a bookkeeping method for coherently denominating increasingly distributed transaction patterns. If you keep in mind that the overall goal is a 2-stage optimization task, then you can always help maintain a coherent, steadily growing nation. The 2-stage optimization is simple. Keep the components - people - well maintained, AND grow the nation. Anything less gets boring very quickly. Small minds think distracting intoxication, big minds think cultural thermodynamics.

How, exactly, do we juggle existing/emerging variables, look for new options, and avoid the worst repercussions ... and do all that faster than others? The simple answer is by using highly connected human systems. Every group, by definition, is an analog computing network, exchanging messages between nodes. Group intelligence is held in the body of discourse, not in the component people. Group intelligence grows by constantly adjusting the inter-connectivity patterns and interaction rates, to increase net autocatalysis.

Autocatalysis rates (innovation) are managed my maintaining open & rapidly collaborative systems. Highly recombinant systems are, by definition, intelligent and agile. We need highly recombinant "culturetics" far more than recombinant genetics.

In the trivial case of monetary operations, how do we make fiscal/monetary/tax/criminology policies optimally serve national growth? Seems rather simple.

First, always maintain & adequately distribute enough fiat currency to allow quality of distributed decision-making to proceed without undue constraints. Any excessive distribution disparity is as stupid as generals hoarding most weapons and thinking they still command a useful army.

Second, regulate patterns of bookkeeping use in ways that inhibit fraudulent decisions, and encourage productive decisions.

Third, tax specific transaction patterns in order to further tune distributed actions to fit group policy goals.

Everything else constitutes local, tactical details. In that regard, the general rule is for policy staff to stay out of most, but not all, local tactics, and not meddle overmuch in the quality of distributed decision-making.

How do we Maintain the Quality of Distributed Monetary Operations & Decision-making?

First, always remember that currency is a tool created by an issuing group, and that all fiscal/monetary/tax issues involve how best to use that tool. No matter how good a tool you have, you have more options for both using and misusing it.

Separating tool & tool use is a good way to look at what goes wrong everywhere. For now, I'm going to attribute all usage problems as Cargo-Cult Process Management.  How we misuse monetary operations is similar to how we mismanage anything.

Instead of being careful, we're being stupidly lazy and making our nation one big skunk-works. We are, by definition, always in an ongoing aggregation process, yet it seems our thinking is typically stuck somewhere between:
1) personal gain,
2) system gain, or
3) co-optimizing both components + system.

Our greatest need? Refined methods for keeping higher proportions of our electorate practiced at stage 3 thinking.

What can we best use monetary operations for?  Obviously, to advance Public Purpose, which boils down to a 2-stage optimization task of maintaining components (people) as well as system (nation).  That goal is easily stated, but difficult to practice.   How do we actually tune monetary operations to help rather than hinder Public Purpose?  To answer that, we need to step back and look more broadly at context.

When naive people recognize a process for the first time, there's a temptation to think that it's use is adequately defined by a few variables ... when, in fact, there's a polynomial list of variables involved and no easy way to see which permutations scale across multiple contexts. Otherwise, it wouldn't have required 3.5 billion years on Earth to produce the densely-engineered, incredibly complex system call "us".

Take something as mundane as orange juice.
Some mechanical engineers & organic chemists say, "How come the growers/grocers have all the orange juice? It's mostly sugars, ascorbic acid, and some volatile oils. That's not stable. Let's fractionate it for separate storage, then recombine on-demand." Voila! Cargo-cult context management!

Once deoxidized & fractionated, purified parts of what remains stable is hoarded in bulk storage.

Eventually though, such, overly simplistic, Cargo-Cult thinking causes apoplexy among nutritionists, biochemists, physiologists, diverse clinicians, statisticians and general system scientists ... not to mention gourmets & chefs, and ultimately parents, educators & diverse developmental specialists.  Defeat was chosen from the beginning, because all the tool users weren't adequately linked to why they were using their tools.

We're always novices at emerging context. We presume that one-pass sampling of a complex system provides enough predictive power to cavalierly tinker with the whole system. To improve, we always have to explore more group options faster, so tinkering is needed, but must initially be safely isolated until beginners learn from most of the mistakes that others would see coming, if asked.  After that, all tinkering always needs full-group review.  There is no known mathematical alternative that can define the quality of distributed decision-making.  Decision quality, like data, is meaningless without full-group defined context.

Our greatest need - even in monetary operations - is to extend the sanity-check process to better sample all emerging sub-processes.  Here's how.
1) Have a rough model or checklist of all stakeholders repercussions (contingency tables).
2) Have a rough model for what constitutes adequate sampling of stakeholders (actually use the contingency tables).
3) Have a rough model for the ratio of disruptive/adaptive momentum (the summary from reading extended contingency tables).

Basically, don't imbalance groups faster than you can re-organize them. Otherwise, we're sawing off the limb we're sitting on.

[Note: It's not really as bad as it seems. Sub-processes more than ~5 layers deep in any system converge to stability. New options are statistically shielded from black boxes more than ~5 fractals in the past?]

What are Monetary Operations For?

How do we use distributed monetary operations to advance Public Purpose, sooner rather than later?

Briefly, organizations do what they must to survive. That includes inventing social species. The human social species survives by organizing scalable success faster than other species. Our moment of adaptation now floats among human cultures, as an unfolding success path tracking the combined pace & quality of distributed decision-making .

To optimize national returns, we generate as many distributed options as possible, then select from them as wisely & pace allows.  Success is continually minimizing constraints on decision quality. For currency, we do that in large part by separating two concepts - quantity and price of bookkeeping currency.  Across diverse decisions co-optimizing both local and group outcomes, it is price, and not access to bookkeeping, that should be the only burden on local degrees of freedom. Focusing on bookkeeping price vs quantity guarantees all people infinite pathways for contributing to group benefit. Limiting access to fiat currency simply limits the volume of numerals that students may utilize as they progress through math studies.   Once virtual bookkeeping is free, there is no public utility in limiting it's utilization.

In order to scale agility of large groups, currency supply should grow, on-demand, while available options should compete per ROI. That refinement is precisely what allows us to parse scaling options.  Evolving groups need the confidence to explore increasing options, yet still want to choose wisely.  Constraining the quantity of distributed bookkeeping is a useless distraction, whereas floating local pricing - NOT price stability - retains and focuses utility.  Stringing together organized chains of distributed decisions is EXACTLY how agile groups outpace more constrained groups.

Populations removed currency quantity as a constraining variable by transitioning to "fiat" currency standards, where currency supply follows than rather constrains the number of distributed transaction decisions that can be made.  Fiat currency, in it's most general definition, is not convertible upon demand to any particular commodity, only indirectly to public initiative.  Further, it's volume is allowed to float, as a function of public initiative.  Finally, it's exchanage rate with other currencies is also allowed to float (floating Fx). Together, these measures help remove currency supply as a constraint when optimizing the quality of distributed decision-making. Fiat currency is simply a virtual measure of unbounded public initiative. The currency-access side of distributed decision-making is never the place to impose market discipline, since it has become obsolete as a limiting variable.

Fiat currency, as only one of many tools we use, is created and distributed via public initiative (Appropriated by Congress, agent for the electorate), destroyed through taxation or return of fiat "profits" to our Treasury, the currency issuer (through it's agents, the IRS & Central Bank) yet primarily utilization in distributed transactions.  Other tools that we use are regulatory services that serve primarily to manage tolerance limits for all aspects of self-organization, from preparatory education standards to control of fraud rates.

Monetary operations involve fiscal, monetary, taxation and criminology fields - all serving public policy.   As only one of multiple tools, monetary operations are useful only when coordinated to optimize quality of distributed decision-making.

Developmental statistics, freak accidents & psycho-social variance will always prevent us from 100% utilization of our population at any time.  However, access to minimal local currency supplies as "revenue" is an obsolete concept once the transition to a virtul or fiat currency standard occurs.  There is no downside for the issuing group since currency supply follows net group initiative, and is not convertible upon demand to anything else. The upside includes more options to pursue full utilization of human capital as asynchronous group options occur.

The only reason for a group denying a member access to minimal "maintenance" amounts of fiat currency is lazy admission that "we can't come up with anything worthwhile for you to do."  None know the potential value of others, given 308 million people.  Rather, to explore unpredictable options, we either suggest things to be done, or follow individual's suggestions for novel things worth doing.   Since fiat currency supply is infinite, we need only practice selecting ROI from - not constraining - emerging, distributed initiative.

There are no better places to orient to modern monetary operations than the books by Mosler, "The 7 Deadly Innocent Frauds of Economic Policy" and Mitchell, "Full Employment Abandoned".

Thursday, January 12, 2012

Currency & Monetary Operations, And How To Use Them.

This blog kicks off with three questions, addressed in successive posts.

1) What are monetary operations, and

2) what are they for? [We forget, and even forget to ask.]

3) How do we seek a general method for answering those unending questions, and keeping emerging monetary Q&A meaningful to all.

As you'll see, these questions can't be separated, only revisited in a useful, variable sequence.

Initial answers, up front are, respectively:
for accelerating cultural growth; and
by simultaneously optimizing [people+nation], not either separately.

Some needn't read any further.

For the less astute here is post #1, what is money and what are monetary operations?

Money, or "currency," is what people use to denominate distributed transactions. It's that simple. If you have no need for widely separated transactions, then you have no need for currency. Adam & Eve didn't mention currency, just fig leaves. Who knows what they were really hiding.

In small groups, organization can track affinity bonds, and currency can be considered to be "backed" by Central Stores of arbitrary commodities. Yet as separation between transactions scales - with population size and/or market complexity - currency becomes a more distributed form of bookkeeping. A currency transition occurs, from primarily a store of local value, to primarily a unit of account for coordinating widely separated events in increasingly complex transaction chains. Transitions occur because net value to an organized group trumps any local definition of value. Strategic, organizational agility can't co-scale with population without a transition to fiat currency methods.

Someone smarter can always take your Central Stores, whether your men, your women, your horses, your gold, or any other commodity.  Therefore, currency is always backed by group initiative. Affinity bookkeeping can't scale with population, so organizational state requires more distributed logistics accounting. In larger populations, currency must be backed more & more directly by distributed public initiative.

"Why is state money better than gold?Because the highest return is always the return-on-coordination. Scaling up ability to explore large-group options requires scalable large-group agility and scalable large-group intelligence & coherent alignment to emerging options. That's the same reason that species & armies are never resource constrained. The biggest constraint is always organizational ability. That means that only state-money denominations are agile enough to keep up with the kinetic demands of uncontrollable public initiative. Commodity-money was thoroughly tested, and was found inadequate. Its valuation has to be constantly re-scaled, simply because populations & their options scale faster than the magnitude of any commodity store. If that’s the case, just simplify and cut the commodity out of the re-scaling loop that links organizational ability to group outcomes.

Currency concepts differ for local-, mid- and broad-minded people. Minds-in-training start with personal transactions, while experienced minds also consider nationwide coordination. Somehow, that spectrum sums to a coordinated whole greater than the sum of it's parts.  It's no wonder that Ben Franklin, an early proponent of the return-on-coordination, was also an early student of fiat currency. For now, let's just agree that money or currency tends to mean different things to different people in different stages of their development.

To review the history of money, there are no better places to start than Wray's book Understanding Modern Money [a historical guide]. and Graebers book Debt: The First 5000 Years.