It's Quantification Again

How could Donald Trump win with the support of "blue collar workers"? Or will the past decade be remembered as the period when the underclass revolt grew into a movement with political bite? With a cry for change? But which one?

Do we have answers? Can we explain the geopolitical, socioeconomic system without understanding the underlying "physics"?

An attempt at an answer:

A policy that fixes what it eventually broke?

We strive for equilibriums, although we have long since dawned that life, in all possible forms, only happens at the border between chaos and order. Political life above all. Politics benefited from the participation of the people. For this, however, more is needed than direct democracy. Complex concepts must be explained in such a way that they can be understood, comprehended and managed by non-experts. Fueled by explorative learning of people and developed according to the principles of evolution.

To implement such a politics is equivalent to implement a radical innovation. It can't implement a structural and behavioral change simultaneously. It must therefore use existing instruments. The aim is a system that overcomes its fragility and becomes stronger when stressed - by diversification, flexibility and optionality. This is impossible without quantification.

Political engineering

Political engineering, deals with the design of institutions. Institutions are understood as the rules that empower a society to govern itself. It often involves the use of paper decrees, in the form of laws, referenda, ordinances, or otherwise. But those instruments can never replicate the system complexity.

Quantitative policy

If the state, in view of systems of growing complexity, wants to reach its targets, it must quantify. An example of this is provided by Financial Engineering on the basis of Quantitative Finance. Methods of econometrics, finance theory, engineering, physics, mathematics and programming are intelligently combined to design primary financial instrument and their derivatives (secondary financial instruments) to asses their return and risk profiles.

Since politics also supports its primary tasks with secondary instruments, it is far more quantifiable than widely accepted.

Structural changes are complicated, but system changes are complex. International exchange is complicated, but global civilization is complex.

In complex systems, crises are not unavoidable cycles, but operational accidents.

The Agenda of Unser, the book

A river flows from the Industrial Revolution - see here
The complexity of labor and economy - see here, herehere and here
Income or wealth - explaining the essence of the money system, it emphasizes the different effects of income producing investments and speculative investments in existing wealth
The programmability of money - it's a liquid media for economic transformations and a store for value, thus programmable, but then money system lacks an operating system.
A change that works - how to avoid the extremes of the change curve
Free market or capitalism? - explaining, why free markets and capitalism without adjectives cannot co-exits.
Management of a wealthpool - how to deal with the conflicts of individual and collective interests has responsibilities.
It's our turn - why direct democracy helps fixing politics
Centralize or decentralize? - why Marxism 2.0 would't work and why a politics with a left orientation must decentralize.
Income from micro to macro - about the different income types of individuals, enterprises and total economies. Why it's important to understand, where it comes from, where it goes to and how it's used
Control with tax - to manage the tax principles, equality-cetrtainty-convinience.economy, cannot be achieved without quantitative modeling and adaptation.
Universal basic income - why it makes sense, but also why it's required to control is by models
The no-problem problem - about systemic risk management

Unser - in this chapter, I give an answers and a resolution to the questions and progressive problems, I've asked and described in the previous chapters. How to use existing instruments, how to write mid term future and how to change foundations.

The century of complexity

But there's one big thing thats atop the details: there's no significant pay off  of any political change, without quantifying - empowering political engineering. Because the required physics of policy is the physics of complexity. It's why policymakers have lost their abilities to sustain decisions. Because it's impossible, without understanding positive feedback, free agent complexity, the complexity of risk, the limits of probability, the impossibility of predicting future, but the possibility to write it (after having understood patterns)…

Without experience in quantitative fields, risk management, the theory of complex systems and innovation principles, I couldn't have written this book. But the other way around, writing it I've looked into topics that has provided new insights in core business: innovation advisory, focusing on quant innovation. In the century of complexity.