Plane crashes, Brexit chaos, and leadership in a fog of uncertainty
- Who or what is to blame for the Boeing 737 MAX 8 disasters? An investigation into the cause recalls the way leaders across the world grapple with today’s highly complex problems, and the comparison is hardly reassuring
Air travel is the safest form of transport, with the risks lower than travel by car. In the case of the Indonesia crash, the flight data recorder, showing experienced pilots on board struggling to stop the plane from diving, seems to suggest to non-engineers that there is something wrong with the plane’s design.
So was this a mechanical hardware, software or human-induced crash?
Complexity theory suggests that we cannot apply simple, linear and mechanical models to understand reality. Much more sophisticated pattern recognition methods are required. Conventional economic models have failed to predict the future because they are too simplistic, assuming that humans have “rational” expectations with perfect information and completely ignoring contextual issues such as climate change, technology disruption and politics – all of which have huge economic consequences. Even a layman understands that.
The clash of the old and new ways of thinking is especially apparent after a week visiting the two capitals that used to run the whole world – Washington DC and London. Both are absorbed with today’s complex problems that have no ideal solutions. We have moved from a simple, predictable world of optimal, “first best” solutions to a condition of utter confusion, in which everything is possible.
All financial crises have political origins and, of course, political consequences. With hindsight, the greatest financial innovation of all time was the creation of financial derivatives on “Ninja” mortgages, namely “no income, no job, no asset” residential mortgages which were simply unsustainable. The banksters of Wall Street turned these financial derivatives into a “no fail, no jail” outcome, whereby no one was accountable to anyone. Heads I win, tails you pay.
The monetary creation of US$14 trillion by the top five global central banks brought interest rates down to zero and boosted global asset bubbles, making the rich richer. The 90 per cent of the population found out later that they were the ones footing the bill, while the bankers got off scot-free.
It was this anger, plus distrust of the elite, especially politicians, that drove electorates to vote for change – Brexit in the case of Britain and Trump in the US. American politics is deeply divided between the left-wing Democrats, which won control of the House of Representatives last year, and the right-wing supporters in the Republican Party who remain hard-core supporters of Trump.
Which brings us back to the jet crashes. If modern planes are so complex that we are not sure whether human pilots or autopilot software are in charge, who is really piloting our future trajectory? Our political leaders across the world will do whatever they think is right, but it looks as if they are flying in a fog of uncertainty. We, the silent passengers, watch and wait for key decisions by the pilots in front, and pray that they know what they are doing.
And that is the true state of the world.
Andrew Sheng writes on global issues from an Asian perspective