Forum Post: How to Rebuild the New System and the Irrelevance of Obamney

Obama, Romney, It doesn't matter, I think we all agree. However, there are problems we can control, and those we can't. We should focus on areas of most value in the remaining time.

The system is about to destroy itself. How shall we rebuild?

I think there are several trends that must be understood:

We are witnessing the death of the Nation-State

The death of the nation-state is coming from nearly every direction. The increased societal stress, the economic ponzi scheme that spans everything with a currency symbol and a promise on it, it's all vapor, and it's evaporating.

The death of the nation-state will require the rise of local government and the community. All attention up till the point at which power transitions should be in building in resilience to your community. How can the community maintain the necessary items for basic survival of those in need? Protest your local government to keep basic supplies of basic medicines for those that may need them, and to ensure local officials are community focused (sheriff, utilities, etc.) No matter how this shakes out, supply chain disruptions will be certain. If your local governments are not community focused, we can much easier enact change there.

Build resilience now in everything that is essential.

In the new system, rules must be simple

People are all talking about golden rules and the golden rule, Rabbi Hillel's rule, is: No government deficits. That's a good heuristic. No government deficits makes things a lot less fragile. It's a very simple heuristic. Again, solutions can only come from very simple heuristics. That's what we've been doing now since civilization started. And of course the codification of the first one we have is Hammurabi's Law:

http://www.commonlaw.com/Hammurabi.html

Skin in the Game, and Ethics

For the last 2 or 3 centuries we have experienced an anomaly, people with power have no downside risk, they shift it to someone else. What happens is that some people in society have the option, namely the bankers, the managers of businesses, they have other people's skin in the game, the left column. No skin in the game other than they keep the upside and transfer the downside to others. You can see this, the stock market has lost about $5 trillion over the past 10 years, comparatively because a lot of stocks were at a higher level compared to cost of funds. Managers of companies made $400 billion. Why? Because you have the upside and no downside. So they actually own the option and they benefit from volatility. So, no skin in the game--in that category I put bureaucrats, journalists, corporate executives, bankers of course, and other people.

Now, people with skin in the game are citizens, people who have the upside and downside of their actions. If they don't pay their mortgage, they lose their house. Or, if I make a mistake, then you have skin in the game.

And of course the right column is an interesting column of people who actually don't have upsides. They are there to take the downside of others. And they have the highest status in society, traditionally. Compare a banker who has upside and no downside, because they don't have negative bonuses, to someone in the military. He doesn't have a bonus and he has his life on the line. Honor is bestowed on those who take the bullet for others. These don't have to be a saint, a knight, a warrior, a soldier, or a fireman. You can be just like the babysitter who pushes herself and lost her life because she had a responsibility for the baby she was holding.

It's the first time in history in which the people on top have power without courage. First time. You cannot find that in any society. Take the knights. The knights were people who, their trade was that they were risking their lives. This is why they or lords were supposed to die first. And of course the President of the United States was supposed to be first in battle. Not someone pushing a button. It changes the incentives. So, the only way you can have a safe society is by moving the first column, the left column, moving these people out of there, making it more accountable.

No successful society has ever put someone in a position of responsibility without accountability.

These ideas are from an interview with Nassim Nicholas Taleb, an excellent listen: http://www.econtalk.org/archives/2012/01/taleb_on_antifr.html