1. The market economies with good managers out-performed the communist economies with equally competent managers.
2. Communist economies age at the young age.
3. Market economies with bad managers create a social dichotomy of winners and losers.
Let me give some examples so you can make sense of what I mean by those three statements.
1. Market Economies with Good Managers:
Market economy shined in countries like Japan, Germany, Asian Tigers/dragons (Hong Kong, Singapore, South Korea and Taiwan), Malaysia and the even Gulf States (oil export economies - no manufacturing or knowledge-based services- with the monarch systems of governance). No doubt, there are other Western countries with market economies much bigger than the listed economies but the purpose of the list to mention the stars.
Market economy rebuilt Germany and Japan that were destroyed by world war second. It enabled four small countries/administrative regions to be big enough economic players to be called Asian Tigers and even make the desert states of gulfs to become the major investment destinations. While the cultures, composition of markets and geography of the listed economies vary considerably, they had one thing in common and that's good management.
3. Market Economy With Bad Managers:
Before going to the second point, I brought up the second point for the obvious reason of stressing that Market Economy does not do well by default. It needs proper management;
The memory of the 2008 US government bailout of the banks after the real-estate-market-crash is still fresh. That was a defining moment in the history of the market economy that exposed the effect of bad management. While the bailout saved the banks but the fallouts of the bad management pushed the forking of the losers (who live under fear of losing jobs, homes, and saving) and winners economic classes to the extreme that led to the occupied wall street movement and election an administration that has promised to run US government as a successful business.
I can add the long list of the countries with soured market economies from the four continents of Asia, Africa, America and Europe but for the sake of staying on the point, I prefer to restrict this knol to the big names. So, let's bring in China. Everybody talks about China, one or another way. From Chinese products to ambitious Chinese land-based-economic-corridor projects to the US-China trade war. It all indicates the success of Chinese economy that is unlike any other economy is very unique. So far, it is a very well managed hybrid market economy that pulled millions of Chinese out of poverty, what communist China couldn't achieve. The Chinese model showed that well-managed communist economy soon expands to its limits but a well-managed market economy can sustain growth much better for a longer time period.
2. The short lifespan of Communist Economy:
Since the powerhouse of the communist economy barely lived for eight decades and there does not exist any mentionable communist economy, this subtitle is almost self-explanatory.
NOW, let's consider a plausible answer to the WHY:
It's common sense that smaller the number or size of something (at macro-scale), it's management is easier. Small villages are mostly self-sufficient populations that neatly recycle their resources. In comparison, the bigger the population of an area, the more they rely on the exchange of goods with other populations, the greater are their waste and more obvious are the economic segregation of the populations.
Size of Problem: My hypothesis is that the bigger the size and complexity of the economy, the greater are the chances of the mishaps and mismanagements. That's one of the main reason for an inherent short lifespan of the communist economy. The government can manage certain amounts of mishaps. Once, the number of mishaps increase, they start tearing down the whole system.
Seeing Patterns That Matters: The human factor is another reason for mishaps when it comes to the handling of large numbers/sizes. In one of the databook (I don't remember where) I read, "Human brains are so good at detecting patterns, they most often overfit." The overfittings make them see things that are either not there (noise) or make predictions based on averages ignoring big chunks of important information that actually matters.
Trusting The Judgements of the Performers Instead of Performance:
If you have closely watched the politicians, they are good performers, the composition of voices, body languages, the environments, and messages are appealing that make people follow them. In comparison, not too many people really care what kinds of laws they pass. It's too much of boring and complex information that is not pleasing at all. People want excitements and relaxations after dealing with exhausting jobs and dealing with their daily personal battles.
Transparency And Fairness Are the Building Blocks of A Moral Economy:
I guess I may better not to go into defining a moral economy here (the risk of undermining the main topic, that's setting the role of artificial intelligence in creating a fairer economy). Still, it's essential to point out that without fairness and transparency there will be not any moral economy. Having said that, I very like to stress that even if intentions are good, complexity and size of problems reduce significantly the transparency of information and hence the fairness of the decisions based on the poor understanding of information. Here comes the role of the AI.
As I prefer short blogs, I will try to add more on the topic in my next blog post.
3. Market Economy With Bad Managers:
Before going to the second point, I brought up the second point for the obvious reason of stressing that Market Economy does not do well by default. It needs proper management;
The memory of the 2008 US government bailout of the banks after the real-estate-market-crash is still fresh. That was a defining moment in the history of the market economy that exposed the effect of bad management. While the bailout saved the banks but the fallouts of the bad management pushed the forking of the losers (who live under fear of losing jobs, homes, and saving) and winners economic classes to the extreme that led to the occupied wall street movement and election an administration that has promised to run US government as a successful business.
I can add the long list of the countries with soured market economies from the four continents of Asia, Africa, America and Europe but for the sake of staying on the point, I prefer to restrict this knol to the big names. So, let's bring in China. Everybody talks about China, one or another way. From Chinese products to ambitious Chinese land-based-economic-corridor projects to the US-China trade war. It all indicates the success of Chinese economy that is unlike any other economy is very unique. So far, it is a very well managed hybrid market economy that pulled millions of Chinese out of poverty, what communist China couldn't achieve. The Chinese model showed that well-managed communist economy soon expands to its limits but a well-managed market economy can sustain growth much better for a longer time period.
2. The short lifespan of Communist Economy:
Since the powerhouse of the communist economy barely lived for eight decades and there does not exist any mentionable communist economy, this subtitle is almost self-explanatory.
NOW, let's consider a plausible answer to the WHY:
It's common sense that smaller the number or size of something (at macro-scale), it's management is easier. Small villages are mostly self-sufficient populations that neatly recycle their resources. In comparison, the bigger the population of an area, the more they rely on the exchange of goods with other populations, the greater are their waste and more obvious are the economic segregation of the populations.
Size of Problem: My hypothesis is that the bigger the size and complexity of the economy, the greater are the chances of the mishaps and mismanagements. That's one of the main reason for an inherent short lifespan of the communist economy. The government can manage certain amounts of mishaps. Once, the number of mishaps increase, they start tearing down the whole system.
Seeing Patterns That Matters: The human factor is another reason for mishaps when it comes to the handling of large numbers/sizes. In one of the databook (I don't remember where) I read, "Human brains are so good at detecting patterns, they most often overfit." The overfittings make them see things that are either not there (noise) or make predictions based on averages ignoring big chunks of important information that actually matters.
Trusting The Judgements of the Performers Instead of Performance:
If you have closely watched the politicians, they are good performers, the composition of voices, body languages, the environments, and messages are appealing that make people follow them. In comparison, not too many people really care what kinds of laws they pass. It's too much of boring and complex information that is not pleasing at all. People want excitements and relaxations after dealing with exhausting jobs and dealing with their daily personal battles.
Transparency And Fairness Are the Building Blocks of A Moral Economy:
I guess I may better not to go into defining a moral economy here (the risk of undermining the main topic, that's setting the role of artificial intelligence in creating a fairer economy). Still, it's essential to point out that without fairness and transparency there will be not any moral economy. Having said that, I very like to stress that even if intentions are good, complexity and size of problems reduce significantly the transparency of information and hence the fairness of the decisions based on the poor understanding of information. Here comes the role of the AI.
As I prefer short blogs, I will try to add more on the topic in my next blog post.
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