English: A metronome.

A metronome. (Photo credit: Wikipedia)

We are entering a new age where things are very different to the previous one. However, many times, this fact is not well understood by the decision makers. I want to provide you some clues in order to think about the future and the changes that have been perceived in the last years.

  1. Globalization provides a more entropic world. This implies that this process is irreversible. We cannot go back to a previous situation. However, there are some people that try to fight against this process, wasting a lot of money and other resources.
  2. Classic economy models are not useful, however, many rulers think following these obsolete economy models. A tech society requires expert workforce, in this situation employment cannot be considered as an easily controllable variable because labor market is very far from a market in perfect competition. For instance, today the relations between inflation and employment are not as direct as in the past.
  3. Political forces have change, but political parties have not. In the past, there were different interests for the capital factor, and the workforce, as sign of the confrontation between the real and financial economy. However, today, the real economy is more driven by technology than workforce. Today that new confrontation between financial and real economy is solved at the markets, but is underrepresented in the political field. It is not necessary to find equilibrium between the rich and the poor, between capital and workforce, but between banks (with their own staff and environment) and industrial companies (with their own staff and environment). Old unions are only noise that increase the complexity of the system. They should evolve.
  4. As technology is substituting workforce, and production requires a fewer number of workers, there is a need to divert funds in an artificial way from the economy cycle to the families. With the exception of qualified technicians, employment must be invented, instead of being got in a natural way. This is a reason why the leisure sector is increasing its importance in the last years. But, on the other hand, there is a risk that governments tend to create bubbles and economic inefficiencies in many sectors in order to provide jobs for people, increasing artificially the administrative staff in the public administrations and large companies.
  5. Innovation is being confused with design by some of its public promoters. Innovation is an activity that provides large value and competitive advantages and moves funds from financial investments to productive ones. However, that process of diverting funds from production to people makes that governments are interested in creating jobs in simpler sectors, promoting activities that create a fewer value as if they were innovation. This fact is breaking artificially the needed new equilibrium between financial activity and technology at the markets.  In order to see how can affect this fact, you only need to analyze what happens when a considered innovative company as Apple put a new product at the markets that does not get the expected level of innovation: the value of their shares decreases sharply. Markets finally correct that deviation, but this process results in an increase of complexity
  6. There is a false idea that politics and management are similar functions. This should not be true. Today is even more important to make a difference between both activities, however, we can see how large private companies and banks are been driven by the political power, and politicians are managers of the public sector instead of regulators of the whole activity of the society. Managing activity should provide the required equilibrium between financial and productive activity, and political activity should find a proper solution to the canalization of wealth from the economic activity to the families in a tech world.

How can we cope with this new scenario? Well, we must analyze the world with new tools as the old models are not very useful. Management activity requires a new focus on complexity analysis techniques, avoiding the use of old management models that only will increase the complexity of the economy instead of reducing it. And we should demand that politicians abandon their ancient class fight to preserve their obsolete structures and they would fit the new world and demands of the new tech society.

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