This treatise explains how boundaries enable self-directed lives and how boundary defects undermine economic and political independence. It contains recommendations for urgently needed repairs to the national borders of the United States, and to the boundaries of its citizens, businesses, and governments. Self-directed entities must have well-regulated borders between themselves and their environments to separate their spheres of autonomy from environments over which they have little or no influence but in which they must interact. Borders are their first line of defense against parasites, pathogens, and predators, which continually probe and attack them with increasing sophistication as they attempt to drain their rich pools of resources.
Boundaries don’t create or maintain themselves. They are complex physical, temporal and mental structures that take work to build, work to operate and work to maintain. When overbuilt or overregulated, they isolate and suffocate. When inadequate, not adapted, allowed to deteriorate, or under regulated, they dissipate vital reserves.
Citizens, businesses, governments and nations are new species of autonomous agents which first appeared about 10,000 years ago when wandering tribes of hunter gatherers adopted agriculture and settled down. Their environments include new forms of parasites, pathogens, predators, poisons and pollutants; most of which are other members of the new species. Members of these species have physical borders and term limits like those of microbes, cells, insects, plants and animals. They also have mental borders like those of tribes and tribal members. Their mental structures of beliefs, myths, rituals, rules, languages, cultures, etc. are generated by human brains. They emerge from physical patterns formed by biology, education, culture and experience. They filter, process and store information, and they motivate choices and actions. For example, economic mental structures include patterns which symbolize the scope and limits of ownership, and rituals for transferring it to and from other agents in the environment.
These newest self-directed entities are rapidly and painfully adapting as they compete and cooperate with one another to produce sustainable structures, niches and relationships. They are so new that natural selection hasn’t produced the fittest designs. They are so complex and interconnected that we can’t run controlled experiments on them to scientifically validate or challenge conflicting opinions. However, we can learn a great deal about which designs will certainly fail and which designs are likely to succeed by analyzing them as species of evolution.
Background
The United States emerged from WWII as the world’s dominant economic and military power. It had a substantial, educated middle-class and a massive reserve of infrastructure and natural resources. In the next two decades, its governments taxed heavily and invested aggressively in a national highway system, public education, clean air, clean water and social safety nets. These actions increased its reserves, expanded its middle class and improved the average quality of life.
The Federal government also pursued economic policies intended to develop a prosperous community of democracies supported by market based economies. It reduced trade barriers and systematically reduced tariffs and duties. It made the US dollar a global reserve currency which flowed freely into and out of the nation. It reduced tax rates on wages and profits. It deregulated banks and other financial institutions. Special-interest groups also manipulated the government into erecting isolating barriers of legal protections and tax benefits around multi-national corporations, entitled constituencies, and wealthy citizens. These two sets of boundary changes have helped other nations, large corporations, and the richest 1% of its citizens. However, over the last 30 years they have drained most of the nation’s reserves, weakened the middle class, undermined its economic health, and threatened national autonomy. These debilitating changes are evidenced by chronic trade and budget deficits, huge debts, blubberous masses of wealth feeding cancerous concentrations of power and privilege, financial bubbles, a deteriorating public education system, and most recently: persistently high unemployment, increasing underemployment, and draconian spending cuts which will cripple defense and shred social safety nets.
While the USA deteriorated from a creditor nation to the world’s most indebted, China’s economy flourished and its currency reserves make it the world’s second largest creditor nation (behind Japan and ahead of Germany). One key to China’s success has been its careful management of political and economic borders.
When, as CEO of a hi-tech company, I first journeyed around mainland China in the spring of 1984, there were only a handful of experienced risk takers in all of China. I was besieged by political leaders and business executives eager to do business. However, instead of mutual commitments or plans of action, our meetings produced carefully worded memorandums of understanding. These documents were passed upstairs to bureaucracies of regional or central governments which, after weeks or months, made decisions and commitments. Very few meetings produced results, because Chinese executives weren’t willing or able to make commitments. (Things went slightly better for Westerners with a high-ranking sponsor or two in the central government.)
The problem was that the businessmen and politicians who had survived decades of central control and purges had done so by avoiding personal risks and dutifully supporting Mao and the party line. [1] A culture of fear and a system of hierarchical, centralized control by a handful of people had all but obliterated several generations of potential leaders and entrepreneurs; something Deng Xiaoping recognized from personal experience, since he had been purged and jailed twice by Chairman Mao for advocating more liberal economic policies.
After Chairman Mao died and the “gang of four” was ousted, Chairman Deng Xiaoping began a process of modernization in 1982. The government relaxed isolationist borders which had kept the nation backwards and impoverished. It also set up and walled off several special economic zones (SEZs) which embraced the freewheeling laissez-faire policies of Hong Kong. These zones were designed to develop a pool of experienced business executives and competitive businesses from the raw material of people willing to take personal risks. They also allowed the government to maintain tight political and economic controls on the rest of the nation.
Each SEZ had two borders, one with China and one with the rest of the world. Shenzhen, the first of these zones, is sandwiched between China and Hong Kong. Our earliest business deals were struck there. Its border with Hong Kong was relatively open to Westerners. Its exclusive currency was Hong Kong dollars, instead of China’s renminbi. Its border with China was very restrictive, particularly for Chinese citizens and currency. Only individuals, willing to abandon their “iron rice bowls” (guaranteed subsistence at assigned roles in their native villages or towns), could immigrate with great difficulty and personal risk to these zones. Once there, these self-selected risk takers either learned how to manage in schools of hard knocks or they failed; just as those who fled China for Hong Kong had been doing for the previous 30 years. [2]
While China developed its cadre of entrepreneurs and globally competitive businesses, first within its SEZ’s and then in selected centers across the mainland, it regulated its currency, maintained its tariffs, and controlled the flow of political and economic information. Most of these controls are still in place.
Don’t get me wrong, although I admire what the China has done economically and some of the decisions it made to do so, I don’t advocate running governments, businesses or churches with large, centralized, hierarchical bureaucracies. These structures, by their very nature, destroy too much autonomy in efforts to support the error-ridden, overly-simple decisions of their leaders.
Autonomous agents
Autonomous agents are dynamic, self-sustaining and self-directing systems. The minimum elements of autonomy are: reserves, well regulated borders, skeletal structures, means for converting energy to work, and facilities for transport, communication, information storage, information processing, construction, deconstruction, waste disposal, and heat dissipation.
Autonomy necessitates an overbuilt infrastructure and reserves of raw materials and energy. I use the terms “overbuilt” and “reserves” to highlight a critical point: autonomy requires significant, readily employable reserves of all fundamentals. As reserves decline, autonomy becomes more limited. When critical reserves are lacking, autonomy is non-existent and survival is temporary. An agent without adequate reserves cannot make choices; it can only cannibalize itself and hope for the best.
Peripheral borders are used to keep a system’s resources firmly under internal control and to protect them from predation and pollution. They also enable a system to willfully manage its exchanges of resources, energy, heat and information with its environment. However, all but the tiniest and simplest of microbes also have well regulated internal borders which enable specializations that increase productivity and competitiveness. Internal boundaries enable living systems to grow substantially larger and to become enormously more complex by coordinating internal communities of specialized agents for the common good. Fences make good neighbors and they make communities of neighbors more productive.
(Part 2: The evolution of autonomous agents. Part 3: Characteristics of well regulated boundaries.)
I will post Parts 2 and 3 within the next four weeks. Later parts of this treatise, will only be made available to those who request copies and provide feedback, because much of the material is part of a book in progress. To receive unpublished chapters, email edwinlee@znet.com with your request. I’d appreciate some information on your background and reasons for your interest, but that’s not a requirement.)
[1] This is not unlike the survival strategies for managers and workers in all mammoth bureaucracies, be they in businesses like Bank of America or American Airlines, governments like China’s or Russia’s, or the Roman Catholic Church.
[2] Russia did not address its leadership vacuum after glasnost. Its only competent entrepreneurs, after generations of rule by a centralized hierarchy, were criminals and corrupt officials who had successfully operated outside the system. Consequently, these people took over huge chunks of the economy as it was privatized under the tutelage of naïve Western economists
