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Taxes are one of the weakest ways to influence an economy (a complex system) or society at large for that matter. Donella Meadows: PLACES TO INTERVENE IN A SY

Taxes are one of the weakest ways to influence an economy (a complex system) or society at large for that matter. Donella Meadows: PLACES TO INTERVENE IN A SYSTEM (in increasing order of effectiveness) 12. Constants, parameters, numbers (such as subsidies, taxes, standards). 11. The sizes of buffers and other stabilizing stocks, relative to their flows. 10. The structure of material stocks and flows (such as transport networks, population age structures). 9. The lengths of delays, relative to the rate of system change. 8. The strength of negative feedback loops, relative to the impacts they are trying to correct against. 7. The gain around driving positive feedback loops. 6. The structure of information flows (who does and does not have access to information). 5. The rules of the system (such as incentives, punishments, constraints). 4. The power to add, change, evolve, or self-organize system structure. 3. The goals of the system. 2. The mindset or paradigm out of which the system — its goals, structure, rules, delays, parameters — arises. 1. The power to transcend paradigms.

wwweston 8y ago
I like this list enough that I intend to read more by Meadows, but it seems to me that tax policy isn't just limited to #12, but can play a notable role in #11 down through #5. Particularly #5 and #6. In fact, a lot of the items on the list aren't entirely distinct from one another. That doesn't mean the list is bad -- I think it's powerful enough to try and articulate as many semi-distinct inflection points for a system as one can. Just that I'm not sure that the ranking is pure.
germinalphrase 8y ago
Are those ranked by perceived impact?
- Jtsummers 8y ago
  Yes. The closer to 1, the greater the impact to the fundamental system. The purpose of those leverage points are not just to change the external behavior of a system but to change the system itself. You can change the external behavior of an economy by increasing/decreasing taxes. But this may not alter the fundamental system itself. Consider #9: Length of delays relative to rate of system change. This is precisely what the Agile and Lean movements wants (OODA and PDCA loops). By reducing the delay (compared to Waterfall and comparable approaches) between doing something and getting feedback, they can adjust their processes and systems to meet customer demands more reliably. This is much more impactful than parameter changes (#12) which is: hire 10 more people, or give the best devs a 25% bonus. Those may help to motivate people, but they don't alter the fundamental system (ok, mass hiring can alter the fundamental system, but often not in the desired way). On the other hand, introducing delays can stabilize a system. So reducing delays isn't the right choice for every circumstance.
  - perfmode 8y ago
    Waterfall versus Agile is a useful and relatable example of different paradigms. Thanks for that.
liber8 8y ago
Serious, non-snarky question: WTF does this even mean? How is "the power to transcend paradigms" the most effective way to intervene in a system? How do you create a policy or a set of actions to actually influence an economy based on "the power to transcend paradigms"? It seems to me that subsidies and taxes are obvious ways to shift the mindset of the system or "transcend paradigms" since we know taxes actually influence behavior. Look at sin taxes on smoking in the U.S., which not only directly reduced smoking but in turn have helped fund anti-smoking propaganda, which together have helped the rate of smoking in the U.S. plummet. Is this what is meant by "transcending paradigms" or "shifting mindsets"? If so, doesn't that really mean that taxes or subsidies can be one of the most effective ways to influence an economy?
- perfmode 8y ago
  2. is basically the work of many think-tanks... to shape beliefs and discourse in the direction of a particular perspective or worldview. think socialism versus free-market capitalism versus libertarianism. two-party politics in the United States could be thought of as a paradigm. these are the types of paradigms under evaluation. altering one of these at this layer has cascading effects on policies etc. 1. is basically the ability to create effective think-tanks to shape beliefs and discourse.
- Jtsummers 8y ago
  It would help to read the context of that list [0]. She's discussing the different ways that you can change a system (its leverage points). Changing paradigms can cause the system to be changed substantially. But you're still acting within a narrow constraint (that of the paradigm you've changed to). Versus going beyond paradigms, and recognizing the value and potential in each of them. Synonyms of paradigm shift might also be culture change or mindset change. The purpose of the leverage points is to change the system at a fundamental level. Changing taxes doesn't (until you hit extremes) cause that. The system continues to behave in the same way but with increased or reduced constraints. Consider birth control policies. Eliminating birth control (making it illegal, so not really eliminating it) can cause an initial increase in children born until a new stable point is reached. Once you make birth control legal again, unless there has been a culture change in the interim, the birth rate will drop to the prior level. Taxes and subsidies are the same. They don't change the system at a fundamental level (or don't do so easily), they only alter its external behavior. But once they're restored to their prior levels the system will probably return to its same behavior. As a tax example: Perhaps we want to encourage people to save money for retirement, so we give them a tax break on their IRA contributions. This seems to help, people are saving more for retirement (as measured by IRA contributions increasing). We remove the tax break, do they continue to contribute (it's now a part of the culture) or do they stop contributing (they only did it for the tax benefit)? If they continue, then you managed to create a substantive culture change. But most likely you'll get a drop of contributions. [0] http://donellameadows.org/archives/leverage-points-places-to-intervene-in-a-system/ http://donellameadows.org/archives/leverage-points-places-to...
DaiPlusPlus 8y ago
> The power to transcend paradigms. What is the level of peer-support for this amongst mainstream economists? It sounds like woo.
- perfmode 8y ago
  Economists don't tend to concern themselves with this. You're better off looking to philosophers, sociologists, etc. Christianity -> Science is a notable example of a paradigm shift. Hunter-gather -> Argiculture is another such shift.
- logfromblammo 8y ago
  Also, it probably doesn't sell many comic books.~ It is woo. My translator says it means, "to invite me to do a TED talk, send a DM".
  - Jtsummers 8y ago
    Why is it you think that this is woo?
    - toufiqbarhamov 8y ago
      In the absence of strong evidence to the contrary, strong claims are de facto woo, except when presented as highly tenuous hypotheses or theories. The default is skepticism, although economists seem to get a pass.
      - DaiPlusPlus 8y ago
        Or just the use of the phrase “transcend paradigm” - all it needs is a PowerPoint slide deck with a marble background pattern.
  - perfmode 8y ago
    Donella Meadows passed away 19 years ago, in 2001. https://en.wikipedia.org/wiki/Donella_Meadows https://en.wikipedia.org/wiki/Donella_Meadows
paradoxparalax 8y ago
The thing is that History doesn't like to drop green fruits, even beating the tree and strong wind, They only fall when they are mature and ripe to fall. You can add minerals and water in the soil around the tree, you can cut some leaves to let the sun directly hits the fruit, but no matter what stick you beat the tree or the wind is Hurricane, History doesn't like to drop fruits that are not mature and ripe.

wwweston 8y ago

I like this list enough that I intend to read more by Meadows, but it seems to me that tax policy isn't just limited to #12, but can play a notable role in #11 down through #5. Particularly #5 and #6. In fact, a lot of the items on the list aren't entirely distinct from one another. That doesn't mean the list is bad -- I think it's powerful enough to try and articulate as many semi-distinct inflection points for a system as one can. Just that I'm not sure that the ranking is pure.

germinalphrase 8y ago

Are those ranked by perceived impact?

Jtsummers 8y ago
Yes. The closer to 1, the greater the impact to the fundamental system. The purpose of those leverage points are not just to change the external behavior of a system but to change the system itself. You can change the external behavior of an economy by increasing/decreasing taxes. But this may not alter the fundamental system itself. Consider #9: Length of delays relative to rate of system change. This is precisely what the Agile and Lean movements wants (OODA and PDCA loops). By reducing the delay (compared to Waterfall and comparable approaches) between doing something and getting feedback, they can adjust their processes and systems to meet customer demands more reliably. This is much more impactful than parameter changes (#12) which is: hire 10 more people, or give the best devs a 25% bonus. Those may help to motivate people, but they don't alter the fundamental system (ok, mass hiring can alter the fundamental system, but often not in the desired way). On the other hand, introducing delays can stabilize a system. So reducing delays isn't the right choice for every circumstance.
- perfmode 8y ago
  Waterfall versus Agile is a useful and relatable example of different paradigms. Thanks for that.

liber8 8y ago

Serious, non-snarky question: WTF does this even mean? How is "the power to transcend paradigms" the most effective way to intervene in a system? How do you create a policy or a set of actions to actually influence an economy based on "the power to transcend paradigms"? It seems to me that subsidies and taxes are obvious ways to shift the mindset of the system or "transcend paradigms" since we know taxes actually influence behavior. Look at sin taxes on smoking in the U.S., which not only directly reduced smoking but in turn have helped fund anti-smoking propaganda, which together have helped the rate of smoking in the U.S. plummet. Is this what is meant by "transcending paradigms" or "shifting mindsets"? If so, doesn't that really mean that taxes or subsidies can be one of the most effective ways to influence an economy?

perfmode 8y ago
2. is basically the work of many think-tanks... to shape beliefs and discourse in the direction of a particular perspective or worldview. think socialism versus free-market capitalism versus libertarianism. two-party politics in the United States could be thought of as a paradigm. these are the types of paradigms under evaluation. altering one of these at this layer has cascading effects on policies etc. 1. is basically the ability to create effective think-tanks to shape beliefs and discourse.
Jtsummers 8y ago
It would help to read the context of that list [0]. She's discussing the different ways that you can change a system (its leverage points). Changing paradigms can cause the system to be changed substantially. But you're still acting within a narrow constraint (that of the paradigm you've changed to). Versus going beyond paradigms, and recognizing the value and potential in each of them. Synonyms of paradigm shift might also be culture change or mindset change. The purpose of the leverage points is to change the system at a fundamental level. Changing taxes doesn't (until you hit extremes) cause that. The system continues to behave in the same way but with increased or reduced constraints. Consider birth control policies. Eliminating birth control (making it illegal, so not really eliminating it) can cause an initial increase in children born until a new stable point is reached. Once you make birth control legal again, unless there has been a culture change in the interim, the birth rate will drop to the prior level. Taxes and subsidies are the same. They don't change the system at a fundamental level (or don't do so easily), they only alter its external behavior. But once they're restored to their prior levels the system will probably return to its same behavior. As a tax example: Perhaps we want to encourage people to save money for retirement, so we give them a tax break on their IRA contributions. This seems to help, people are saving more for retirement (as measured by IRA contributions increasing). We remove the tax break, do they continue to contribute (it's now a part of the culture) or do they stop contributing (they only did it for the tax benefit)? If they continue, then you managed to create a substantive culture change. But most likely you'll get a drop of contributions. [0] http://donellameadows.org/archives/leverage-points-places-to-intervene-in-a-system/ http://donellameadows.org/archives/leverage-points-places-to...

DaiPlusPlus 8y ago

> The power to transcend paradigms. What is the level of peer-support for this amongst mainstream economists? It sounds like woo.

perfmode 8y ago
Economists don't tend to concern themselves with this. You're better off looking to philosophers, sociologists, etc. Christianity -> Science is a notable example of a paradigm shift. Hunter-gather -> Argiculture is another such shift.
logfromblammo 8y ago
Also, it probably doesn't sell many comic books.~ It is woo. My translator says it means, "to invite me to do a TED talk, send a DM".
- Jtsummers 8y ago
  Why is it you think that this is woo?
  - toufiqbarhamov 8y ago
    In the absence of strong evidence to the contrary, strong claims are de facto woo, except when presented as highly tenuous hypotheses or theories. The default is skepticism, although economists seem to get a pass.
    - DaiPlusPlus 8y ago
      Or just the use of the phrase “transcend paradigm” - all it needs is a PowerPoint slide deck with a marble background pattern.
- perfmode 8y ago
  Donella Meadows passed away 19 years ago, in 2001. https://en.wikipedia.org/wiki/Donella_Meadows https://en.wikipedia.org/wiki/Donella_Meadows

paradoxparalax 8y ago

The thing is that History doesn't like to drop green fruits, even beating the tree and strong wind, They only fall when they are mature and ripe to fall. You can add minerals and water in the soil around the tree, you can cut some leaves to let the sun directly hits the fruit, but no matter what stick you beat the tree or the wind is Hurricane, History doesn't like to drop fruits that are not mature and ripe.