Benjamin Butler, Emerging Future Institute, Wednesday 8th July, 2015
“The Future is already here now, but it’s just not evenly distributed yet.”
The local morning Hong Kong newspapers have titles like “Suspension Fiasco” (The Standard) on their front page, commenting on the market crash in Hong Kong and China. As of this morning 40% of the listed Chinese companies requested a trading halt today. This is all reminiscent of the debacle in 1987 when the Hong Kong stock market was halted for 4 days. In a short space of time we have gone from discussing MSCI inclusion for China and more liberalization to now talk of capital controls. Retail investors make up 80% of the Chinese market and the reason why I recommended selling literally at the peak of this market – in my Dow Theory Letters note – was that they were borrowing way too much money (margins) in order to buy stocks. Tomorrow I am going to meet up with an old “China Hand” and see what he has to say about recent developments. I prefer going into markets when there is a clear and obvious opportunity. For now I am happy to watch this bloodbath from the sidelines. I guess this will put further pressure on commodity prices, the Australian dollar and Hong Kong property even. It will also add to the pressure on international markets. As I said in my talk in Moscow where I predicted an imminent global crisis, we are in the realms of an unstable snowpack in avalanche theory. I cannot predict what it going to be the trigger for the avalanche (GFC2.0) I can only identify a number of triggers. Greece was one and China is now emerging as another. I am convinced that there are more out there – including the US economy itself.
Education and Creativity – The ghost of Darwin’s Survival of the Fittest
I flicked through the local newspaper some more and saw some photos of students who had been accepted or rejected from their top choice schools. I guess we are back in exam season. As a child the summer can be a heart-wrenching time when you have to receive results of “critical” exams. I recall receiving my A Level (High School) results by phone from a payphone on the Harbourfront of Hong Kong many years ago. Until then I was a straight “A” student and destined to go to Oxford but I missed it by a grade. I was in anguish on that day. I had forgotten about it until I passed that very spot the other day, as I leisurely walked home after a meeting and enjoying the bustling energy of the harbor: things seemed to have turned out OK. I ended up going to law school in an equally-ranked school in London, but quit anyway after I realized that my passion was not to be a lawyer. I wanted to travel the world, discover foreign lands and make my life a voyage, not a stagnant 9 to 5 existence with a mortgage and 2 cars. After 2 years of law, I switched schools to the School of Oriental and African Studies (a little like the school at Monterey which excels in languages perhaps), and embarked on a course in Japanese and Economics. When I graduated I received an offer from Morgan Stanley to work in their Tokyo office, apparently the youngest ex-pat employee ever for a front line position. I also got a phone call from British Intelligence, which I politely declined. I say all of this because when I look at all of these stressed children’s faces, I just think it’s all unnecessary. We don’t know how things are going to turn out. Not going to Oxford and ending up in international and cosmopolitan London was perhaps one of the best things that ever happened to me.
My 5 month daughter has very clear and sharp eyes and is constantly monitoring her environment looking for new things to learn. There is an intelligence there that you rarely see in children once they are in the education system and certainly not in adults. Babies and young children don’t need coercion, they naturally want to learn. In fact, the highest level of intelligence is an open mind and the state where one is constantly ready to learn. In fact the sages of antiquity saw the state of “not knowing” as a revered state. Because it is from that state that anything is possible. A hedge fund manager – perhaps one of the brightest – called Ray Dalio -wrote about this earlier this year. Another way of articulating this is to say that the question is more important than answers. But our education system is about “knowing.” We adults impose all of this stress on our children to know something. I remember the terror of sitting in class praying not to be called upon when I didn’t know an answer. Creativity, learning and insight don’t come from stress. They happen when we are joyous, open-minded and free to make mistakes. I look at these photos and cannot help thinking, are we not imposing our collective adult neuroses and fears upon our children? We fear that they might not get into the right university or career and we project far into the future. Yet our lives never worked out as we planned. I yearn for an education system where children are allowed to continue to play, to fail and to really learn without constantly freaking out about the future. Learning is the highest form of intelligence. “Knowing” is really a delusion. [ Lao Tsu in the famous Tao Te Ching even goes as far as saying that knowing is a “disease”! ] Even the world’s greatest scientists are proven wrong over time. Quantum physics today is destroying all the paradigms of science; so much so that many of its findings have been ignored by the other branches of science because it contradicts what established academics “know.”
Lots of my friends are telling me that I need to decide my 5 month old daughter’s kindergarten and school. It won’t be long before she is forced in to interviews apparently. Is this healthy?
The other big lie is competition. Children – actually all humans – behave better in co-operation. I think we live under the lie of Darwin’s Survival of the Fittest, hundreds of years after he wrote it. Perhaps – I suspect – he has even been mis-quoted. I am going to read his text from beginning to end over the summer. The New Scientist once wrote:
The theory of natural selection clearly explains how features such as the sharp teeth of the tiger, the thick fur of the polar bear and the camouflage of the moth evolved. When the ancestors of polar bears colonised the Arctic, for instance, those with thicker fur would have had a better chance of surviving and producing more offspring than those with thinner fur. Many social species, however, have traits that benefit others or the group as a whole, often to their own cost. It is much harder to see how such traits evolve. Darwin proposed that it was a result of the survival of the fittest groups, rather than the fittest individuals. Today, most evolutionary biologists think he was right, but group selection, as this idea is known, has a long and complicated history.
Actually one looks at nature it is full of co-operation, symbiosis, and harmony. Look beyond the lion killing its prey, and think of the bees and the way the eco-system is carefully designed to mutually support all animals and plants. Finland’s education system apparently doesn’t emphasise ruthless competition and they have the best education in the world for younger children. I want to visit it in the summer, along with the fantastic business and design school Aalto. Scientific paper after scientific paper have essentially rejected Survival of the Fittest (as its often espoused) yet we still cling to it to justify the “dog eats dog” system in which we live. People can still excel and work hard in a system of co-operation. I have witnessed it in many Silicon Valley startups and I am sure you have.
Whilst I believe we are entering another major crisis, the consciousness of humanity is in flux. There are signs of change ahead and many children are being home schooled for the very reasons I espoused above. And many other schools and institutions with more innovative approaches are being born. One of the keys for humanity’s consciousness to catch up with its technology is the way we treat our children and a rejection of Survival of the Fittest: co-operation or co-creation, not competition.
I guess tomorrow I am going to be forced to reflect more on financial markets. I prefer to act before not during these crises hence I was so vocal before. On days like today I prefer to find a quiet sanctuary on the South side of Hong Kong Island by the beach and reflect.
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